A ban on owning more than one negatively-geared home is the central plank of a radical plan to fix Australia’s housing affordability crisis.
The three-point plan, proposed by Sydney playwright and journalist Melanie Tait, suggests limiting home ownership to just two properties.
But only one of them would be allowed to be negatively geared as an investment rental property where a landlord can claim the losses on tax.
Ms Tait argued the federal government could then fund more public housing, using the capital gains tax windfall when ‘boomers’ are forced to sell off investment properties because of the new negative gearing restrictions.
Labor lost the 2019 election based on a plan to scrap negative gearing for future purchases of existing homes.
Both major parties at the upcoming May 2022 election are promising to keep the status quo.
A ban on owning more than one negatively-geared home is the central plank in a radical plan floated as a way of fixing Australia’s housing crisis
Melanie Tait proposed that negative gearing should apply to only one property
Australia allows the offsetting of property losses against other types of income, such as wages or business income, with few restrictions.
Housing advocates say there is a desperate shortage of affordable housing in Australia with many blaming a tax system that encourages property investment as retirement income based on high rental yields.
Australia needs to build 650,000 affordable homes by 2036, the UNSW City Futures Research Center recommended.
In the year to March, Australia’s median property price surged by 18.2 per cent to $738,975, CoreLogic data showed.
With a 20 per cent deposit factored in, an average, full-time professional on $90,917 would already be in mortgage stress, having a debt-to-income ratio of more than ‘six’.
Sydney’s median house price of $1.403million is now so dear an individual borrower with a 20 per cent deposit would need to earn $187,000 a year, or be among the top 3.5 per cent of income earners to avoid being in mortgage stress.
With interest rates at a record-low of 0.1 per cent, the value of all investor loans surged by 55.8 per cent in the year to February as first-home buyers were squeezed out, Australian Bureau of Statistics figures showed.
Opposition Leader Anthony Albanese dumped Labor’s policy of scrapping negative gearing for future purchases of existing properties after his predecessor Bill Shorten lost the 2019 election, despite being the opinion poll favourite.
Ms Tait also suggested renters be given five-year leases to allow them to have pets and hang pictures on walls.
Sydney’s median house price of $1.403million is now so dear a borrower with a 20 per cent deposit would need to earn $187,000 a year, or be among the top 3.5 per cent of income earners to avoid being in mortgage stress (pictured is an auction at Paddington in Sydney)
‘Hey ALP and Liberal Party, I did a housing shortage and affordability policy for you. Here it is, and you’re welcome,’ she tweeted on Tuesday night.
‘No one needs more than one house, but we’re a generous lot here in Australia, so you can have two.
‘So, negative gearing can only apply to one investment property. You’re on your own with the rest.’
Her suggestion for landlords was the second point but the third point explained how new affordable housing could be built.
‘Build and maintain more public housing with the fund you set up from the capital gains tax you receive when boomers sell off their multiple investment properties that they can no longer negatively gear.’
One twitter user, suggested inflated property prices were a contributing factor.
‘If the price of milk had gone up at the same rate as median house prices since 1970, it’d cost well over $20 at the supermarket,’ Ben Ellis said.
The three-point plan, proposed by Sydney playwright and journalist Melanie Tait, suggests limiting home ownership to just two properties but only one of them can be negatively geared to offset losses
While Ms Tait was widely praised for her plan, not all followers agreed it would work.
‘I am a property owner and a landlord and I absolutely endorse all of this,’ said Dr Kate Stewart.
Many pointed out the ALP tried to introduce negative gearing as a signature policy in 2019, with a plan to halve the capital gains tax discount to 25 per cent from 50 per cent.
‘Sadly Labor took these kinds of policies to the last federal election and LNP did an effective scare campaign on it. So much so that Labor is too scared to bring those policies back in this election campaign, Craig Vertigan wrote.
Another suggested the plan would actually result in a shortage of rental properties, with this occurring during the 1980s when Bob Hawke’s Labor government briefly scrapped negative gearing.
‘If there is no incentive to have investment properties then that will create a shortage of profitable properties so your policy would be self-defeating,’ one comment said.
Another suggested the plan would actually result in a shortage of rental properties (pictured is a unit block in Sydney)
‘Renters already have plenty of protections, problem lies with renters themselves as they don’t take care of someone else’s place.’
‘The only problem is majority of voters 67 per cent vs 33 per cent are home owners. They don’t want a hard landing on property prices,’ another follower added.
In response to Ms Tait’s plan, some users suggested a complete ban on foreign ownership of residential property.
‘Maybe just reduce the benefits to owners (foreign and domestic ) of reducing multiple properties,’ said EuroDez.
Glenn Holmes went further, ‘Kill Air BNB and stop Russian and Chinese criminals from laundering by buying houses and leaving them empty.’
One man suggested Ms Tait’s plan didn’t go far enough, proposing a graduated increase in stamp duty until people own one home each.
‘Raise stamp duty on second homes to 50 per cent. Third homes 75 per cent, fourth homes 90 per cent. Once everyone has one home this could be revised.’