Welcome to our article,
The people that are renting, complain that they cannot afford to pay the rent, and the landlords complain that it is hard to keep the rental properties going, because there is not enough money in this business anymore, and some of them have given up renting, bercause there are too many problems and not enough money. So, this is becoming a real problem. What people do not not realize that the Australian rental shortage
problem can be solved, if we do what needs to be done, after we pinpoint the
reasons, why this is happening. Because in the past, if there was any rental
shortage, it was not as bad as it is now. But I believe that the people in charge
do not know what to do, or, they do not want to know what to do, because what
needs to be done may favour the small investor, which is the middle class that
nobody wants to know about, since they can look after themselves, if they are
in a plain field, so, nobody cares about them, even though they are the people
that make the economy work in a balanced way.
Anyhow,
let us talk about the rental problem. These days, we can hear every day in the
news, that there are a lot of people in Australia that cannot afford to pay
their rent or buy a house or unit to live in. People believe that in the past
it was easier to buy or rent, and I believe it myself that it was easier. So,
in this article, we are going to discuss what could be the reasons, and if
there are ways to improve the situation. To do that we need to compare what is
different today, and if there are laws or by laws that make the rental
properties more expensive to run, and therefore, it is harder for the property
owners to rent their properties at a lower affordable price.
Now
what I am writing here is just common sense, that anyone should be able to work
out. So, I wonder why the smart politician have not picked it up, what they are
doing wrong, because I can see a few things myself that could make the rental
situation better. In fact, I believe that to restore the rental affordability
issue, it is a lot easier than most people think, it all depends, if the
politicians do what they must do the right way, and they must not try to
impress people just to gain a few votes, like what they are doing now, they
want to tell the owner, that they cannot increase the rent of their properties,
when for about ten years or more, the rent have not gone up like everything
else, but the charges to run their property has. So, today the owners are
forced to pass the entire charge increase, that they are asked to pay from the
authorities in charge, and some of them ask the owners to pay, just because
they need the money. We will say something about this hereunder.
The rental affordability issues.
Having said that, now let us start discussing
this affordability issues. We believe that in the past properties were more
affordable, so, we must look at what has changed to understand the reasons. This
is not easy to do since the Australian economy is a capitalist economy and free
to run its own way. So, most prices are automatically set, from the supply and
demand market, when there are not enough properties on the market the price
will go up. When the prices go up, more properties will be built and come on
the market, so, the market will go down, and it is self-balancing, and
sometimes it is good, at other times it is not.
Anyhow,
for me that I have followed the rental market for a while, I believe that in
the past it was easier to rent or buy, but the greedy politicians have changed
the laws, so, there are a lot more expenses today than in the past , in some
cases 50% of the rent covers the bylaws charges levied on that property,
therefore some property owners cannot make much money from their rental
investment, for this reason people that were going to invest in properties,
they do not see enough money coming in and they do not invest in properties.
People need an incentive to invest their money on rental properties, or at
least know that they are not going to lose their money if they buy rental
properties.
Anyhow, it is a well-known fact that people
with a lot of money, knowing that the rental market is risky, they keep away
from it, so, it is up to the small investor, with limited money and struggling
that invest in rental accommodations, but even these people are kept back from
the never ending expenses, that the authorities levy on their property, not
only that, but today while I am writing this blog, some politicians in Canberra
are talking about limiting the rent increase that the properties’ owners can
charge. Okay, it sounds good, and it might work for a very short time. But if
they pass this law, then the few rental property owners left, may have to close
their rental properties and there will be less properties for rent.
I
believe that the government needs to think what they are doing, because if they
want cheaper rent, then their levies on properties must come down a lot, it is
outrageous that in some case, a rented house, may only earn one per cent of its
value in a year, when everybody else make a lot more. Anyhow, there is very
little money to be made in rental properties, but there are a lot of problems
to run them. So, the few investors that are left wonder, if they will continue
to stay on the market or sell out, if they can find a buyer. But it is very hard
to find anyone because rental properties do not earn enough money to run them
at a profit.
Some discussions on rental issues.
Anyhow,
I have called this article, Australia rental problems solved, so, in a way a
have promised my readers that I can solve them, so, now I must come up with a
theory, how the rental issues can be solved.
I
believe that there are at least two choices, one, all the governments involved
in rentals must chose, whether to build lots of affordable rentals themselves,
and run them at no profit or at a loss, and this can cost several billions and
may keep the government budget in the red for a long time.
The
other way is that the government authorities charge less levies on rental properties
and do other things that keeps the small investors interested in rental
properties. So, let me tell you a couple of things that come to my mind.
Here
I am talking about the small investors only, because I do not care if the rich
people lose money. Anyhow, one of the charges that hurts most small investors
in Queensland is the land tax. The land tax is a levy from the Queensland Government,
these days, they charge $1.7 per thousand of the land value. So, a property
that is on a block of land of ONE MILLION, will be charged, about SEVENTEEN
THOUSAND DOLLAS, per year, then there are the Rates, the Urban Uility chages, the insurance, the maintenance of the building, and other charges. Now, you can see why rental properties are not worth keeping. The Queensland government may argue that they need the money of the Land Tax, but that is not helping the
rental market, and it is driving the few small investors left away.
I
believe that the government authorities do not care for the small investors, or
anybody that owns a property, and they are treated in a way that makes me think
they are discriminated, when they deserve better, to prove that, I am pasting an
article I fount on the internet. (And I quote).
Public Trustee leaves pensioner
without money for food and takes 40 per cent of his income
There's growing concern about the
treatment of some of the country's most vulnerable people by a government body
that manages their finances. In Western Australia, the public trustee charges
higher fees to people with assets, even if they have little cash to spare. (End
of quote).
This behaviour of this government
body above, it makes me think that most government bodies are like that. So,
the small investor, would have been better off, if during his life, he would have spent
his money to enjoy himself, instead of saving to buy a property investment,
that in the end make his life harder instead of better.
How we can solve these rental
issues.
Now
let me go back to the rental problem. Apart what we have said above, the other thing
that comes to my mind is that years ago, the assets test for pensioners
sickness benefit and other, was 1.5 dollars per thousand, but today it is three
dollars per thousand, so, a pensioner is deemed to earn $7.5 per cent, on their
rental property value, when in fact, he may earn only one per cent. You see why
I think that the small investor is in a disadvantaged position and is being discriminated.
My
view here is this. If the authorities want to save Australia from a huge debit by
building lots of affordable rental accommodations, they can choose to abolish
the assets test, not only on the house you are living in, but also on the first
rental house or unit that is rented, or on the market for rent. This will keep
some of the small investors in the rental market, and the problem is half
solved. Anyhow, this is my view how the rental problem can be solved.
What
I am suggesting here, is a possible way how to solve the rental problem for
good, and will save the governments billions of dollars, because they may need
to build fewer rental properties themselves.
You
may say that what I have suggested will cost the government money. I know it
will, but it will be a lot less than if they build all the affordable rental
themselves.
There
is more that can be said, but I will say it next time I write something about
rentals.
To see more click on this link, Australia Rental Problems Can Be Solved.
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