Changing negative gearing will not help housing affordability

“The retention of negative gearing provisions for new and established homes is a long held policy by Master Builders,” National CEO Wilhelm Harnisch said.

“Master Builders strongly backs the Treasurer’s announcement to put housing affordability at the centre of discussions at the Council on Federal Financial Relations meeting to be held today and would encourage the State/Territory Finance Ministers to work with the Federal Government to remove the structural impediments to the efficient supply of new housing,” he said.

“Removing impediments to supply must be the first priority if we are to seriously tackle housing affordability, not tinkering with negative gearing rules,” Wilhelm Harnisch said.

“The retention of negative gearing means the $8 billion of investment each year spent on renovation of private rental properties will continue to boost economic growth and provide jobs for tradies,” he said.

“Negative gearing helps mum and dad investors, and plays a critical role by supplementing the shortage in public and social rental housing stock where there is a waiting list estimated at upwards of 200,000 dwellings,” Wilhelm Harnisch said.

“Negative gearing allows more people to enter the asset market, including residential property. This will be an increasingly important role as the building challenge mounts over the coming years to provide an adequate and diverse supply of new housing that supports people at all income levels, all ages, and at all levels of ability,” he said.

“Without negative gearing the supply of rental properties would be lower, and/or the rents charged would be higher,” Wilhelm Harnisch said.

Absent negative gearing, there would be substantial additional fiscal pressure on Federal, State/Territory and Local Governments to:

1.  Provide more public-rental housing; and
2. Provide additional financial assistance to meet higher housing costs carried by socially disadvantage    members of the community.

“A holistic approach to tax reform is essential. As the Henry Tax review rightly points out, cherry picking tax reforms risks significant unintended consequences, particularly while structural impediments to the supply of new housing remain in place,” Wilhelm Harnisch said.