Bruce McLachlan at the beach in The Entrance.(AAP Image/ASHLEY FEDER)
Local real estate agent Bruce McLachlan has weighed in on the national negative gearing debate, claiming that Labors plan to abolish the policy would have an adverse impact on Central Coast renters.
In a bid to help new home buyers and encourage new construction, Labor recently claimed that if it wins the 2019 election, it will restrict negative gearing to new dwellings only, while also reducing the tax break investors currently get when they eventually sell the property.
The term negative gearing refers to the rental return of an investment property – if it is less than your interest repayments and outgoings, then investors may be able to claim back the interest portion of the loan repayments and other costs.
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Mr McLachlan is a local Councillor and longstanding real estate agent.
Mr McLachlan, a third generation agent, local Councillor and principal of McLachlan Partners Long Jetty has warned that if Labors plan went ahead it would mean less property investors, resulting in less rentals, meaning more competition from bidding tenants, which leads to higher rents.
“I recently heard a story about 16 lots of tenants queuing up on the weekend for a $600 per week Wamberal house. The same cottage 18 months ago, when investors were active, we had to lower the existing tariff to attract a tenant,” he said.
“As always, it’s the poorest in our community that pay the price. Investors will always find alternate investment opportunities, as they did in the eighties, and again it will be the tenants that get it in the neck with increased rents, if negative gearing is removed for existing homes.”
Springfield is one of the highest population suburbs on the Central Coast, with some of the lowest priced rental properties.
Mr McLachlan suggested that the policy could be ‘limited’ to a maximum of one or two rental properties, which still covers the overwhelming majority of most existing Mum and Dad investors.
He also said that argument that Labors new policy will encourage construction of new buildings does have some truth to it, however for the Central Coast it would more likely be the new Boarding House code.
“If we do see an uptick in rental construction, it will most likely be in the Boarding Houses and Granny flats codes, which are both permissible complying developments under current Affordable Housing State planning codes. This does offer generous bonus development density, greatly reduced carparking provision, and are allowed in our existing low rise residential suburbs,” he said.
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“They will prove increasingly attractive rental investments, but are often contentious developments within existing suburbs and owners. Both Ettalong and Ourimbah communities have had extensive, long running campaigns against these new type of developments.”
SQM Research director Louis Christopher recently said that implementation of the Labor’s proposal during a housing downturn was “very risky and may trip the economy into a recession.”
While Sydney has experienced a large drop in property value, (7.4 percent over the last year), the Central Coast in comparison has still seen a decline in dwelling value of 2.4 percent for the 12 months to November. Moody’s Analytics have forecast the region for positive growth next year.