Screw Property Investors

love your avatar

 

Actually the rental increase fallout could be short term as landlords try to adjust and get to neutral gearing. Also rent rises will only be sustainable if the underlying economy is strong.

Imagine taking away negative gearing in a recessionary environment like W.A. Don't think landlords will be able to raise rents when they are struggling to find tenants even when rents are dropped multiple times. In such a situation, many investors will just throw in the towel or be force by the banks to do it.

So best time to remove negative gearing would be when the economy goes into recession and rents are dropping. Landlords will be unable to raise rents and that would solve the "rental increase" problem.

 

Well it depends what they think they are preventing.. If it's "investors" just sitting on properties and claiming losses without actually attempting to make them available for rental, well yes, that is tax fraud, which is already illegal. I'm sure they already have ways to check that, and always developing new ways to catch these sorts of people.

If it is to stop/profit from foreigners (I'm guessing mainly those in Sydbourne) holding vacant new properties.. They won't have a TFN, they don't even need one I believe, as they are not collecting any AU income. They are just hoarding their money in an asset outside of China/elsewhere so they can one day sell and collect. It would be a nice little cash-cow for the Government if they can enforce it. I'm sure FIRB has a pretty good list to go through.

Depends on the wording on their policy says. Does anybody have a link to exactly what they are proposing?

 

It's like this, when we are not in government, we are the peoples champion, when we are in government we act in the national interests of the world bank,

 

So do I.. a lot Well I felt a bit left out surrounded by all of these beautiful avatars talking

 

That's a solid viewpoint. I actually didn't think of other markets - was fixated on Syd.
So the removal of negative gearing, if its nationwide, would be ruinous for markets outside of the ones which have moderate vacancy rates? Even in Sydney, if potential tenants know landlords generally will be hurting and current tenants can't cope with a step change in rental, the only places where people would offer to pay higher rent would be areas of major appeal. Right in the heart of the CBD, or waterfronts etc.

Also, side note. Scrapping of neg gearing would make depreciation reports pretty much useless right? What's the point of on-paper losses if it no longer affect EOFY tax returns. Would hit those with new builds and mammoth 1st year depreciations hardest.

 

I don't think they will they will prevent depreciation allowances...as this is very attractive to keep the supply of new houses ongoing. If they remove this....I say katching.....my rents will rocket as supply of houses dries up

As it is an artificial deduction they will keep it..but all other expense deductions may be affected.

 

If this Genius RMIT Professor is right, investors not buying houses will bring rents down, as investors building houses is forcing rents to rise ! Negative gearing forcing up house prices, not land shortage: expert

 

Gov just has to allow rezoning and allow more rezoning/division especially for ex-farm or ex-industrial land. and let developers in who are happy to make a smaller margin. Yes we might end up with miles of cookie cutter estates or apartment blocks but at least it will be much cheaper housing and supply will be abundant. FHBs looking for new estate and owning will flock to these much cheaper estates. Put in a rule of no resale in 5 years to prevent speculation.

Unfortunately if the PM can't even stay in office and get enough votes from his own party, any long term plans for solving supply issues in Syd/Melb will have no chance of happening.

 

Negative gearing (funded by tax payer) limited to new properties, create construction jobs, increases the housing supply thus putting a lid on rentals rises.

Just wondering what is the benefit of Negative Gearing on an EXISTING property for an economy?

 

Peanut Shorten doesnt know what his policies are one day to the next. He runs around the country in a flouro vest with one hairbrained idea after the next. He thinks all property is owned by millionaires and wants to win votes to run his commie country where all unionists can buy a house for $250,000....I dont quite know who will buy / build the houses and where they would be and how state taxes on land tax and GST etc will all be addressed when he kills the property markets and the economy tanks. Maybe Commie Bill will throw billions at the states to build government housing to hand out..An ALP recession stimulus scheme.

 

What a dill. Professor of what I wonder? Hopefully not Economics.

 

how do you figure that @sash?

 

Wouldn't depreciation be caught in the killzone if negative gearing on existing properties is abolished? Curious to get your view on how depreciation can wiggle to safety should policies change.

 

Could be as simple as removing the ability to claim deductions for interest paid, leaving other deductions in place.

 

not likely as building industry is key to growth.

 

Given the high esteem I have for economists, I'd say "highly plausible".

 

Like most people in Australia, I doubt most pollies actually understand what negative gearing is... I honestly don't care if it stays or goes, as long as I can still claim deductions against income and be "neutral".

 

I buy in Trust so wont matter either way and most of my properties are generating income.

I actually don't think it will happen.

 

I think negative gearing will be adjusted within the next few years.

Like it or not, I don't think Turnbull is going to get re-elected. Bill Shorten has already made the removal of negative gearing an election promise, I can't imagine they'll back down from it.

Combine that with already tight rental markets, housing unafordability, lending restrictions, I believe there'll be rent increases on the cards. A lot of people are going to be reluctant to invest. This will create some purchasing opportunities, but it will also limit rental supply.

I'm not saying there'll be a spike in rents, more like a steady increase well above the almost flat past few years.