Investors feel the big squeeze

Negative gearing is becoming more widespread as rent rises fail to cover increasing costs, with some landlords forced to sell

- Pam Walkley

Australia’s landlords, battling steep rises in interest rates, are at the same time being labelled as ‘greedy’ as they try to recoup some of their increased outgoings by raising rents.

Because demand for rental properties is far outstripping supply, rentals have skyrocketed but not by enough to cover landlords’ rising costs, according to modelling by CoreLogic, the property data service.

This imbalance in supply and demand has been labelled a rental crisis and has become a political issue, with the Greens housing spokesman, Max ChandlerMather, saying Australian renters are treated as ‘second-class citizens’.

The Greens have been campaigning for a two-year rent freeze, followed by a cap on yearly increases.

In the wake of this, state and territory governments agreed to tenant reforms at a national cabinet meeting in August, including a limit on rent increases to once a year and minimum rental standards.

Tax variation can boost income

Investors who are finding it hard to manage cashflow can take advantage of a tax variation, which will give them the tax deductions from their investment property in their pay packet instead of their tax return.