A real estate boss has warned landlords may hike rents by up to 30 per cent if proposed changes to negative gearing come into effect.
It is not known how much the government will change negative gearing, a generous tax break that allows an investor to deduct expenses related to properties from their taxable income, meaning they pay less at tax time.
Although the changes could result in lower prices, Nathan Birch from property investment firm Blink Property said renters would feel the pinch from any changes, and warned it could be immediate.
“For Aussie battlers doing it tough, that means a $400 rental will become $550 almost immediately post the budget announcement if changes to negative gearing come into effect,” Birch said.
Birch said the changes would have the strongest impact on “mum and dad investors”, who were often renters themselves while they leased out their investment property and waited to save.
Birch said this would lead to a knock-on effect that benefited fewer people in the long run.
“When policy changes like this come into play, their own rents go up, leaving them no choice but to raise the rent on their investments,” he said.
“It’s a very dangerous knock-on effect that I’m not sure the Labor Government has considered adequately – particularly when so many renters and investors are Labor voters.”
Treasurer Chalmers said despite promising against it in last year’s election, the government had no choice but to take bold action to address the housing crisis.
“There are genuine intergenerational concerns and pressures in our budget, in our tax system, in our housing market and in our economy more broadly,” Chalmers said last week.
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