Quarantining rental losses would certainly raise barriers to entry for small-time investors and to some extent favour institutional investors. Also, since effective tax on rental property would be somewhat higher, it is bound at some point result in somewhat higher rents.
Some are touting this (specifically the move towards institutional investors) as a good thing because it would tend to improve security of tenure for those renting. Not sure I totally agree, but they have a point.
Hi Morbius, sorry for the delayed response. This comment is puzzling me that more institutional investment in rental property would improve security of tenure. It is not borne out in my experience.
I have rental properties for over 25 years now in Melbourne, Brisbane and
ACT. Only one tenant had the lease terminated due to unrealistic demand made on the landlord to address every thing that is maybe not just right. Another lease was terminated over inability to pay the rent. Yet many others have stayed in the rental property for many years with average duration of aboutr 4 years.
I do not think it is to the advantage of a landlord to terminate a lease without good reasons. An unhappy tenant over an unexpected termination of lease can cause mischief, damage and theft. There is also changeover cost to the landlord, eg advertisement.
If the institution is the landlord how would it behave differently? Perhaps, it may handle interactions with tenants more coldly, with more professionalism and terminate a lease quicker if the tenant is shown to be a trouble maker?