We have created a tool below that compares the national average income to house price decade by decade in Australia. You can customise the tool to see how you compare with the national averages of then and now. Choose between single and dual income and change the household income &…READ MORE
The point of any tax incentive program is to stimulate growth in the economy, which in turn provides more jobs and growth in the private and public sectors.
Negative Gearing in it's current form has some fatal flaws resulting in minimal stimulus. As a result of these flaws, some elements of Negative Gearing result in minimal to no new jobs or growth in the private and public sectors.
These flaws also introduce an unnatural or artificial demand for housing even when there are no people available to occupy the dwelling. This means when a potential homeowner occupier is looking to buy a home, they find a short supply of available houses and thus, increased prices, even if there are many houses that are presently unoccupied.
This artificial price inflation effect also negatively impacts renters because investors must spend more and more money to buy new or existing investment properties. Further, this separates renters from the dream of ever owning their own home as the problem relentlessly grows larger and larger.
Negative Gearing also introduces new landlords who are investing for the sole purpose of making a loss to offset personal income taxes.
This has an undesired effect of creating a supply of available rental accommodation with a landlord who is in no financial position to maintain their investment, further exacerbating rental issues (see National Tenancy Body).
Tenant Rights recognises the following additional flaws of the current Negative Gearing policy:
- In Australia during the year 2007, 9 out of 10 negatively geared investment properties were existing dwellings
- Existing property investments provide little to no stimulus, increase property prices by creating artificial short supply and increases congestion in popular locations
- Homeowner occupiers are not able to offset personal taxes with the costs of repairs and renovations, providing an exclusive advantage to the wealthier classes
- Negative Gearing costs the government a lot of money and thus funding from other programs must be reduced or scrapped
Tenant Rights will address Negative Gearing policy with the following changes, which will result in intended stimulus, real estate prices will be more consistent with natural demand and there will be fairer access for all:
- Investors would be limited to negatively gearing newly constructed dwellings only
- This change would not be back-dated so as to ensure existing investors are not unfairly exposed but stops the behavior going forward
- Negative Gearing would be available to both existing and new dwellings for homeowner occupiers with the costs of repairs and renovations being deductible expenses under the program only
- For the purposes of Negative Gearing, an investor would be classed as any person or entity that holds the rights or title to real estate whereby they are not presently homeowner occupying the dwelling
Posts in "Housing Affordability"
Following some terribly misguided comments published recently by Malcolm Gunning (former President of the Real Estate Institute of NSW and Principal of Gunning Real Estate), I called for an interview and had hoped this might set a few things straight and even give his comments a chance at redemption. Well,…READ MORE
How can we encourage kids who have grown up in social housing to break free of these chains? I'll admit, I don't know the answer to this question. Can we work together to find a solution? I want to share with you a story about Cheryl from Rowville, Victoria. Cheryl…READ MORE
It appears as though Australian tenants have woken up from the great Australian dream, that is owning their own home, to the nightmare that is the frightening reality of renting for life. An analysis of data published by the Australian Bureau of Statistics reveals that renting in Australia has been…READ MORE