$6000 tax incentive ...
- Thread starter WillG
- Start date
Did they do their maths?
Assuming that rent didn't even rise over the ten years, the rent would have to be $57pw or below in order for a developer not to be out of pocket. ($57 less 20% by 52 weeks by 10 years is just under $6000). I don't know of many places which would rent for that little.
I wouldn't be surprised if they came up with a firm proposal before the elections...
Cheers
Another fine example of how politicians piss away my tax dollars just to buy votes from the lazy sods who already steal plenty of our tax dollars in social benefits. We've had nearly 20 comments in this short thread and none of it seems to me to be supportive of KR's idea. Why doesn't KR's policy advisers make an attempt to speak to investors like ourselves or event post the question here before making outlandish policy decisions like this? Furthermore its subsidised with our tax dollars!
BTW, I don't know many insto funds who buy resi IPs. Only one group I know is doing it - Residential Property Trust of Australia I believe but they're mandate is to focus on high growth resi IPs in metro areas but with moderate gearing only as the negative cash flow is simply too much to sustain. Who'd want to buy new IPs in the back of nowhere which are already negatively geared, let alone a further 20% reduction in market rent.
To the politicians: LEAVE US THE HELL ALONE AND STOP WASTING OUR TAX DOLLARS TO BUY VOTES!!
BTW, I don't know many insto funds who buy resi IPs. Only one group I know is doing it - Residential Property Trust of Australia I believe but they're mandate is to focus on high growth resi IPs in metro areas but with moderate gearing only as the negative cash flow is simply too much to sustain. Who'd want to buy new IPs in the back of nowhere which are already negatively geared, let alone a further 20% reduction in market rent.
To the politicians: LEAVE US THE HELL ALONE AND STOP WASTING OUR TAX DOLLARS TO BUY VOTES!!
Absolutely Right!
This is a pure political grab for the masses upset with the Howard Gov.
Unfortunately it will not fix the problem.
It will however be politically savvy. Note how it came after the recent Housing Summit? “We listened, we acted” will be the catch cry.
Labor has finally worked out how to win Government
Libs look dead in the water.
Debating the merits is waste of time as it will very likely become like the FHOG and simply be absorbed in to the process. No doubt economists at all the big builders are working on “lower rent market packages” as we speak. It will have so many loopholes you could drive a truck through them.
But again…
It will help them win Gov and that is the game.
Regards, Peter 14.7
I guess that comes down to a philosphical view about where (if at all) you have a safety net in society. I dont think anyone denies that there are people who rort the system, but having an inadequate safety net (im talking about in general, not just housing) leads to problems in its own right.
Hmmm. I quite like it. I just dont think it has a great relevence to non institutional investors, or the majority of the people in the current rental market. I think it is trying to bring institutions and marginalised people together into a win-win scenario.
You can buy a new unit/appartment for $250k easily in many parts of melbourne. 4% rental yeild = $10,000 a year rent. If they rent at 20% below market ($8k) and have a $6k subsidy, income is $14k. With wholesale build costs, management costs, and mortgage rates that looks like +ve cash flow with little or nothing down. As long as they can enforce payment (eg rent and damages come directly from family benefits), I dont see that as rediculous.
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It's $6000 a year not $6000 all up.
To break even with market rent $6000 cannot equal greater than 20%
6000 divided by 20 times 100 = $30,000 annual rent = $576 per week rent
Surely the vast majority of rentals are under $576 per week?
Greedy tenants??? Rents have kept track with wages so how have they had it too good? Aren't most investors also getting a discount at taxpayers expense through negative gearing?
See that's the problem, they're not really increasing at double digits. Wages aren't so rents never will. This rents rising at 20% rubbish has already been debunked. See:
http://www.abc.net.au/mediawatch/transcripts/s1857681.htm
Poor yields does not equal rental increases. Most current IP owners had poor yields going in, why would/should this suddenly change now? Just becuase the poorly formed business model relies on continuing capital gains wont make it so either? What will make it so is an increase in wages and peoples capacity to pay higher rents.
Wrong! Wrong! Wrong! Rents rely on supply & demand. When there is a high demand for a property it will go up in price regardless of what wages are doing.
Maybe you should stop believing all you hear in the media.
