Everyone seems to forget that without investors, no rental housing.

Thanks Belly, I do find it hard to think of someone on $50,000 as a low income earner, I guess I'm a bit out of date.

I don't know what everyone is getting their knickers in a knot over, investing in rental housing is a mugs game, you should be sorry for those who do it. You are entirely dependent on price appreciation to make a profit from it, & it has to be decent appreciation to make it actually better than money on bank deposit, & you have a fair chance of having the house trashed. Today either of them often don't keep up with inflation.

We have a satellite city development to total 50,000+ residents about 12 kilometers from us. Granted it is pretty horrible, with all those houses jammed onto the modern small blocks, but it does have more open space & parks than old suburbs.

You can buy a house & land package for less than $300,000, about the same percentage of wages as my first home was. It was on a decent size block, but then it was a second hand ex housing commission house, in a less than great suburb, & no where near as grand as the bottom end today.

I have a neighbor renting a couple of doors down. Despite earning over $100,000 & his wife earning $50,000, he tells me they will never be able to buy a home. I have not suggested that with no kids & their income, they probably would be able to buy, if they sold her 3 horses, horses float, & land cruiser wagon to tow it, his 20Ft boat & the big Ford F150 to tow it, his 2 jet skis, & 3 motorbikes, & other assorted toys.

I do find it hard to be as sorry for many people as they are for themselves.

Everyone seems to forget that without investors, no rental housing.
Hasbeen,
under the present system yes, if we look at housing as a business then it would be totally different. Investors aren't business people, they're scammers with the sanction of legislated loopholes. There are many who own flats & houses to provide a service & there are those who buy/sell houses with not an ounce of thought for providing a service. It's an entrenched mentality & only necessity will eventually change that. The changes which will hit the investment market in the not so distant future are presently unthinkable. I see changes in our small area already where want/need rather than provide value for taxpayers funding are the norm. As the return for outlay becomes more & more unacceptable, rents & housing are already veering towards a 180.

Much rental housing is owned by aspirational mums and dads who could not be considered to be investors, more hopefuls. Few of them recognise the high risks and poor returns. Otherwise they might choose another form of investment that also allows them to sleep at night.

Governments cheat by having them (mums and dads landlords) provide the lion's share of welfare and low income housing, which is even higher risk. As well, government regulators ensure that the rental regulations favour and 'empower' 'vulnerable' welfare tenants. In effect, hand over the keys and ownership at the same time.

Nowhere is this more apparent than in the interpretations of the rental tribunals who regard owners as millionaires and tenants as 'informationally disadvantaged' (!) and vulnerable. 'Wear and tear' is now a licence to live as a grot and be hard on the home and fittings. As Hasbeen has intimated, it is a fool's game for those mums and dads 'investors'.

Incredibly, the many (but not so many as years ago) tenants who pay their rent (eventually is good these days) and don't trash the property are obliged to pay higher rents to support the losses from the many tenants who know how to work the system.

It is only jealousy that calls for the removal of 'negative gearing'. But jealousy of what exactly? Few are prepared to go the hard yards with blocked toilets on the weekend -modern tenants do regard toilets as more convenient for rubbish than the bag that needs to be put in a bin. As for the returns from rental property 'investing', that is a joke, yes?

It is only jealousy that calls for the removal of 'negative gearing'.
onthebeach,
I have no doubt that some see it like that. Decent people see it as a rip-off loophole that's costing those who don't get a share in the profits.
I simply cannot subscribe to someone wanting something & expect others to pick up the tab because that's precisely what ngative gearing is in its full run. Like those "generous" who "give" to charity & less than a second later claim it from tax. Very noble indeed.

Individual on this one you have the wrong end of the stick, or the bull by the horns.

Rather than see negative gearing as a subsidy to investors, you should see it as a sugar coated carrot to the foolish. It sucks the foolish into buying rental properties, & providing housing to the rental market, that otherwise would have to be provided by government.

If government did provide those rentals, we would not just be broke, with the cost of doing business by the public service, we would be totally bankrupt. I have done business with them in 3 states, & have direct experience. You have to see it to appreciate just how much they can waste.

So mate, you have to see negative gearing as a subsidy to the renters. Without it rents would have to exceed the gross income of many renters, & private owners could not do it at all.

I looked at real-estate investment some years back, when the prospects were much better than today. The only investment available to investor with less than tens of millions available for large shopping centers, was industrial sheds.

So many people don't realise that tax deductibility is only of any use if you have tax to pay. That requires you are making a taxable profit to start with. Even with warehouses, maintenance costs can quickly eliminate any profit.

You are spot on Indi, as one of the problems with business is the not knowing what your debt servicing costs are going to be in six to twenty four months.

Businesses borrowing tens of millions have to factor this in, a move that drives costs up as they have to think worst case in most instances.

As for negative gearing, I have to disagree, because if people can't afford a house at say $300 K, chances are they can't at $250K and, I have no doubt that if you chase the investors away, one, you kill the building industry, two, rents will skyrocket and three, where will people who can't afford rents now, live?

One option for housing affordability is to rent the land (government owned) where home owners can build their house.

Then, people can sell their homes and upgrade, but not the land, as the land collects a very nominal rent forever and a day.

You see all governments lack foresight, with the home owners grant being a classic example.

Had that grant been an interest free loan, repayable when either the home was sold, rented, or borrowed against, those billions of dollars would have been spread a lot further and in fact the loan could have perhaps been even larger. But no, it was used once and never to be seen again.

Meanwhile, many who used that grant, have since cashed it in and made good TAX FREE MONEY, whike the tax payer who paid for it receives next to nothing.

There is no easy fix to a lot of things, but the hand outs simply have to stop, even sooner now given our debt position.