Let us talk about the housing problem that we are experiencing in Australia. The federal budget of 2023, has not done enough to help the housing market, they new that there are problems that need to be solved, but they only promised that they will build affordable rentals themselves. But the problem is a lot deeper than that, as we will try to explain hereunder.
Housing disaster in Australia and what can be
done.
Welcome to our article,
Let us ask ourselves why this is happening.
Now, let us start from the beginning. Today to
buy or rent a residential property in Australia is not easy. Yes, we had these
same problems in the past, but it was not as bad as now.
So, we must look for the reasons why this is
happening. I believe that, for this to happen there must be negative forces
that keeps the housing supply not growing fast enough to keep pace with what is
needed. So, what can be done, we may ask?
To ease the rental market, the federal
government, and the local governments must start building lots of affordable
rentals, and rent them at no profit, or at a loss, this will help to keep the
price of rental down. But this by itself will not be sufficient to solve the
rental problem. So, what else needs to be done urgently to make it better? I
believe that they need help from the private investors, but most investors are
not interested in having affordable rental properties, because there are lots
of problems running them and not enough money, compared to other available
investments.
Therefore, the governments involved should make
and pass laws that will help to private investors to build and own properties,
at a moderate profit. You see, nobody wants to be involved, if there is nothing
for them, especially if they can lose their hard-earned money, if they are not
careful. Having said that, now, let us talk about the rental problem.
Today in Australia, there are many types of residential properties for rent, so, would be tenants that are looking for a house or unit to rent, should inspect them and make sure that, this property is what they want, and that they can afford to pay the rent. There are forms and agreements to fill in, and these forms explain the rules of the rental agreement.
Let us
talk about the rental problem.
TO SOLVE THE RENTAL PROBLEM, THE ASSETS TEST ON
RENTAL PROPERTIES MUST BE REMOVED.
As we have said
above, today to buy or rent a residential property in Australia is not easy,
because there are negative forces, that keep the housing market down, so, hereunder I want to say what I believe needs to be done
as soon as possible, to stop this rental disaster becoming worse. One of the
negative forces is the ASSETS TEST. And it needs to be removed.
Anyhow, it seems to me that we need to build lots of new
houses and rental properties. The problem today is that everything is going up
in price, and there seems to be a shortage of builder and building tradesman. There
are a few building firms that are going broke, so, this problem is going to
take time to solve, but it can be solved, if we look at the reasons why this
has happened, in the first place, and the politicians change the laws that need
to be changed.
Anyhow, as we have said the federal government, and the local
governments must start building lots of affordable rentals, and rent them at no
profit, or at a loss, this will help to keep the price of rental down.
But this will not be sufficient. I believe that they need
help from the private investors, but most investors are not interested in
having affordable rental properties, because there are lots of problems running
them and not enough money, compared to other available investments.
Today there are still a few old timers that
have affordable rental properties for rent, but they are slowly giving it away,
because of what they cost to run and because they are being discriminated. They
are being discriminated on two fronts. One most people hate landlords, because
the people that rent think that they are paying their rent to a rich person,
when in most cases the owners are financially struggling to keep the rental
business going. Then there all these charges from local authority to pay, one
of these is the land tax that gives you nothing, but because you own this land
you must pay them. This is like paying the stamp duty every year, like when you
buy a property. All these charges plus maintenance, there will not be much
profit left to run the property. The other problem is that, if you have a
property for rent, everybody thinks that you are a rich person, when in fact
this is far from the truth, as we will explain hereunder.
Let us talk about rental properties.
Now let us talk about those people that have a
house for rent or a couple of units. If they are pensioners they might lose
their entire government pension, because of the assets test, when their
properties can only earn a few hundred dollars after all expenses are paid.
Which most likely is under 2% of the property value, according to today market.
THIS IS THE REASON WHY, THE ASSETS TEST ON AFFORDABLE RENTAL PROPERTIES MUST BE
REMOVED. If that is not removed nobody will want to save money to buy a rental
property for financial security when they become old, and those that have a
rental property will want to sell them, because they cannot afford to keep them,
they are losing money.
Now, you must understand that to solve this
rental problem, we need the private people to invest on affordable rental
properties, so, there need to be a small incentive, or at least some security
that they are not going to lose their money, Australia needs those investors,
because the governments will never be able to build and run affordable rental
properties for everyone.
ANYHOW, IT CAN BE A LOT CHEAPER IF THE ASSETS
TEST ON AFFORDABLE RENTAL PROPERTIES IS REMOVED.
Anyhow, if the assets test on affordable rental is removed, then investors may still try to own a property for rent, instead of keeping their money it in the bank earning interest, or some investment that earns money, and you do not have to do anything.
In Australia people on low incomes may qualify for rent assistence, the government offices of Centrelink, is where the tenats can apply for rent assistence, if they are on low income. They need the rental agreement or some other forms signed by the landlord or the rental agent. This office also looks after the pensioner, the jobseeker, the disabled people and many others social services, according to the present laws.
Today views on rental properties.
You see, today people think that those people
that have no house, are the people that have been hit the hardest from this
changing economy; but I believe that, it is the small residential investor has
been hit the hardest from the changes. Because the small investor is being put
in a disadvantaged position, not only they are in a disadvantaged position, but
they also can be abused from the tenants. But what hurts most is that the government
treats them as if they are rich people, when some of them are financially worse
off than the tenants they are housing.
Because the tenants that are on a low income,
can receive rent assistance from the government. But the landlords cannot
receive any help from the government, because of the assets test threshold, even
when their properties income is very low and they may be starving, so, we may
say that they are being discriminated.
Anyhow, because I want this article to carry
the message that THE ASSETS TEST ON OFFORDABLE RENTAL PROPERTIES MUST BE
REMOVED. I am not going to explain how the landlords of affordable rental
properties are worse off than their tenants. But later I will write another
blog to explain that.
Now, in this article we have said that to
overcome the housing shortage in Australia, the governments must build lots of
affordable rentals, and rent them at no profit or at a loss.
We have also said that the governments need
help from the private investors, but the rich private investors cannot be
interested in affordable rentals, because there are lots of problems and not
enough money, so, it is up to the mums and dads the small investors. But they
are put in a disadvantaged position from the assets test. So, THE ASSETS TEST MUST
BE REMOVED, or perhaps reset at a lower rate that reflects what those rental
properties can earn. Instead of their imaginary and impossible 7.5 % when those
properties may only earn about 2% or less net.
I believe that the rental market can be fixed, if the people in charge make laws that do not discriminate the small investors. Starting by REMOVING THE ASSETS TEST on affordable rentals, or modifying it to the right level, where the owners do not lose money, if they are on a government pension, they are jobseekers, or disabled. I hope I have explained it clear enough. You see nobody wants to be involved if they can lose money.
This is all in this blog, we will write other articles to explain our views better. See you next time.
To see more click on this link, Housing Disaster in Australia and What Can Be Done.
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