A new report from RMIT University suggests using Australia’s tax system to incentivise property investors to improve conditions for private renters.
The proposed reforms would make negative gearing available only to investors whose properties meet national standards for fair rental contracts and construction quality.
Professor Jago Dodson, co-author of the report, said tax breaks could be a “good carrot” for property investors to improve conditions for tenants.
“There’s an opportunity to use negative gearing and capital gains tax to make things better for renters, without relying on negotiation with the states,” Professor Dodson said.
“It doesn’t require dramatic reform, just some tweaks to our tax laws.
“According to our proposal, investors would still get their tax benefits but only if they make positive changes for renters.”
The reforms would require rental properties to meet a seven-star energy rating, with heating, cooling, and insulation among the requirements.
Additionally, the proposal calls for minimum quality, safety, and security standards covering aspects such as minimum lease periods and rent increase limits.
He said investors who participate in the scheme would benefit from discounted capital gains tax, providing further incentive to improve rental properties.
The proposed national standards would create consistency for both renters and investors, regardless of their location within Australia.
Dr Liam Davies, co-author from the RMIT Centre for Urban Research, said that the reforms would lead to better outcomes for renters across Australia.
“By cutting out the states, the federal government can deliver these improvements quicker and easier,” Dr Davies said.
“Renters will get a better deal out of this, regardless of which state they live in.
“Being an opt-in scheme, it will free up money that can be reinvested into areas such as public housing.”
Executive Director of Better Renting, Joel Dignam said he said the report has some merit, but there are still issues.
“They’re absolutely right that negative gearing and other tax concessions are completely untargeted,” Mr Dignam said.
“We’d probably say negative gearing is pretty bad in itself and should be phased out.
“But in the meantime, if it exists, we should at least use it to achieve better outcomes.
“There’s a strong argument for better targeting here.”
He said a key concern is that these standards are things he’d want to see across all rental properties.
“It’s great if some landlords voluntarily meet these standards, but we don’t want an outcome where 20 per cent of renters are lucky enough to have those landlords while the other 80 per cent live in substandard homes,” he said.
“Some of these things should just be mandatory.
“It shouldn’t be about getting a bonus for doing it; it should be a condition for being a landlord.”
