Why negatively geared landlords are going to struggle the most with reducing rents for tenants

Discussion in 'Property Market Economics' started by Peter2013, 22nd Apr, 2020.

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  1. Melbourne_guy

    Melbourne_guy Well-Known Member

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    As many landlords identify with bad tenants, many others can identify with bad landlords. Perhaps the experience of landlords not doing what they are supposed to do in terms of repairs and ensuring safety has formed that opinion because it definitely creates a lasting impression. The majority of landlords and tenants will be doing the right thing but its the bottom end minority of landlords and tenants who don't 'do the right thing' that needs to be called out, if necessary, through stronger legislation.
     
  2. Traveller99

    Traveller99 Well-Known Member

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    Unfortunately resentment is a by-product of what it means to be human, along with love and other emotions. Resentment is also intertwined with victimhood - the feeling that everyone is out to get you and you uniquely are suffering the burden of existence.

    We also seem to be living in a moment in history where victimhood has been elevated as morally virtuous trait whereby it is better to claim you are in perpetual suffering at the hands of others, than to be stoic and analyse personal failures as a possible reason for your own shortcomings.

    Yet in saying this, the term ‘landlord’ has a long, sordid history and has been the subject of many uprisings and revolutions. Unfortunately, the resentment around a tenant, who stereotypically is seen as poor, living in a ‘rich’ landlord’s home, continues to play out as the cultural narrative.
     
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  3. MB18

    MB18 Well-Known Member

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    This is exaclty what I meant by property being the only measure of ones success in this part of the world.

    Stereotypically the tennants feel poor as they struggle to save a deposit for their own place as that is what they are expected to do, meanwhile the landlords negatively geared 'investment' is a dud without any reasonable capital gains.

    The result is that both parties are wrong, and tension ensues.

    I am in a rare position whereby renting is a lifestyle choice rather than a financial one so I'm up against the cultural narrative of the majority of Australians.
     
    Last edited: 26th Apr, 2020
  4. wylie

    wylie Moderator Staff Member

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    That's just not right at all. You're mixing with the wrong crowd.
     
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  5. MB18

    MB18 Well-Known Member

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    Tell me about it, if I hear one more otherwise intelligent person tell me I 'need' to reduce my taxable income by 'investing' in negatively geared property I'll scream :confused:
     
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  6. skater

    skater Well-Known Member

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    I think you will find that the majority of landlords are good, and keep their properties well maintained. Where there can be some agitation is when a tenant wants the landlord to upgrade the property, but not charge them extra rent. For instance, if I have a property that does not have airconditioning, tenant rents it, then straight away wants you to upgrade the property and put in airconditioning, with no extra rent being paid for it. Rents are often priced fairly, at the start of a tenancy, where an older, unrenovated property will rent for less than a more modern property in a similar area. Many times a tenant chooses the cheaper property & then tries to 'condition' their landlord to 'fix' things to the tenant's liking.

    Again, as above, there is a difference to repairs and upgrades.
     
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  7. hieund85

    hieund85 Well-Known Member

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    You are talking to the wrong ones. They are not investors. They are spruikers who often try to convince novices to invest in marked-up OTP apartments/townhouses to reduce taxable income. I have met quite a few like that and the only word I told them is LOL.
     
  8. MB18

    MB18 Well-Known Member

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    Agree on the difference between repairs and upgrades but it's not always clear cut.

    I prioritize location over quality of house, so I am familiar with the perils of older stock. I've had a couple of rentals suffer mould problems (old south facing etc). Would it be unreasonable to ask for a bathroom extraction fan or rangehood for the kitchen?
    Keeping the windows open to help sounds great, unless you are the one living there throughout winter.
     
  9. MB18

    MB18 Well-Known Member

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    It's actually the novices that are trying to convince me. I think they are unwittingly spruikers themselves, and usually thier parents are even worse which is where they probably get it from.

    Speculators and investors are two different things but the novices cannot comprehend that.
     
  10. wylie

    wylie Moderator Staff Member

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    Absolutely not unreasonable to ask for a bathroom extraction fan or range hood. They keep the house in better condition, and if you are inspecting a house to rent, the lack of these things would indicate that perhaps the landlord is too cheap to add these, doesn't care about his property or his tenants. Pass.

    We have always bought old houses that didn't have such things, always added them.
     
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  11. Melbourne_guy

    Melbourne_guy Well-Known Member

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    I know very well the difference between repairs and upgrades and don't accept your premise for excusing penny pinching landlords. How many landlords (even the supposedly 'good ones') provide an annual gas and electrical safety checks for their property - even periodically every 2 years?
     
  12. Peter2013

    Peter2013 Well-Known Member

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    I concur. It does appear to be a thing in Australia.

    Australia also has the 2nd highest level of household debt in the world, so we have a higher portion of people highly leveraged into the housing bubble, outside of Switzerland. Leverage is normally a sign a greed.

    When the housing bubble blew up in Ireland, the government review (similar to a Royal Commission) found their two new papers owned real estate sites and would regularly pump the bubble and print "Property Porn". In Ireland, you were effectively a loser if you weren't highly leveraged into the property asset bubble. The media effectively created the view point that you MUST be in property. The same is happening here.
     
    Last edited: 26th Apr, 2020
  13. TMNT

    TMNT Well-Known Member

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    Everyone's definition of repairs and upgrades are different, sure running water is a repair but a colour matched mail box is not,

    part of being a renter should be to understand that your definition may not match, and you are only under the obligation of a lease and are free to leave, and if you are a good tenant the landlord will more likely to agree
     
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  14. The Y-man

    The Y-man Moderator Staff Member

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    Actually the difference between repairs and upgrades are determined by the ATO. Therefore, some LL's might baulk at putting say a new fan in a bathroom in because it may be an upgrade which needs to be capitalised, as opposed to a repair of an existing fixture which can be claimed in that tax year.

    The Y-man
     
  15. The Y-man

    The Y-man Moderator Staff Member

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    I'm actually intending to do this for my own sake than the tenants - as callouts for repairs to HVAC are getting very expy! I've had one unit where I feel by now I could have bought a new one (we even had to remind the PM we had just got it repaired by their nominated repairer and the repair should surely carry a warranty....:oops:)

    The Y-man
     
  16. wylie

    wylie Moderator Staff Member

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    I think it must be the way you are asking the question and the people you are mixing with. I truthfully don't ever see this. Most people we know don't hold property, or if they do, it is not discussed.

    Hubby's mother and sisters don't know what we are up to with rental properties. It is not discussed. Nobody I know in our street or within our circle of friends holds properties, talks about them or even their own brand of investing (if they do invest).

    Surveys are worded in such a manner to get the answer looked for. I think this is what you possibly are doing as well. Confirmation bias.
     
    Last edited: 26th Apr, 2020
  17. Melbourne_guy

    Melbourne_guy Well-Known Member

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    That first repair will carry the warranty but the new repair will be a different failing component :rolleyes:
    You could argue it but I wouldn't be betting on you winning. Tucked away in size 6 font on page 8, paragraph 39.c.i.ii.i clause a) of your contract says you're not:D
     
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  18. MB18

    MB18 Well-Known Member

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    I dont ask the question, and I truthfully cant avoid it. The hype of residential property ownership in middleclass Australia is alive and well (was until several weeks ago anyway).

    If you have discovered a utopia outside the enthusiasm for conversation about negative gearing benefits and gauranteed capital gains then consider yourself lucky.
     
    Last edited: 26th Apr, 2020
  19. The Y-man

    The Y-man Moderator Staff Member

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    Gotta say I do avoid discussing it because I might raise resentment or envy or whatever....

    The Y-man
     
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  20. MB18

    MB18 Well-Known Member

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    Ah that explains the determination one LL had to have a old dishwasher sent away a couple of times for investigation and repair rather than just picking up a new one in an EOFY sale.