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Dear readers, we are writing about social issues that effect our way of life, and this is blog, No. 8.
To solve the rental problem, we must ask ourselves why this housing disaster is happening.
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 is the cause and 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 today 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 how the the rental problem can be solved.
Let us talk about the rental problem.
I believe that, 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 happen, 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. They can afford to do that, because the money they spend is taxpayer money.
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, since 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, and if they do, they will lose money.
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.
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 later, 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.
I believe that I have said enough in this article, so, see you in our next rental article about,
How to Fix the Housing Disaster, My Views.
To see more click on this link, Housing Disaster in Australia and What Can Be Done.
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