Real estate boss warns of immediate rent hikes if negative gearing changes

A property boss has warned that landlords could increase rents by up to 30 per cent if proposed changes to negative gearing come into effect.

It is not known to what extent the government will change negative gearing, a generous tax break that allows an investor to deduct property-related expenses from their taxable income, thereby reducing their tax liability.

While the changes could lead to lower prices, Nathan Birch of property investment company Blink Property said tenants would feel the pressure of any changes, and warned this could happen immediately.

“For hard-pressed Australian fighters, this means a $400 rental price will become $550 almost immediately after the budget announcement as negative gearing changes come into effect,” Birch said.

Birch said the changes would have the biggest impact on “daddy investors,” who were often renters themselves as they rented out their investment properties and waited to save.

Birch said this would lead to a domino effect that would benefit fewer people in the long term.

“When these kinds of policy changes come into play, their own rents go up, leaving them with no choice but to increase the rent on their investments,” he said.

“It’s a very dangerous knock-on effect that I’m not sure the Labor government has adequately taken into account – especially as so many tenants and investors are Labor voters.”

Treasurer Chalmers said the government, despite its promise at last year’s election, had no choice but to take bold action to tackle the housing crisis.

“There are real intergenerational concerns and pressures on our budget, in our tax system, in our housing market and in our broader economy,” Chalmers said last week.

NEVER MISS A STORY: Be the first to get your latest news and exclusive stories by following us on all platforms.