This article can also be found at this Hub Pages link, Assets and pension cuts.
To read all the blogs of this selected group about rentals click on this link, http://menfranco.blogspot.com,
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I belive that past politicians are to blame for today affordable rental problems, and they need to fix it.
NOTE, ARTICLE No: 8.
This article is the eighth article of a group of articles, about Australia and the housing problems cause and remedy discussions. We are reposting some articles to show you, what we believe is the cause of the rental shortage in Australia. You see, the Australian Social Security System fails to help the farmers, because of the assets test, and fails and punishes the small rental investors, because of the ASSETS TEST, that is the only reason I can see, why today there are not enough rental properties on the market. So, to solve the housing problem, the politicians need to abolish or reset the ASSETS TEST at least to the same level or below, what people can lose from their pensions or other benefits. Also, to solve the housing problem, the politicians must find grounds to work together with the private sector, and definitely not against the private sector. But today, from what they are doing, they seem to say that the private sector is their enemy, when the private sector is only running a rental service to the community.
Welcome to our
article,
Dear readers, in
our last article, Australian pensioners alarmed, we talked about the disastrous
budget that the ex treasurer Joe Hockey delivered on the 13th of May
2014, in this article we are continuing to talk about the pensions cut, and the
effect it will have on pensioners. Depending on what sort of pensioner you are,
these changes will affect you in different ways. So, there are pensioners that
their pension does not change at all, some pensioners that will be losing part
of their pension, and some will lose it altogether. So, if the pensioners are
upset about this change, they are right to be upset. Because Joe Hockey is an
idiot, because any politician in his position, must consider first the effect
of the budget it will have on the people.
Anyhow, now let us
discuss an example, which we have started in our last article, about Mr. and
Mrs. Day, who own two houses, they live in one house and rent the other one.
Then, we will talk about other cases, and what some pensioner can do, because
for every action there is a reaction, so, the pension changes can bring other
changes, and most likely, they will be negative.
Talking about Mr.
and Mrs. Day, and what they are going to lose, because of the pensions cut.
Let us see how much pension they received before, then how much they receive now, and whether they are being discriminated.
Anyhow, we are setting this case, in a way that is easy to understand, so, all
figures are well rounded figure, and therefore they have not been worked out
mathematically.
So, Mr. and Mrs.
Day have about $850,000 worth of assets beside their own residence.
Before the 1st
January 2017 change, they received about $450.00 per fortnight each.
After the 1st
January change, they will receive about $250.00 per fortnight each;
So, they will be losing about $200.00 per fortnight each. Now because they have problems with renting the house. When the house is not rented, it is hard to live on $250.00 per fortnight. One must keep in mind, that a single pensioner that has no assets, receives over $900 per fortnight, and even they complain about living a modest decent life.
Anyhow, let us talk
about owning and renting a house, because Joe Hockey budget, is a budget aimed
at ruining the small property investor. So, these small investors must decide
whether it is worth to keep things as they are, or they need to change a few
things, to live their life at the same level of other pensioners. So, now let
us look, how owning and renting a house affects the pensioners, if they can
receive a government pension.
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People owning and renting a house.
People believe that owning and renting a house is the way to go. If you talk to any real-estate agent, they will tell you that it is profitable to own a rental house. But we must ask ourselves if it is profitable all the time, or are there times, when it does not work out in your favour, and owning a second house is not the best thing to have, which is the case of Mr. and Mrs. Day.
As we have said, sometimes house owners find it hard to rent their houses. And Mr. and Mrs. Day, had to rent their house for $500.00 per week, which is a low rent if one considers the house value. Anyhow, they hope that the tenants will pay the rent on time and will not damage the house while they are living there. They have worked out that as things are, after paying all the bills, they can average in a year about $300.00 a week net rent.
After going over
all this rental stuff, we must start to think whether there is something wrong,
with the way’s things have been set up for Mr. and Mrs. Day. So, we should ask.
Did Mr. and Mrs. Day make a mistake when they invested in this rental property?
Because they were thinking that by having a property for rent, they could be
better off when they retied.
But now that the
assets-test is changed they are shocked, because their second house investment
is more a disaster than a benefit. In facts, they are worse off, because if
they had only the house they are living in, they would have received a lot more
pension, than what they are earning from their rental property. So, they could have
more time for themselves, instead of trying to run their property for rent.
Today we can only
ask, what sort of government does this? They tell the people to save their money
for their old age, so that they can live a better life. But when the people
reach their old age, they turn around, change the laws and take away that money
from you. But this is not all that we need to say; you see, they make laws that
takes away money from the people on the government pensions, but they don’t
make laws to cut their own pensions that are huge compared to the rest of us.
You see, the means test, and the assets-test does not apply to their politician
pensions, so, they can own huge properties or anything else, they can earn
anything, and they still will receive their full government pensions and other
benefits. So, there is a law for the public and a different law for the
politicians.
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What some people could do.
When the laws
change, and those properties that you have worked hard for, they don’t earn
what you expected them to earn. You must start thinking many things including
about what you want to do, and what you can do with what you have.
In the case of Mr.
and Mrs. Day, they are losing so much money that they must start thinking about
a different set up, so that they can receive more pension, so that they can live an easier life.
As we have said,
Mr. and Mrs. Day, are not on the best terms, they are living together, because
divorces and changes are costly, but because of what has happened to their
pension, they may have to divorce now. Because, now that their pension has gone
down more, they have lost that financial balance, which in a way kept them
together. So, they will be forced to divorce, because, if they are divorced,
they will receive a single pension each. But that is not all, they will own a
house each, and live in their own houses, so, they have no more assets, they
will not earn any money, so, they don’t have a mean-test or assets-test to go
through to receive their pension. therefore, they will receive the full pension
each. Now let us see what difference it will make.
Today they receive
about $250.00 per fortnight each.
If they are
divorced and live in their own houses, they will receive over $900 each per
fortnight.
Which is a lot more
than what they receive today, the only question left here is will they do it?
Anybody that is
losing that much money will certainly do it, so, let us look at those
figures again, but this time let us see, how much money they are losing in a
year, if we work both pensions together:
Now, they would
receive about $500.00 per fortnight, in a year they are receiving $14,000.00.
If they divorce,
they will receive $900 each per fortnight, which will be $24,000 each.
Or 48,000 per
year. So, they are losing $34,000 government pension in a year.
Our own views on
this is this.
If people start
divorcing to receive a full single pension in the future, you cannot blame
them, because they have been pushed from the government to do it. If the assets-test had not been changed, this could not happen as much.
Now, let us talk
about pensioners owning properties.
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Pensioners owing properties.
The pensioners that own a rental property today are in a lot of trouble, because everything has turned against them. The government changes the assets-test and cuts the pensions down, the properties cannot be rented at a profit, since averybody is screaming to keep the rent down,
But there is more,
when their rental property is sold, it is subject to the gain tax, here again the
government is robbing what is rightfully yours. They are robbing you, because
if you want to buy another property of about the same value somewhere else, you
must pay the gain tax, which is based on the difference in price, when you
bought the property the first time. If you have bought the property a long time
ago, for sure there will be a lot of gain tax. Now, I want to point out, if you
need to buy another property of the same value, for personal reasons, why you
must pay this gain tax, you really haven’t gained anything at all, because you
still have a property of the same value. But the government does not accept
this explanation, they work on the difference of the price when you bought it
the first time.
Now let us look at some other real-estate problems. Some of you may think that I am exaggerating, because everybody things that the properties are always going up. But old rental properties, that are most affordable properties, are not doing that well, because they become run down and need renovatins, and some times rebuilding.
Anyhow, we want to
conclude this article, by saying that the pensioners are having a hard time
no matter where they turn, they find problems.
Therefore, in the
future, they better plan to own just one house, and then collect the full
pension from the government.
I believe that I have said enough in this article.
So, see you in our next article, Australia Rental Problems Can Be Solved.
To see more click on this link, Assets and pension cuts.
See you soon.
NOTE. This article above, is the link to the following article, Australia rental problems can be solved. This article is also the eighth article of a group of articles that we want to publish. The aim of these articles is to demonstrate that, the Australian Social Security System fails to help those that need their help. And we believe that it must be equal for everyone. The greatest problem is created by the assets test anomalies, so, the ASSETS TEST must be abolished or adjusted, so that those anomalies are eliminated. Because it is not fair to the pensioners, and this is one of the reasons why, there are not enough rental properties on the market. But the greatest problem is that the politicians do not see it that way, and they make laws that would stop anybody to invest in rental properties, when they need the private sector to invest in the rental market, so, the politicians need to make laws that helps the private sector invest in rental properties. So, let me explain.
For me there are three main things that the government can do, to come out of this rental crisis: give more rent assistance to the low income earners, abolish the assets test on affordable rental properties and low other levies, so that the small investors can keep renting at affordable price, and stop foreign ownership on rental properties, that is pushing real estate prices up, and the rental market must follow to go up, because the properties cost more.
Some politician believe that the government should build, affordable rental units to solve this rental crisis, but for the government, to build an infinite number of affordable rental units, is not practical, because it will cost the tax payers several times more than helping the present rental set up, as we have suggested above.
To read all the blogs of this selected group click on this link, http://menfranco.blogspot.com,
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