It’s Not That Simple!

04 Aug It’s Not That Simple!

Dear Here to Help,
I don’t understand why government doesn’t do things about the rental crisis. All they need to do is set a rental cap and penalise landlords who charge more.

Interesting question.

Community is a complex set of interactions and public policy decisions need to consider all of this. If we look at the housing market, there are several levels of government involved:
• Federal Government, who is responsible for income taxation, including:
o Capital gains tax, and the 50% discount if assets are held for more than a year
o Income tax, including quarantining and negative gearing (which applies across the tax system, not just to housing)
o Foreign investment review
o Superannuation and Self Managed Super Funds

• State Government, who is responsible for things like:
o Public housing, including the relevant department
o Land tax
o Stamp duty
o Appeals of some council decisions
o residential tenancy regulation

• Local Government, who is responsible for things like:
o Rates
o Planning and development

On top of all that is community attitudes to property. “Safe as houses” is part of our mentality and there are many mum & dad investors who have 1-2 investment properties as their superannuation fund, with mortgages, insurances and other costs. At the other end of the spectrum are landlords who own many properties.
There are good tenants and good landlords; bad tenants and bad landlords. Like most of society, most people lie in the middle – good enough tenants and good enough landlords.

More tax on rental properties could result in more properties on the holiday/air bnb market, or force mum & dad landlords to sell their rental properties. This might reduce supply and push up prices, which is the opposite of what your proposal is trying to do.

This complexity is why public policy takes time – government doesn’t want to create a bigger problem than the one it’s trying to solve.

This article comes from my column entitled “Here to Help” in Hunter Local, August 2023. If you have an everyday problem just begging for a simple, real world solution, send it to “Here to Help” and let’s see what we can achieve.

Elaine Abery has a closet full of great ideas and empowering solutions. She’s also the Director of Unravelling Red Tape, a company dedicated to helping everyday people, not-for-profits and companies change the world through improved decision-making and legislation.