Limit investor tax concessions, says brokerage

by Calida Smylie08 Apr 2014
A major mortgage brokerage has said the government should form 10-year housing development targets and limit excessive tax concessions to investors in order to combat declining home ownership.

Mortgage brokerage Aussie thinks it is essential to address housing affordability as residential real estate is the primary wealth accumulation source for most Australians, with a combined asset value of $5.2 trillion. This easily outstrips superannuation, which has $1.8 trillion.

The paper, submitted to the Murray Inquiry by Aussie executive chairman John Symond, gives four recommendations on how to improve home ownership rates for Australians.  

The first is to include annual new housing development targets and infrastructure plans in the federal budget process with a 10-year view.

This would determine where new developments should occur, which constraints around land releases the government needs to address, and what natural growth and replacement will occur.

“…Supply targets cannot be adequately or efficiently addressed by metropolitan creep together with marginal increases in housing density and small regional expansion,” said the submission.

Aussie also said the government should limit excessive tax concessions like negative gearing and the CGT discount to investors, as these have an inflationary impact on property prices.

To help limit the impact of negative gearing concessions, there should be controls on the number of applicable properties or a ceiling on the amount of losses deductible in a year, Aussie said.

Aussie questioned how appropriate stamp duty is on residential property transactions, recommending a reduction and instead a broad property tax levied on all residences.

“The extent of the duty is sufficient to discourage relocations that would drive the most efficient use of land. The strongest example of this is the deterrent to ‘downsizers’ who might otherwise be freeing up larger residences to accommodate young families.

"To create the most efficient use of residential property Australian should be seeking a system that encourages home owners to be flexible and to find the housing most suitable to their present needs.”

Aussie also recommended reducing funding costs for new housing development by implementing a phased charge for infrastructure. 

MORE:

House prices keep going up and up

First home buyers staying away in droves

Record high number of investor loans

COMMENTS

  • by norgs 8/04/2014 9:55:51 AM

    Crazy!.... without the tax concessions we would have a serious rental housing crises. The building industry would stall! around 50% of homes built are in one way or another going to lead to an investment property coming onto the market be it the new home or the current owner occupied home.

    Limiting tax concessions acheives nothing as investors stop building, rental prices sky rocket which in turn push home values. I would have thought he would know better

  • by Incognito 8/04/2014 11:12:40 AM

    I agree with most of this.

    People will invest in housing regardless as it's SAFE and SATISFYING - so why give tax gifts (entitlements) as well? It only pushes up prices..

    The rental property argument isn't based on facts, usually made by vested interests and referring to some outlier event from the 80's.

    EVERY renter i know wants to buy (every. single. one.). It's just that compared to income the prices are rediculous. We know this.

    Progressively scrap the tax-gifts over 10 years.

  • by Greg of Perth 8/04/2014 11:40:24 AM

    Occupants of Larger homes want to downsize, John......Really.
    What about your not so small house on the harbour, you'll now be downsizing, will you?