What if they change the Rules?

It is important to note that a very high percentage of elected politicians own an investment property. If they changed the rules to the detriment of investors, they would be on the receiving end of such change.

In 1985 the then Labour Government quarantined Negative Gearing. In its place they introduced a 4% Capital Allowance on the construction of new buildings, assuming that strategy alone would stimulate the housing industry. The move backfired and investors shied away from investing in property. A lack of investors resulted in a shortage of rental properties. With high tenant competition, rents skyrocketed causing an unprecedented housing crisis. Not surprisingly, Negative Gearing was brought back in 1987, only 18 months after it had been quarantined.

Government understands that Negative Gearing means more rental property available in the market. This reduces pressure for Government to provide new public housing, which already bites into the Federal Budget. There are no signs on the horizon that the Rules as we know them would be adversely changed anytime soon.

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