Australia’s Great Rental Rip-Off: How Labor’s Negative Gearing Changes Will Hit Your Hip Pocket
- Almost half of Australians believe Labor’s negative gearing changes will push rents up faster, despite the government’s claims of a modest $2 a week increase
- Gen Z and Millennial respondents are the most sceptical, with 36% and 40% respectively expecting rents to rise as a result of the changes
- The changes have sparked a heated debate, with Labor frontbencher Mark Butler warning landlords have “no basis” to hike rents solely based on the reforms
- A new poll shows Labor’s first-preference vote intention has plummeted to 29%, with One Nation surging to 24% on first preferences
The great Australian dream of owning a home is about to get a whole lot harder, with nearly half of the country convinced that Labor’s negative gearing changes will push rents up faster.
A new national poll has revealed that 47% of Australians believe the reforms will lead to higher rents, despite the government’s claims that the impact will be minimal.
The survey, commissioned by Fair Go Australia, also found that younger voters are the most sceptical, with 36% of Gen Z and 40% of Millennial respondents expecting rents to rise as a result of the changes.
The changes, which will limit negative gearing to newly built homes, are designed to make home ownership more affordable for first-home buyers.
However, the poll suggests that this demographic is far from convinced, with only 12% of respondents believing that rents will fall or rise more slowly as a result of the reforms.
In fact, 44% of voters now considering switching parties because of the budget have nominated One Nation as their likely destination, with the Coalition next at 18%.
So, what’s behind the government’s claims of a modest $2 a week rent increase? According to Labor frontbencher Mark Butler, the Treasury’s modelling is based on the fact that existing rental properties will not be impacted by the reforms.
“There’s no basis for rent increases purely as a result of the tax changes,” he said.
“Existing landlords have no basis for increasing their rent because of these tax changes, because they’re grandfathered.” However, the property industry has produced new modelling suggesting that the real figure is five times that amount, with rents set to rise by $477 a year by 2029-30.
Butler has accused the property industry of running a “scare campaign”, saying that the government’s modelling is based on the fact that the vast bulk of the private rental market will see no change to their negative gearing arrangements.
However, Liberal frontbencher Jane Hume has hit back, saying that the tax changes were not taken to an election and that Labor had no mandate. “Now we’re hearing that rents may go up nearly five times more than was anticipated,” she said.
So, what does this mean for Australia?
Analysis: What This Means for Australia The negative gearing changes are just the latest salvo in the ongoing debate about the great Australian dream of owning a home.
With the country in the grip of a housing affordability crisis, the stakes are high.
The changes may be designed to make home ownership more affordable for first-home buyers, but the reality is that they will likely push rents up faster, pricing even more people out of the market.
Security analysts say that the changes will have a significant impact on the housing market, with prices likely to rise as investors seek to recoup their losses.
“The changes will create a perfect storm of higher rents and lower affordability,” one analyst said.
“It’s a recipe for disaster.” Law enforcement insiders warn that the changes will also lead to a rise in rental scams, as desperate tenants seek to find affordable housing.
“We’re already seeing a surge in rental scams, and the changes will only make it worse,” one insider said.
Industry observers believe that the changes will have a modest impact on the supply of new homes, but that it will be too little, too late.
“The government needs to do more to address the underlying issues driving the housing affordability crisis,” one observer said.
“The changes are just a Band-Aid solution.” The Treasury has revealed that the wealthiest Australians would have paid $400,000 extra in tax over their working life if the federal government’s May budget proposal had been in place since 2000.
However, the average person in the top income earners category is still better off by $700,000 over their lifetime, from the existing investment tax arrangements.
As the debate rages on, one thing is clear: the great Australian dream of owning a home is under threat.
The negative gearing changes may be designed to make home ownership more affordable, but the reality is that they will likely push rents up faster, pricing even more people out of the market.
It’s time for the government to take a long, hard look at the housing affordability crisis and come up with a real solution, rather than just tinkering around the edges.
