Bill Shorten to address housing affordability at ALP national conference

Once rents exceed $800 per week, the scheme doesn’t make economic sense for the landlord.

A lot of inner and middle ring properties will exceed this threshold; if not now, not in the too distant future.

My rents for my IPs range from $320 per week (regional) to $1,350 per week (high end).

Not yet. Takes more than 5 years for a non-intentional slum to develop .

 

Interesting quote from Benjamin Franklin (who was a bogan of sorts by the look of him):

“I am for doing good to the poor, but...I think the best way of doing good to the poor, is not making them easy in poverty, but leading or driving them out of it. I observed...that the more public provisions were made for the poor, the less they provided for themselves, and of course became poorer. And, on the contrary, the less was done for them, the more they did for themselves, and became richer.”

― Benjamin Franklin

So there you go . Don't give the poor too much, instead just a little hand to allow themselves to work out of the humungous hole they're in. The worst that could happen is you'll have massive bogan suburbs lol.

 

"The worst that could happen is you'll have massive bogan suburbs lol."
Mt Druuitt QED ?

 

I can see the future headlines now "This property investor earns $600k per year, and $200k of it is paid directly by the taxpayer."

 

@euro73 - scant info available as yet on this but would be interested in your views on how it compares to the original NRAS?

Will you be voting labor?

 

Basic calculation:
I rent out my investment property at $500 per week earning $500*52 = $26,000 gross p.a.
I then discount 20% meaning $500 x 80% = $400 per week earning $400*52 = $20,800 gross p.a.

Then, I will get $8,500 cash rebate totaling at $29,300, $3,300 of which exceeds the original amount without cash rebate otherwise. Either my own taxed income or those of other taxpayers, it is even worse than negative gearing. As the arbitrage profit is obvious, irrational speculators will jump in.

I support Australian Housing affordability so that every Australian can live under a roof over their head. Nonetheless, a detailed plan must be carried out by sane experienced experts rather than by delutional socialists.

Cheers,

DP

 

What is being proposed is a 20% rental reduction, not a 20% pricing reduction. In return for renting a property out for 20% below market rates, you would be paid a tax incentive of $8500 per year for up to 15 years. I'm assuming it will be indexed, as the current NRAS is. The current NRAS payments started at 8K and last for a maximum of 10 years , by way of comparison,

With a proposal that NG be limited to new builds and IO quotas making P&I a reality for many investors, I imagine this will attract enormous interest ( excuse the pun) from investors

 

Who is going to determine the rental market rate?

It can be different for every suburb in a town/city.

It can be different for every street in a suburb.

It can be different for every property in a street.

I know of two 4/2/1 houses next door to each other (exactly same floor layout).

One currently is rent at $445 pw; the other $400 pw.

What is the rental market rate?

Policy seems unworkable to me.

 

Because the current coalition shut it down before Round 5 was allocated . Had they proceeded with Round 5 we would have had 50,000 dwellings or thereabouts

I disagree. Those 37,000 properties were delivered in 4 years, not 10. They are eligible for a maximum of 10 years tax incentives under the current version of NRAS but it didnt take 10 years to build/deliver them

I disagree. We have years of NRAS telling us otherwise. It has not had any impact on the price of non NRAS properties within the same estates, developments or locations. What will hurt the price of other investment properties is their low yields in the post APRA era. Thats happening completely independent of NRAS, already.

I disagree. I heard all this nonsense about slums and housing estates with the original NRAS. It was nonsense then and its nonsense now. There are concentration limits with NRAS and no such "estates' ever actually happened. I would imagine the rules around this will be similar....

Also, don't forget we have had Affordable Housing (AHSEPP) in place for almost a decade in NSW, where developers can build boarding houses and get extra FSR on townhouse and apartment developments in return for 20% discounts to their rents.... There are tens and tens of thousands of such dwellings all over NSW today..... there is no evidence that has resulted in slums.. and those are all run bu Community Housing Providers .

 

Then you havent been paying attention, because this policy already exists and already works just fine. Its called NRAS

 

Lets wait and see the detail.. but it appears to be a similar concept

 

So, let’s say you buy a cheap $150k property in a regional town, and rent it out for $200 per week. Rent is discounted by 20%, so $40 per week. Battler renting the property gets a $2,080 per year benefit. IP owner gets benefit of $6,420 ($8500-$2080)? That is x3 the benefit of the battler.

 

Eh I like your way of thinking of how to squeeze the most dosh out if this scenario.
I was thinking more along the lines of discounting rent but having the tenant pay for other misc fees to make up the lost 20%, while also pocketting $8.5k... worth a chat with the REA if this policy does go ahead and isnt just PR optics to combat the idea of negative gearing hurting poor ppl

 

How does that work if the local market becomes slightly oversupplied with everyone jumping on the bandwagon and building new homes.
In an oversupplied market rents can go backwards as investors become more customer focused, especially those with older properties, that suddenly have to compete with brand new houses and apartments.
Its no different to how business works , if you cannot provide a cheaper price with good service, your competitor will take your customers. Those with good skills at looking after their customers tend to do better.

 

Just my observation from the previous NRAS
I dont really think it made it any more affordable, just allowed people on lower incomes able to live in a nicer house (wouldnt say saved them anything)
Eg existing house in the suburb cost $300pw rent and new house in same suburb got appraised at $375pw (though may struggle to rent at that price long term due to older comparables) and renting for 300pw through NRAS. While they get a nicer house, affordability has not changed.

In saying that some low quality housing in cheaper suburbs might actually make it more affordable (just didnt really see that last time)

Either way as long you know how to take advantage of schemes when there available be happy. Not of a fan of Shorten's NG and CGT proposed changes but if it means a new NRAS just take advantage of it.

 

Well, it wouldn’t make sense for a nurse or cleaner either at that price. The idea is affordable rentals for working people in essential jobs who have been priced out of living a reasonable distance from work.

I am interested in how you define this ‘slum’ with which you keep trying to frighten us...

What is so horrible about about those ordinary working people with families and jobs that you need to make such dire predictions!

 

Change negative gearing so that it really only applies to new builds. Create an incentive for investing in new builds creates a rebate.

How does this make housing (specifically new builds) more affordable?

No denying that it creates some very interesting opportunities for developers, the construction industry, OTP sales and even some investors. It also costs the government a fortune and leaves the system open to administrative abuse.

 

I'm not sure I see the point? With the housing market softening and rentals in some areas sitting vacant for a long time I would have assumed the cycle correction would fix issues of affordability no intervention required. But I'm all for developing more housing for those that really need it (pensioners, single mums etc).

 

The concept and ideology is a great concept but it's far removed from the reality.

Essential worker housing - how many of these jobs are actually in or close to the CBD? Ambo stations are on longer suburban, they're superstitions, police don't have a local cop shop but an LAC, schools are a dime a dozen. Hospitals are dotted throughout the metro area - very few are in/close to the CBD but are suburban eg Canterbury, Bankstown, St Leonards, Frenchs Forest, Liverpool, Baulkham Hills.

This policy is purely aimed to win votes from public servants who work for essential services. Those employed in these careers earn the same rates of pay, it doesn't vary If they work in Stanmore, Strathfield or Smithfield or Shelby or Seycheville. Fair to say those who live in the outer areas and work in those areas are better off.

 

The whole proposal would be a lot more efficient if they simply increased renters low income supplements via Centrelink.