[VIC] Arrangement with Tenant - using Vic gov assistance

Choc0 on 19/04/2020 - 13:13

So the Victorian government has announced some (minor) relief for parties affected by COVID-19

https://www.housing.vic.gov.au/help-renting/rentrelief

In order to access the $2000 benefit (paid direct to the landlord) - you must first provide a deferment and a discount to rent.

If I was to provide a permanent $10/week reduction and a $500 deferral for four months, with the expectation of a $2000 'make good' payment at the end of that time, and the tenant didn't have the capacity to pay that based on their circumstances, am I right to assume that the Vic government will directly pay the landlord $2000 (as per their policy)?

Financial

Comments

  • S2 on 19/04/2020 - 17:49

    @bkhm and @zeggie, your comments have both been against government support for landlords. I do agree with many of the points you've made. A question I do have for yourselves, and those that share your sentiment, is;

    Do you expect Australians to rely on the government for their retirement?

    There are a number of ways for individuals to invest for the future; stocks, real estate, start a business. Stocks and business aren't suitable for everyone (although diversity states investors should have a bit of everything). If property investing individuals (of which you refer to as being greedy) aren't looking for ways to invest now for a better future, they would get to the end of their working life and be dependent on government support. I don't think that is as good as the self-sufficient option.

    • [Deactivated] on 19/04/2020 - 17:53
      +3

      Sorry but what do you think superannuation is for?

      • S2 on 19/04/2020 - 18:11

        I think it's not enough. I've also been advised that it's over regulated - e.g. the rules on when you can use it or not are out of your control. I feel like it supports my argument on over reliance on the government. Currently, employers are required to deposit 10% of income into super for the employee. This was brought in because people weren't saving enough for their future - with a result of being reliant on the government.

        Are you stating that rather than borrow money for property, I should invest it into super so I can access it at 65?

        Property plays a hand in the success of super too. People buy property, others rent it, agents manage it, banks lend money for it - all this contributes to profitable listed businesses which super expect a return from. Then there's also government at various levels making money from taxing the exchange of property. The more I think of it, the more benefits I'm realising from the purchase of investment properties. I think Australia's economy as a whole would be worse off without property investment.

        • [Deactivated] on 19/04/2020 - 18:27
          +2

          So you're saying if I just carry along working 50 years from now I won't have enough to retired based on superannuation? The whole point of the rules, i.e you saying it's over regulated, is because of exactly what you said, people weren't saving enough, so the government created a piggy bank for them. How would this be different if the government just took it as tax and gave pensions later?

          I'm saying don't borrow money at all, debt burdens are what sends countries crashing. Either take that money and invest it in shares or a business if you want it sooner or yeah, put it in your super. But everyone trying to put it in housing thinking it will increase is exactly what causes it to increase. But where does this money come from? Someone else having to borrow more to pay for your greed.

          The more I think of it, the more benefits I'm realizing from the purchase of investment properties. I think Australia's economy as a whole would be worse off without property investment.

          Home ownership is dropping, debt levels rising, more people are expecting to rent for life. You want to talk about over reliance on government? Normally, you can buy a house and pay it off before you retire. Then the measly government pension and your super is enough to live on. Imagine being burdened by 2-4k a month during your retirement because you couldn't afford a house as it became so lucrative. Then, not only is your super not enough, the pension is not enough. Government is forced to increase it.

          People buy property, others rent it, agents manage it, banks lend money for it - all this contributes to profitable listed businesses which super expect a return from

          Yes but we have to look at where this profit is coming from, it's not the same as a an innovative company does. These landlords just serve as shitty middlemen that really don't have much purpose at all.

          I think Australia's economy as a whole would be worse off without property investment.

          You mean if everyone could afford their own home and doesn't have to worry about what happens when they retire? You mean if the average wage worker doesn't have to borrow 10x their income to out compete those who are doing it for investment and their tenants, who because they couldn't afford one, will help pay?

          Surely you're joking right? The super will not enough BECAUSE no one can afford a home.

          • S2 on 19/04/2020 - 20:27

            @[Deactivated]: I tried keeping it short but failed.

            if I just carry along working 50 years from now I won't have enough to retired based on superannuation?

            Yes. Pension is currently the highest federal expense, if super was so super (intentional pun :), the reliance wouldn't be that high.

            How would this be different if the government just took it as tax and gave pensions later?

            funds sent to super are invested to be a bigger sum later. Income tax is used by the government - often, they use all of it. I don't want the government to be actively investing tax like super.

            I'm saying don't borrow money at all, debt burdens are what sends countries crashing.

            This sentence seems to mean don't borrow money at all, is this correct? Yes, some borrowing is bad, but some are really really good. Examples; anyone starting their working career won't be able to buy a house with cash. Businesses have to borrow money to start and fund increasingly bigger projects. We enjoy so many great products because people have been able to borrow money for it.

            because you couldn't afford a house as it became so lucrative.

            I think there's a factor missing from your statement - people couldn't afford a house in the location they want to live in. Or does this not matter? Australia has a huge amount of land. I think a greater problem is everyone congregating in major cities.

            Yes but we have to look at where this profit is coming from

            Agreed, in some cases it's taken more debt to pay off existing debt - I don't see this as being bad. Calling landlords shitty middlemen doesn't convince me otherwise. I haven't experienced a recession and I'm unsure if that's why I don't see the evil of debt.

            These landlords just serve as shitty middlemen that really don't have much purpose at all.

            Many of these middlemen you dislike are mum and dad investors looking for a better future for themselves and their families. Many are hard working individuals who sacrifice spending today to have that investment property in the future. They're not shitty. There are groups of people who appreciate available rental properties, such as; people leaving home, travelers from overseas, people on working visas. Are you expecting the government to provide these people long term accommodation?

            You mean if everyone could afford their own home and doesn't have to worry about what happens when they retire?

            I feel like this statement is a straw man based on my original point - rental properties have been and are still good for Australians. I definitely think everyone should be able to afford their own rental properties. I think laying the entire blame of affordability on landlords is rather limited. Another dimension has been pointed out by Sbah22 which you're also in discussion with atm.
            I also think everyone should worry about what happens when they retire. Relying on other people not being able to buy multiple properties or the government to make it cheap is rather lazy.

            Surely you're joking right? The super will not enough BECAUSE no one can afford a home.

            I think you're giving super far too much credit and I'm unsure why. If I put money in super, it's stuck there until I'm 65. I can't go out and give it a new paint job to increase it's value. Picking shares is hard, I either accept what the super funds pick or I spend too much time learning about it. Banks don't lend as much for share investments since it's more volatile. Margin recalls force me to sell the shares immediately even if I still have an income to service the loan. Some of the best companies that make up super appreciation relate to property investment - without them, super returns would be lower.

            Do you expect Australians to rely on the government for their retirement?

            To me, you make property investment sound evil. I'm surprised there's no consideration to any of the benefits it provides. I think you've answered this question though. You expect people to support themselves with super in retirement. Is this correct?

            There's one other benefit I wanted to call out too. Sometimes, first home buyers don't lose the bid to another investor, but a builder. They would then build multiple properties on the land and more people would be able to live in that location (an investor could do this too I guess). Without the investment aspect, the first home buyer would live in the one house and someone else misses out on living there. In popular areas, land is limited and increasing house prices creates incentive to build it up further.

            • [Deactivated] on 19/04/2020 - 21:20

              @S2:

              Yes. Pension is currently the highest federal expense, if super was so super (intentional pun :), the reliance wouldn't be that high.

              I see, thanks…I guess cause I basically have nothing in my super, I've just read about how much I should invest and put in to ensure I have a good 'nest egg' and the amount of super some old people I know have, I just expected it would be enough.

              Many of these middlemen you dislike are mum and dad investors looking for a better future for themselves and their families.

              At the cost of other families maybe?

              This sentence seems to mean don't borrow money at all, is this correct? Yes, some borrowing is bad, but some are really really good. Examples; anyone starting their working career won't be able to buy a house with cash. Businesses have to borrow money to start and fund increasingly bigger projects. We enjoy so many great products because people have been able to borrow money for it.

              No, borrowing to start careers, a business, your first home is just very different to everyone trying to borrow to have investment properties

              There are groups of people who appreciate available rental properties, such as; people leaving home, travelers from overseas, people on working visas.

              No you're right, they may not be 'shitty' people. Wherever there's a market though, there's going to be supply.

              I think there's a factor missing from your statement - people couldn't afford a house in the location they want to live in. Or does this not matter? Australia has a huge amount of land. I think a greater problem is everyone congregating in major cities.

              I look at the debt to income ratio

              To me, you make property investment sound evil. I'm surprised there's no consideration to any of the benefits it provides.

              To me, the 'benefits' it provides is not as a society but individually. It's also not, say like someone selling a product where the maker gets money and the buyer gets what they want, it's people being forced to rent because they couldn't afford it.

              They would then build multiple properties on the land and more people would be able to live in that location (an investor could do this too I guess). Without the investment aspect, the first home buyer would live in the one house and someone else misses out on living there. In popular areas, land is limited and increasing house prices creates incentive to build it up further.

              Yes that's not a bad thing, like someone buying land out and building an apartment. More people can live in it. It's sharing the land. But it's not being done everywhere where houses are still crazy expensive.

              I don't know, maybe I've just been mislead by media. Thanks for educating me though, but I've seen the math of what super could be. Although yes, I agree it requires more than doing nothing and something more people should be educated on. So you don't think that this investment property fixation people have, like I know many people who are just trying to grab as much property as they can because they know they can just rent it out and pay the difference hoping it will increase in value later, is having a major impact on prices? The way I see it, sure lets hype it up, lets not rely on super, this is something that is for a majority of Australians if you're correct. What's the solution then if not shares? How can a majority of people try to own more than one house? It doesn't work. Then you have inter-generational wealth, the kids now have two-three houses and can afford another.

              You're right, I might have over played it but I guess the question is, does the good (not on an individual level) outweigh the bad? Are all these articles about our household debt wrong? Is it just simply land shortage?

              • S2 on 19/04/2020 - 23:05

                @[Deactivated]:

                At the cost of other families maybe?

                limited supply of quality living locations dictate that someone has to miss out. Even without investment properties, this would still exist.

                Thanks for educating me

                I'm definitely no expert and equally appreciate your open-mindedness and responses. With your comments in other chains, I think you're looking at the bigger macro picture. I've focused on an individual sacrificing joy today to have investment properties in the future. You're seeing this accumulative effect on the whole economy and future homeowners. That's a fair observation.

                just rent it out and pay the difference hoping it will increase in value later, is having a major impact on prices?

                I agree this is having an impact on prices. I agree prices are astronomically high in desired locations. In my field of view, I don't know if it's a bad thing. Maybe you are in fact right, however, we did not experience a GFC like the rest of the world, so I have not associated the situation with being bad.

                What's the solution then if not shares?

                Again, I'm no expert, but I have ideas that I prefer over crashing the housing market and letting all over-extended investors burn.
                I would really like to see better infrastructure to connect outer regions and make them more desirable to live in. Others have mentioned this.
                I think more immigration and encouraging population growth would help. This might not be a popular point, however, compared to other countries around the world, Australia is under populated. The challenge is, getting people to spread out, to live in all the spots with lots more space rather than cramming into cities that are already full. The geek in me says we would have cheaper high speed internet if more people were living between Sydney and Melbourne and all other major cities. Las Vegas was built in the desert. We have desert space.

                How can a majority of people try to own more than one house? It doesn't work.

                I don't actually know of that many people with multiple properties. If they can build huge apartment complexes in inner suburbs and still fill them, there would be greater demand than supply.

                Then you have inter-generational wealth, the kids now have two-three houses and can afford another.

                This would be the case for single child households with parents who purchased multiple properties. It would not be the case for multiple sibling households. Although I guess if you had multiple kids, there's no way you could afford multiple houses. I hear more stories of siblings carving up the parent's home, rather than getting one each - although people normally talk about the problems rather than brag about getting multiple houses.

                does the good (not on an individual level) outweigh the bad?

                I think so and I accept that our opinions differ.

                Are all these articles about our household debt wrong?

                I don't know to be honest. I have been expecting house prices to go down over 2019 but it didn't really drop enough for me to take notice.

                maybe I've just been mislead by media.

                Great point. And if I'm allowed to drop in another topic. There's a lot of hate for negative gearing. I don't understanding why it's loathed by so many. If I borrow money to buy shares or property, I pay interest. The shares give me dividends, the property gives me rental income. If the interest paid on the loan is higher than the dividends or rental income, I can tax deduct that at my marginal tax rate. It doesn't mean the interest is free. It does mean I don't pay tax on the dividends or rental income that is offset by the interest cost. It also means the remaining interest amount is reduced by my marginal tax rate.

                It's the same for shares and property investment. Is there equal hate for negatively gearing shares? or have I gotten it completely wrong?

                • [Deactivated] on 19/04/2020 - 23:55

                  @S2:

                  I think more immigration and encouraging population growth would help. This might not be a popular point, however, compared to other countries around the world, Australia is under populated. The challenge is, getting people to spread out, to live in all the spots with lots more space rather than cramming into cities that are already full. The geek in me says we would have cheaper high speed internet if more people were living between Sydney and Melbourne and all other major cities. Las Vegas was built in the desert. We have desert space.

                  yeah I guess people have always supported less immigration, even myself, I guess it just made sense that more people equals higher prices. I'm an hour train ride from the city, at the end of the line and literally it still gets full during peak hour. How much further are you thinking? We'd need to then cut commute time meaning stations skipped, more lines which I think is almost impossible in Melbourne now.

                  I think so and I accept that our opinions differ.

                  I think it's just too hard to tell but I am trying to look at it more differently. I just see housing like toilet paper at the moment and there will for sure be people trying to capitalize on it.

                  It's the same for shares and property investment. Is there equal hate for negatively gearing shares? or have I gotten it completely wrong?

                  I read an article on how wealthy people use negative gearing to pay less taxes. The difference I see is that you buying shares might mean someone else misses out because it's too expensive but they can always still invest what they have. When it comes to housing, if you can't afford it, you're forced to rent and rent nowadays is getting to the point of repayments if you had actually bought the house 10 years ago. So it's very, very difficult for the average person to save for a house when they're paying someone elses. Secondly, if you buy shares, it's not tangible and could go to zero. By offsetting shares, it promotes investment in companies which allows them to grow. In housing, sure, you're paying more than your rental income but that's also because by the end of it, you have a HOUSE! For the person just renting it out before they move in, negative gearing doesn't mean anything to them and doesn't discourage their purchase. However, it can attract wealthy people willing to pay more than what it's worth, there was a near 10% increase in landlords owning 5+ properties since negative gearing. Mind you, this was an article in 2017.

                  I just think people don't realize how were in unprecedented times. Computers and phones are only a decade or two old, AI is relatively knew and threatens to take over thousands of jobs. Water and fertile soil is decreasing and climate change is a thing. I think our way of life is extremely fragile and making housing super expensive isn't going to help. No matter how you look at it, having a roof over your head is one of the best things you can have in the case of something like this. Something becoming less affordable for the general public, maybe I attributed it too much to landlords and negative gearing. The thing is, all my other extended family are in that mindset of land being limited and wanting to buy it because they can rent it out, offset their taxable income and sell it for 2x value down the track. I don't think their view is uncommon either…so when the common person is irresponsible, in situations like this, everyone gets screwed, the tax payers now and the children that will be paying off the debt later due to irresponsible spending. It was wrong of me to say all property investment is done under evil intentions but there definitely is.

          • aboogee on 20/04/2020 - 07:37

            @[Deactivated]: agree with your point to some extent. we should manage debt levels or we will be another Greece or Italy.
            but the problem is expenditure is rising when productivity is slowing.
            the only way to overcome this is to have improved productivity when we come out from the pandemic which i am sceptical about.
            otherwise using superannuation is just kicking the can down the road (ie more people with no super and gov have to subsidise)

            not sure if anyone shares my view, but during the light rail construction, i saw 1 person excavating (doing real work), 2 person holding signs (ok sort of doing real work), 2 person chatting with each other (maybe doing real work), a few more on the phone (well… dont know). sigh. this was of course at about 11pm when i was returning from work and no ones looking except me and the poor taxi driver who made $30 from driving me home for like 15-20mins.

        • Kenb0 on 19/04/2020 - 20:49
          +1

          Just to clarify because this seems to be parroted incorrectly everywhere:

          I should invest it into super so I can access it at 65?

          Right now, you can access your super at 60, NOT 65. 65 is the age that you can access the age pension if you qualify for it

          And also, the age at which you can access your super has been changed ONCE since super was introduced in the early 90s and it was only changed in 2015

          Other than that, please carry on.

    • Typical16-bitEnjoyer on 19/04/2020 - 21:39

      Investing in property isn't suitable for everyone either. It's not just investment on paper. You are signing away 99% of your property rights to a living, breathing tenant.

      Plus, in my experience, a lot investing in property have no real idea what they're doing. Key example - anyone who bought a metro Perth property 10 years ago. Property prices went up drastically during the "boom". However, nearly guaranteed worth LESS now than when they purchased it.

      You can be self sufficient and save for your retirement without rolling the dice.

      • S2 on 19/04/2020 - 21:59

        Investing in property isn't suitable for everyone either.

        agreed. Humans just love a hype train. Crypto anyone? I heard from a friend of a friend, who's aunt knew a guy who once spoke to a girl that said it's going to moon.

        without rolling the dice.

        I feel like a die has to be rolled somewhere. Particularly if your idea of retirement is to live well.

        • Typical16-bitEnjoyer on 19/04/2020 - 22:13

          Investing is essentially gambling. Saving is not.

          A lot of peeps with a mortgaged PPOR and mortgaged investment property probably would be in a better financial situation if they had put efforts towards paying off their PPOR instead of over leveraging themselves. They probably believed the fallacy that property always goes up.

          • cloudy on 19/04/2020 - 22:59

            @Typical16-bitEnjoyer:

            Investing is essentially gambling. Saving is not.

            Do you have all your savings in cash? out of interest

          • S2 on 19/04/2020 - 23:14

            @Typical16-bitEnjoyer:

            Investing is essentially gambling. Saving is not.

            It's not gambling if you know you're going to win ;)
            Besides that, investing allows you to leverage, with property being the vehicle you can leverage the most on. I don't think there's any amount of saving you could do to achieve the same reward as property investing.

            put efforts towards paying off their PPOR

            Whilst I agree this is a good strategy, it is limited by your income. If you purchase an investment property, you could get rental income too. If you want greater reward, there has to be risk.

            They probably believed the fallacy that property always goes up.

            we've covered human hype trains.

            instead of over leveraging themselves

            I don't think anyone disagrees with this. Sometimes it takes hindsight to realise it.

            • Typical16-bitEnjoyer on 19/04/2020 - 23:31

              @S2:

              It's not gambling if you know you're going to win ;)

              Yet here we are with many, many landlords up in arms about lost rent :)

          • Sbah22 on 19/04/2020 - 23:19

            @Typical16-bitEnjoyer: Zeggie…saving…from what I think you are implying( capital protected savings in a bank account I am assuming) is a gamble.
            You are gambling that inflation will be less than the return on your savings

          • dufflover on 20/04/2020 - 08:13

            @Typical16-bitEnjoyer:

            They probably believed the fallacy that property always goes up.

            Even if so, I know a few people who are "investing" for this reason (quite obviously for the capital gains) … but then never plan to sell the place.

            They will never make their investment back in rents that's for sure the prices they have paid. They might have a safety net as in something they can sell if they run into tough times, but they couldn't quite join the dots when I said you only get the gains when you sell, whenever that is. Aussies love their equity and paper value I guess.

  • burningrage on 19/04/2020 - 18:38
    +3

    My head hurts reading OP.

    • CalmLemons on 19/04/2020 - 20:16

      I reckon the headache from the corona is nowhere near as bad as the headaches the comments on social media are causing in relation to it.

    • tessel on 19/04/2020 - 20:16

      The whole thread is a wall of text. It's clearly a sensitive topic. /me grabs some more popcorn

  • abc123z on 19/04/2020 - 21:27
    +1

    I don't believe this is actually law yet in Victoria. They haven't passed any legislation yet. QLD were making proposals and presenting them as law on official websites with no disclaimer that they weren't law yet and now they are saying those proposals will change radically (and they still haven't updated their website). It seems vic are presenting these proposals as law already too which is disappointing.

    Best not to agree to anything formally until the laws are actually passed. In the interests of potentially both parties not just the landlord.

  • cloudy on 19/04/2020 - 22:57
    +6

    Love how my tax payers dollars continue to subsidies mom and pop property investors. Can't let those property values fall!!! Give them CGT discounts, give them negative gearing! But don't let them fall behind in bank payments if tenants cant afford to pay rent.

    Pretty low risk investment property

    • parsimonious one on 20/04/2020 - 17:04
      +1

      Indeed.

      Add to that, the little landlords seem to think they are doing society a favour by buying up multiple properties, failing to see that its everyone else tax dollars subsidising them.

  • nomoneynoproblems on 19/04/2020 - 23:10
    +6

    If a pandemic isn't gonna crash the Aussie property market, I dunno what will. Future generations are absolutely screwed…What a joke.

  • tomleonhart on 20/04/2020 - 03:39
    +8

    And again the government is out to punish saver and reward debt loader.

    • cloudy on 20/04/2020 - 19:49
      +1

      Can’t give you enough upvotes.

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