Are tenants psying market rent?

I hear if negative gearing goes, rents will shoot up. Generally aren't landlords charging as much rent as they can in the market? Yes if changes to negative gearing creates less rental properties then yes I can see rents going up, but I don't neccesarily see the relation between abolshing negative gearing and increase in rents as I assume the majority of landlords are charging as much rent as they can.

 

Those who have their properties at under market rent would be more likely to raise rents to cover costs.

But more importantly, and in the medium to long term: Less investors will enter the market (and some would leave) as the cost of holding the asset will increase, this will restrict the supply of available properties for rent pushing up prices. Yields will then increase and investors will re-enter the market.

The overall impact is better yields for investors and therefore higher rents than would otherwise be the case.

It's actually interesting that the left is so pre-occupied with this negative gearing thing. It won't improve social justice or help the worst off in our society, it will hurt them. Those people will never save enough money for a deposit and so will always rent, but now those on benefits will be subjected to higher rents than would otherwise be the case. Negative gearing is really subsidising rents not inflating prices.

Getting rid of negative gearing benefits middle class Gen Y who are actively saving for a deposit at the expense of those who are on struggle street, at least in the long term. In the short term it would create mayhem.

But this is the unseen consequence that is hard to measure.

Beelzebub

 

Rents are determined by the market not the incentives. As if the removal of ng will cause rents in the already unaffordable inner-city and inner-ring suburbs to skyrocket. Returns in these areas are abysmally low coupled with land tax as icing on the cake.

 

Gangnam style tenants?!