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The Real Estate Institute of Australia (REIA) has called on the government to abandon its idea to remove or restructure negative gearing provisions for property investments, arguing it could significantly discourage property investment and worsen the already tight rental market.
“Renters struggling to find any rental accommodation, let alone affordable accommodation, cannot afford any moves to push investors out of the property market,” REIA president Noel Dyett said on Friday.
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The institute also argued that restructuring negative gearing provisions would mostly impact ‘mum and dad’ investors, not overtly wealthy property investors.
“Negative gearing benefits middle Australia,” Mr Dyett said. “Taxation statistics published by the Australian Taxation Office show that in 2004-05, 80 per cent of taxpayers who owned negatively geared investment properties had a taxable income of $70,000 or less.”
It has been suggested that by removing negative gearing, affordable property owned by investors would be freed up for first home buyers and that with this increased supply prices would fall, Mr Dyett said.
According to the REIA this strategy is wishful thinking.
“Any such movement would only be short term, as the total amount of housing stock would remain constant, the number of dwellings for rent would decrease and investors would be discouraged from building new homes, only exacerbating the current problems,” he said.
To address supply imbalances, the REIA suggested the government double the first home buyer grant, introduce a sliding capital gains tax scale and provide first home buyers with access to their voluntary super contributions until the first home saver accounts take effect.
Published: 10-03-08
