Mortgage brokers are being urged to prepare clients for potential fallout if the federal government proceeds with tax changes targeting property investors.
The Finance Brokers Association of Australia (FBAA) argues that moves to alter the capital gains tax discount and negative gearing to “combat intergenerational inequity” could instead lift rents and make it harder for first-home buyers to save and qualify for loans.
FBAA interim CEO Peter White said cutting investor incentives would shrink rental supply, pushing up costs for tenants already under pressure.
“While I commend the government for wanting to open up more housing, these changes will disadvantage the very people it seeks to help – younger Australians, as well as many other people on lower incomes,” White said.
White warned that the policy rationale behind the reported tax changes overlooks how loan serviceability is assessed in practice.
“The theory that this will drive down the cost of housing to the extent where someone who can’t currently afford to service a mortgage and enter the property market, will suddenly be able to, is overly simplistic and ignores the many other factors in loan approval,” he said.
The association believes the only result of moves to disincentivise investors, including those with multiple properties, will be to increase the cost of living for people who rent — from would‑be first-home buyers through to households that are already financially stretched.
The FBAA’s 2023 Australian mortgage and rental affordability survey, conducted by research firm McCrindle, found that even before the latest rental increases, many tenants had to take on extra work, cut back on groceries, and sell assets just to keep up with housing costs. It also reported that more than half of renters experienced higher stress, while others felt socially disconnected and faced increased family tension.
White warned that further rent rises would make it even harder for renters to transition into ownership.
“Someone renting with the aim of buying a home won’t be able to save a deposit as easily, while many who are renting because they are already doing it tough will struggle to meet the increased repayments,” he said.
White also pointed to the current shortage of rental listings.
“In many parts of Australia, there are 10 to 20 people or more looking at one rental property such is the lack of availability now, so why would we reduce that supply even more?”
Recent figures from SQM Research show the national residential vacancy rate has dropped to around 1%, while advertised asking rents are nearly 6% higher than a year ago, underlining how tight conditions have become for tenants.
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