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The Forum > Article Comments > Green landlords: do they exist? > Comments

Green landlords: do they exist? : Comments

By Michelle Gabriel and Phillipa Watson, published 25/11/2009

Landlords should direct some of their profits back into improving the sustainability of housing for private rental tenants.

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Residential property investors collectively receive billions of dollars in subsidies.

It is entirely fair, as is the case with others receiving government handouts (including members of society's poorest), to impose obligations on them in return for the generous assistance they are provided, and it is GENEROUS or otherwise they wouldn't be in the game.

On water efficiency, the investor should be denied the right to recover water usage charges from a tenant unless water fittings are of the highest efficiency available (eg 4.5/3L toilet cistern, hot water recirculation device, insulated hot water pipes throughout, high efficiency tap and shower fittings and a rainwater tank with a capacity minimum of 1000 Litres per bedroom for all semi-detached and freestanding rental properties.

As a condition of receiving such generous federal tax subsidies, the investor should be forbidden from replacing hot water when its needed to be replaced with anything that does not include solar panels, ie they MUST go solar to get the tax breaks when replacing hot water. It must also be a precondition to receive such subsidies that any existing property be retrofitted with ceiling insulation throughout, and that any new property taken up must also have wall and ceiling insulation.

Its obvious that the market or the industry won't pick up its act, so regulation is necessary to drive change. Its often only through regulation that change which has been difficult to achieve can be achieved.

The country's renters have among them many of its poorest and most vulnerable citizens, paying more for essential uses of hot water and power than many of the well-off. This must change.
Posted by Inner-Sydney based transsexual, indigent outcast progeny of merchant family, Wednesday, 25 November 2009 9:20:50 AM
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Subsidies bollocks,

The government is doing its best to suck off the profits with land tax, capital gains tax, and if there is anything left, income tax.

Guaranteed, the gov would not see the green improvements as tax deductable. If this was the case, then maybe the landlords might use some of what is left do upgrade their retirement investments.
Posted by Shadow Minister, Wednesday, 25 November 2009 10:03:31 AM
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Profitable landlords: Do they exist?
Posted by TheMissus, Wednesday, 25 November 2009 11:36:17 AM
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If property investing wasn't a highly profitable wealth creation strategy, then so many people wouldn't be doing it, so many people are doing it, so ergo it is highly profitable. Its money made from government and off the backs of many of society's poorer and more vulnerable citizens, not hard-earned dough, and I think it could also be called non-personal exertion income. Lets just refer to the bulk of them as Slumlords, driving artificially high prices for essentially substandard housing, often uninsulated and highly environmentally unsustainable and energy inefficient.

The billions of dollars in subsidies are all the tax breaks and deductions, and also in recent years the granting under some conditions of capital gains tax concessions and capitulation of state governments (their dropping or cutting land tax) to the investor lobby.

Many experts now agree that negative gearing has driven up demand for, and the price of, housing and land to artifically high levels. Go figure.
Posted by Inner-Sydney based transsexual, indigent outcast progeny of merchant family, Wednesday, 25 November 2009 11:44:56 AM
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Indignant outcast,

For someone who has probably spent most of his life mooching off the system to cast stones at the majority of investors, who have invested their life savings in a property or two as an inflation proof retirement income, is a little rich.

The rental return is about 40% of the interest they pay, so the renters are being subsidised by the expected capital gain.

These are often the people that fund the construction of new homes and without their hard earned investment, indigents such yourself would have to either rely on state housing or, god forbid, work and pay off a mortage.
Posted by Shadow Minister, Wednesday, 25 November 2009 12:29:32 PM
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I sometimes get the impression that there is a whole "other population" in Australia, where people wander around in healthy natural-fibre underwear, gathering woolly thoughts, dreaming up right-on fantasies, and turning them into articles like this, that they can keep looking up on the Internet and experience the warm, soggy feeling of holier-than-thouness.

I'm just glad I don't actually get introduced to these folk. Suppressing hysterical laughter can be unhealthy, and I'd hate to vomit all over their sandals.

"The property market has delivered considerable financial rewards to Australian landlords and lined the pockets of real estate agents across the country"

Well, there goes lunch.

"The property market" does not, in any way shape or form "deliver" anything to anybody, let alone "considerable financial rewards".

Sure, there are investors, who - just like everybody else in the real world - have to endure the good with the bad, the rough with the smooth, the paying tenants as well as the absconders, the model tenants as well as the ones who trash the place beyond recognition.

It is nothing more sinister than a financial equation that might offer an adequate reward to the investor. "Considerable financial rewards" simply don't come into it.

The authors make a very persuasive case, in the course of a number of paragraphs, as to why there exists no incentive for landlords to "go green". Having made their point so eloquently, their sole suggestion is that the landlords' "windfall" should be used to this end.

And presumably, since they are tarred with the same brush, "real estate agents across the country" should be asked to contribute too, although - despite having introduced them - the article is strangely silent on the means by which this could occur.

The only possible position from which such a solution can be aired without danger of the authors being drowned in a sea of raucous mirth, is a solidly tenured position in the halls of academe.

I rarely begrudge the part of my taxes that pays for the education of young Australia. But today I'm prepared to make an exception.
Posted by Pericles, Wednesday, 25 November 2009 1:02:31 PM
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I only got through half of this rant before giving up, quite convinced that the authors had not bothered to do the most rudimentary research lest it challenge their left-wing idealism.

Rental housing is generally owned by low to middle income mums and dads investors who are trying to improve their financial position, always for such mundane things (well it would be mundane to a leftie) as their children's education or superannuation for themselves. They make considerable lifestyle sacrifices in doing so.

I will not attempt to educate the authors about the high risk and pitiful returns, however I will say that it is the only investment outside of farms where the business has to be sold to make a profit. What most don't realise is that the 'profit' is simply due to the value tracking inflation and capital gains tax is applicable (after sale, one couldn't afford buy a similar property).

So much for the windfall gains assumed by the authors. Most mum and dad investors teeter permanently on the brink of insolvency, sacrificing their weekends on minor maintenance and lay awake at night worrying about tenant damage.

It is a simple incontrovertible fact that for years all levels of government have been withdrawing from providing welfare housing. Given the well-documented management problems and high overheads of government housing it is understandable that government wanted out.

What is unreasonable however is that upon shedding its responsibilities government has had the gall to cast private providers as the whipping boys for the policy limitations and mistakes. Government also seeks to reduce the already poor return on the investment property to achieve the efficiencies in welfare housing that it could not attain itself.
Posted by Cornflower, Wednesday, 25 November 2009 2:54:25 PM
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Poster number 1, "Residential property investors collectively receive billions of dollars in subsidies" really?

I have never qualified for any subsidies at all, I pay extortionate State Stamp Duty (Tax) when I buy a property, I pay income tax on anything left over after rates and repairs - so figure a minimum of 5% of the property's value per year reinvested just to keep it at the standard it was when I bought it, the bank regularly gouges me for various charges as well.

Now you want me to invest that pittance left over, that's if there is any and I'm actually positively geared, most people are negative geared, not for tax reasons but because they don't have the money to get the property positive.

Do you think it would be OK if I increase the rent every time the interest rate goes up? I don't drop the rent now when interest rates go down, because I'm already losing as I could not raise rents as they went up.

Could I raise the rent AND improve the property, oh, market forces are against me, people don't care how green your property is when rental hunting, funny that.

I have no idea what subsidies you think go on out there. The only one is the first home buyer grant and I am over 30 years past that, from a time when WE DIDN'T GET ONE!

This is some sort of fantasy article and you're socialists, right?

Pericles and Clownfish obviously are out in the real world not in your fabulous academic retreat.

People don't invest in property to become charitable institutions, they do it as the only other way to invest that is less risky than the stock market?

It's not done so we can all become property tycoons and magnates, it's hard work and a lot of worry and stress. We do it for our own future and our children, not for abstract ideas of socialism.

It's so easy to criticize, though isn't it, I' guessing this is for a paper trail for your qualifications though isn't it?
Posted by Amicus, Wednesday, 25 November 2009 3:34:59 PM
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In Queensland the combination of rental regulations and water commission directives make the owner liable for the water use of the tenant and for implementing water saving strategies including water saver shower heads and the like. [Tenants immediately replace them with Niagara deluge shower heads and owners are still responsible.]`

If government was really concerned about water use and equity, it would make the user of the water responsible. Electricity, gas and telephones have always been the responsibility of the user, yet though water is usually separately metered, government refuses to make the user responsible.

There should be no additional requirements upon owners of rental housing that do not similarly apply to all housing. However it has not been unusual for government to legislate requirements for the rental property and not to owner occupied dwellings. For example, rental property owners are liable for heavy fines if they do not install earth leakage devices for power and smoke detectors for fire. Yet owner-occupiers have no such requirements, except for new houses.

What the authors and government rental tenancy agencies do not accept, is that eventually all of the extra requirements foisted upon rental housing must eventually be passed on in the form of higher rents. For instance, in the adversarial and litigious environment that has been created by government rental tenancy agencies (to grow their bureaucracies) agents feel obliged to use a licensed contractor at a cost of $80+ to insert a 9V battery in a common smoke detector. Great idea (for a bureaucrat), but guess how that affects rents?

I am astounded by the authors' inference that investment property owners are uninterested in maintaining their assets. Returns are directly related to the condition of the property and if that isn't enough incentive, there is always the risk that an insurer will not cover faults through lack of maintenance.
Posted by Cornflower, Wednesday, 25 November 2009 4:14:54 PM
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Michelle and Phillipa, True: “incentives to adapt a property are weaker for landlords compared with home owners.”
One solution may be to give landlords an incentive which is repaid upon sale of the property (value of incentive is either indexed to inflation or sits as a percentage value of the property).

Amicus: the first poster mentioned ‘subsidises’, but I think the term s/he meant was ‘deductions’.

Items that can be claimed as deductions by property investors:
Advertising for tenants, Bank charges, Body corporate fees and charges, Cleaning, Council rates, Electricity and gas, Gardening and lawn mowing, In-house audio/video service charges, Insurance – building, contents, public liability, Interest on loans, Land tax, Lease document expenses – preparation, registration, stamp duty, Legal expenses, Mortgage discharge expenses, Pest control, Property agents fees and commission, Quantity surveyor’s fees, Repairs and maintenance, Secretarial and bookkeeping fees, Security patrol fees, Servicing costs, Stationary and postage, Telephone calls and rental, Tax-related expenses, Travel and car expenses – rent collection, inspection of property, Water charges.

In comparison, Items that can be claimed as a home buyer: zilch !

Shadow Minister: “These are often the people that fund the construction of new homes”. Not sure that using the term “often the people” in describing the 1 in 11 investors who actually build new homes is appropriate use of the word ‘often’.

Perhaps more correct to use the phrase ‘often the people’ in respect of the other 10 in 11 investors who use their massive tax advantage to outbid genuine home buyers at sales and auctions.

Govt actively sanctions this waste of tax revenue thus creating next to no construction jobs (1 in 11 loans for new build) and the consequent negative effect of a tighter rental market. This is completely counter-productive and is symbolic of self-centeredness – ie. I want a bigger property portfolio of 2nd hand properties, let someone else subsidize it.

Govt needs to grow a brain on the issue of where it is directing capital flows and investment.
Posted by leela, Wednesday, 25 November 2009 6:44:05 PM
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