Investors who buy existing homes don’t add to the overall supply, but merely turn homes for sale into homes to let. This does NOT address the shortage of rental homes, because the reduction in the supply of homes for sale throws potential owner-occupants onto the rental market, so that the increase in supply of rental homes is offset by increased demand. If you really want to address the shortage of rental homes, you have to address the OVERALL supply, not just the supply of rental homes. But if you only want to PRETEND to address the shortage of rental homes, the existing negative regime is a great way to do it. That’s why it’s so firmly entrenched.

FACT: The only investors who actually add to the supply of accommodation are those who build new accommodation. Therefore, if negative gearing deductibility were really intended to maximize the supply of accommodation, it would be allowed only for new construction — not for future purchases of established properties. But in fact the negative gearing rules fail to distinguish between new and established properties, giving no incentive to build rather than buy. So the supply of accommodation is lower than it could be, and rents and prices are consequently higher than they could be. That’s good for current owners of rental properties, but bad for renters and first home buyers.

Just realised the parody address was incorrect.

The address should have read -
http://zzalanz.googlepages.com/home
then go to investorsruleok

Cheers
Alan

Your short article ‘Negative Gearing - Incompetence or Conspiracy’ is the best succinct description of what is causing the housing affordability problem in Australia.

It appears to me that a sort of covert neo-feudalism is sucking the life out of the next generation.

I have written a parody of the situation that you might enjoy reading if you have 5 minutes free.
The address is -
http://zzalanz.googlepages/home
then go to investorsruleok

I am doing what I can do to embarass the architects of this problem (Treasury) into action.

Any suggestions as to how I can help curtail the monster in our midst would be greatly appreciated.

Alan