Today’s big announcement is getting missed

I have no issue with the NG changes, imo they are an artificial lever on prices. Once its removed we can return to a more realistic market of price matching the underlying intrinsic value. I can see it having a big impact in over inflated markets, where investors are recieving 2-3% yields. but where i am sitting in Adelaide 4-7% yields, not so much. Personally i think it may also open up some interesting opportunities.

 

Professional as opposed to largely a cottage industry I guess which seems to make sense.

 

Works fine in Europe, so well in fact that people pay a premium to live there

 

100%. May also open up long term resi leasing as seen in Europe and make renting a much more palatable option for families.

 

Just a thought.

I offer all my tenants long leases 3 years+

To date I have 0 uptake.

Even with fixed rent rise's like $5 per year. No interest.

I feel it's just not cultural here to be a life long renterr a stigma preventing people sigbisi long leases.

 

Probably will take a while to shift perceptions - personally I would consider if I didnt own. Small sample size granted.

 

Or is it because people worry that they will be stuck if something unexpected happens - like ill health, job loss etc.

They would then be responsible for the remaining (long) term if it was hard to rent out...

 

The major complaint in the leftest groups is the lack of security in rental accommodation.

 

Not quite sure how your comment relates to my post?

 

Agree, to those of us that will be grandfathered, and are approaching exit strategies, this may seem advantageous, but for future generations I too see it as a detrimental step ahead...well time will tell...let's live and see?
I never liked centralized large conglomerates or not, institutions or organisations or businesses, holding most of real estates most of any business, at least before there was some competition, which would favour the tenants, the customers. Similar how large companies endeavour small businesses' competition, what happens to consumers then?
Sometimes interventions by external parties has detrimental effect rather than what was truly intended...interesting times ahead indeed!

 

Depends how you structure it, not necessarily true.
I actually hold apartments in a block and don't pay any land tax on any of them, whereas my house and land purchases heapssssss!
Plus sooner or later I think land tax will be enforced on all properties, especially if NG is abolished....

 

And the quality of childcare in Australia is improving while it is getting cheaper. Ouch, just my dream.

 

Boy did this thread end up in a different place to when it started.

To wrap up my view on the original announcement.
- labor have lowered taxes for institutional investors, but the libs would have caved eventually anyway. May do so in this weeks budget.
- will see more medium and high density build-to-tent housing constructed around major train line.
-the product will actually likely be ok in most cases, and shifts renting from a cottage industry to a more professional sector.
- leasing out residential property was likely to become more regulated anyway, making it hard for small mum and dad investors to keep up, as we are already seeing with childcare.
- we may end up with more of a US style market where most detached housing is owner occupied, particularly if transaction costs are reduced.

 

Love your Freudian slip typo. build-to-tent housing

 

Hehe good call

 

Yes more regulations will make it hard for part time investors.

There seems to be a common theme that renters will be happy renting apartments.
I would assume a lot of renters biggest "asset" is there car. Most apartments seem to have open car ports.
In the past there were many high density housing areas for low income workers, state housing estates. Most of the were not nice areas to live. What has changed that will allow strangers to live together in high density apartments?

Apartments on train lines, one area South of Perth I drive past. It would be great you can sit on your balcony and watch trains go past all day and most of the night and twice a day get to enjoy views of peak hour traffic on the freeway. None of these are cheap so I assume rent would be high if professionally owned and managed.
Apartments & units for Sale in Cockburn Central, WA 6164 - realestate.com.au

 

Becomes a nice little political football to kick around no!? Can see government controls being implemented over who gets to live in these made to rent apartments through quotas and other measures, things that can’t be achieved if a large number of investors are the typical mum and dad types

 

So the idea is to lower taxes to allow institutional investors to pay developers large chunks of money to keep developing shoebox apartments in the CBDs and and inner city suburbs??

Whatever to that..I see pros and cons both way.
Where’s however the incentives to keep developing regionals and linking them to the CBD via fast rail??
I acknowledge the government is Never going to do this so how about handing out some tax breaks for any private companies that want to take this on.

Sorry went off topic. I’m just so tired of this shortsighted thinking where we encourage this HongKong shoebox lifestyle instead of tapping into this vast land of ours.

 

Very much agree @abc, and to expand, Government incentivising things that are objectively productive for boosting the economy long term makes sense.

Government incentivising things that are substantially less productive for boosting the economy means short term profits takes precedence over profit sustainability long term.

Subsidizing existing housing purchases with negative gearing and capital gains tax concessions doesn't make sense for profit sustainability long term. Though understandably, people might not want sudden or drastic changes to existing policies.

Government isn't very keen on transitioning things to a long term profit sustainable economy anyway, something as archaic as the current stamp duty situation not being addressed is a great example.

Specifically property related, the following things (I would presume, I am not a doctor of economics) would possibly encourage long term profit sustainability for everyone over short term benefits for the ones already in the game:

• Negative gearing and capital gains tax concessions for new purchases only; encourages new property development and helps to incentivise the supply side of the equation
• Changing stamp duty from a 1 time massive cost to a 1 time small cost with an increase in land taxes in metro areas; encourages development of existing lands and encourages higher volume of transactions
• Reduce land taxes on properties that are part of a strata, e.g. units, townhomes, etc
• Tax concessions and benefits for people buying medium density housing in areas such as the west; medium density housing is a big part of why inner areas have a lot of appeal and a unique culture, etc.

 

I would at least cut stamp duty to 2% for ppor for prices at or below the median, or say under a million. And then scale it above that.

People are literally being robbed for the priviledge to house their family. It is a priviledge , or a right ? Or a necessity, an essential, a basic right ?

Negative gearing and other tax benefits are putting this basic right out of reach for many to house their family, only to benfit those most likely already benefitting in other ways.

Nothing wrong with investing or investing for your future, but it should not be done to the detriment of those looking to house their family, or to the extent that effectively people are paying little in tax and only to their benefit, while others already less fortunate are actually paying tax into the economy.

Now I am sure we will have some complain about this, but that is ok and understandable as they may not be aware of the below, or what it has finally become.

Can anybody guess the reasons why negative gearing was introduced in the first place ? And who it was designed for ? And perhaps what it has eventually become ?

On one hand I like the idea that less tax is going to the government, so less wasted money. And most likely put to better use by private hands. But in this instance, it is helping to price the less fortunate ,or less priviledged, financially or otherwise, out of a basic right.

In nearly all of history, until recent years or say a decade or so ago, even a taxi driver could afford to buy a house in Sydneys eastern suburbs. Try that today.