Rent could surge 50% without negative gearing

by Julia Corderoy02 Dec 2014
Abolishing negative gearing on investment properties could see the cost of renting increase by 50% or more, according to a national accounting and wealth advisory group.

With 96% of public housing provided by ‘mum and dad’ investors, scrapping negative gearing would see the rental stock go into the hands of commercial investors – who will charge more in order to get the higher rental yields that they typically see on their commercial portfolios. 

Chan & Naylor’s managing director Ken Raiss says that yields for commercial property are typically 50% above residential property.

“Like any other public utility, as soon as they enter private and more entrepreneurial hands then prices will go up, and in the case of public housing this could lead to a rental price hike of as much as 50% over time, resulting in the government having to shoulder the weight of providing a much larger percentage of housing for tenants and social dislocation for those unable to receive government housing,” said Raiss.

“Small business owners wouldn’t invest in a new or start up business if they couldn’t claim their losses, so there is no reason why property investment should be any different.”



  • by Incognito 2/12/2014 9:05:40 AM

    On cue the fear campaign.

    This is why they must grandfather existing arrangements when they abolish negative gearing on established property.

    People would rather own than rent anyway. The tax man shouldn't stand in their way.

  • by John from Geelong 2/12/2014 9:17:48 AM

    Pathetic scare mongering designed to be self serving and not intended for general consumption.

    Negative gearing is Government meddling in the market and there has be a way to unwind it to allow the market to return to a normal level, we simply pay too much for property.

  • by Brado 2/12/2014 9:29:29 AM

    What is the big deal with negative gearing? What sane person buys an investment specifically to lose money? There is never a benefit in losing money. Negative gearing helps lower the loss on a property in the first 3-5 years, until rent increases and the property begins to go positive (pay for itself). Its a very good point to consider investing in property just like investing in a business. In which case losses are deductible against income.