Landlords, What Value Do They Provide? and What about Renters?

deme on 12/04/2023 - 16:06

Alright, OzBargainers! Landlords - what value do they really provide? And let's not forget those pesky renters, too!

Landlords, those real-life Scrooges, are just in it for the $$$, right? But wait, could it be that they:

  • Rent out places for people to live? Shocking.
  • Keep properties maintained (or not)? Mind-blowing.
  • Pay taxes that fund local services? You don't say!
  • Offer a variety of housing options? How kind of them.

And let's not forget the renters. What are they even doing?

  • Paying the landlord's mortgage? Lucky them!
  • Keeping the property in good condition? How generous.
  • Being part of the local economy? As if they had a choice.

What do you think, fellow OzBargainers? Are landlords and renters more than just greedy and ungrateful caricatures? Let's share our thoughts.

Home & Garden

Comments

  • askbargain on 12/04/2023 - 16:08
    +1

    try using chatgpt

  • Crow K on 12/04/2023 - 16:12
    +21

    (tired) can't we just assume this page is filled with arguments for and against both sides and be done with it?

    • GG57 on 12/04/2023 - 16:14

      Yes

      • Crow K on 12/04/2023 - 16:17

        thank you, i promise i'll culture wars properly tomorrow

        we all will, for reals

    • AustriaBargain on 12/04/2023 - 16:33
      +1

      I dunno. If there's more renters than property investors who are eligible to vote, then shouldn't us renters be controlling how the system works? Shouldn't our people be voted into Parliament? Of course Parliamentarians are property investors themselves so they have no interest in making a system that works for the majority when they are in the minority who are benefiting from the way we do things right now.

      I've said it before, but I think it would be interesting if there was a movement where renters only voted for candidates who owned no property except the one they currently live in and where it became fashionable to divest of your "property portfolio" if you wanted to get into politics. "Without property investors there would be no homes for renters!", except we are an ENTIRE COUNTRY, I think we would figure out how to solve that problem, if property values plummeted and investors sold their houses and bought stocks and bonds instead. The property investor is not the smartest person in the room, we wouldn't be living in tents on the streets without them..

      • [Deactivated] on 12/04/2023 - 16:37

        Looks like the clan have clocked off from the 'culture war' front for today

        • AustriaBargain on 12/04/2023 - 16:39
          +2

          I'm just saying there's more of us than there are of you. When the system stops working for us don't be surprised if there's a redefinition of what the system is. Property investors could have banded together and formed a lobby to make sure the property market is sustainable long term, there was never anything stopping them from doing that, except maybe innate greed.

          The property market is growing by value at the rate of trillions per year, how does that make sense?

          • [Deactivated] on 12/04/2023 - 16:51
            +2

            @AustriaBargain: Why must there be this 'us vs you' on a bargain forum?

          • mit on 12/04/2023 - 19:47
            +1

            @AustriaBargain: The property market grows at whatever rate due to supply and demand like any other (almost) free market. There are more people wanting to live in Australia so prices go up. Once you add the cost of living expenses etc and population growth and immigration it makes sense.

            There is no need for anybody to make anything sustainable in a free market - the market will do it by itself. ie. unsustainable = house prices and rent will plummet similar to stock market crashes. Unfortunately (or fortunately), not enough renters are willing to be homeless for any period of time so in some sense the demand side of the market is always growing relative to supply. Shelter and food come first before all else.

            If you're thinking there's going to be a redefinition of the system, it's probably going to be dark days for everyone. Those kinds of things only happen with wars or widespread disasters - maybe the zombie apocalypse. Eg. Jews losing all their property/possession to the Nazis

            Hypothetically, let's say the system does get redefined somehow. Property won't be repossessed because it was legally bought - too much distrust would occur in such a case. If the conditions are not beneficial to the landlord, they won't rent the property out. And if they don't rent it out, there's fewer properties available yet again which will drive rents up and make it more unsustainable for renters. If it's so bad for landlords, they'll just leave it vacant if they can afford to or sell at the ridiculous prices that will likely occur if the shortage of housing is that bad. And so the cycle continues.

            Side note - I think Keating tried to abolish negative gearing a while back and the backlash in increasing rents made them reverse course.

            • AustriaBargain on 12/04/2023 - 19:57
              +5

              @mit: Except demand isn't just driven by the number of people renting, it's also driven by the number of people who want to buy a house as an investment because they speculate it will grow in value. The house has the base utility value, but it also has speculative investment value.

              Suddenly you have people invested heavily in the value and speculative value of houses. Things are way more dynamic than just a simple equation of number of houses divided by number of people wanting to rent them or whatever. If the government wants to build a tower full of cheaper community apartments then people will be all like "no way José, it'll lower the land value of the surrounding area!". Plus if you were pretty sure that a house was going to grow 400k in value over the next 10 years and were thinking of buying it, then suddenly someone else might be willing to pay 200k more for it so they can make 200k more 10 years from now instead of you making 400k more.

              Treating houses as an investment, rather than being a landlord as a job, are two very different things. I would agree with you that there is good to society in property investment, but only for new developments. Treating existing houses as pure investments helps no one except the property investor. Property investment on existing properties is a cancer on Australian society.

              • mit on 12/04/2023 - 20:10
                -1

                @AustriaBargain: Yes I agree house and rent prices is not that simple but it'd be impossible to go through everything here.

                So are you saying you want to abolish property as an investment? This would raise issues with commercial property purchases and building and would most probably cripple the economy in some ways. In this case, I could see the government zoning where commercial development can and cannot happen but it'd be so inefficient. I think I agree this could have worked about 50 years ago before the property boom and at the bottom of a recession but there are too many conflicting governing objectives to make this a priority. And lets face it, which of our parties has more than a 3 yr plan… let alone a 50 yr plan.

                • AustriaBargain on 12/04/2023 - 20:33
                  +3

                  @mit: I'm saying for existing homes, that people live in, the incentives to invest should be removed and perhaps even disincentives introduced to cool the market back to realistic levels. New properties, go nuts. Commercial shops and warehouses, do whatever we are already doing. But existing homes should just be allowed to be homes like back when we were kids for those of us old enough to remember what things used to be like. If some suburbs get land values so low that the landlord literally can't afford to replace a falling apart kitchen, then introduce tax breaks specifically for upkeep of a home with low land value or whatever.

                  I'm saying that these problems can be solved. The housing bubble and treating existing homes as high yield investments is not an unsolvable problem, it isn't a monster that has gotten too big that we can't do anything about it. Do we rule our own country or do the narrow interests of property investors rule it? And why do we owe anything to people riding the property bubble, why should we rule out solutions to housing affordability just because greedy property investors might not get rich quick like they were lead to believe when they bought their houses? It's absolute madness. And things will come to a head if land values keep rising. Property investors may be fine with Chinese millionaires joining our bubble, but if actual citizens can't afford to live or even share a house in our own cities then I think we'll find a political party willing to dismantle and rebuild the housing situation will come to power sooner rather than later. Maybe home owners are pleased to see high land values, but at the end of the day unless they are about to retire and move to Spain then if they sell their house they will need to buy rent or another one and it'll be just as expensive as the one they just sold so they will hardly come out ahead. I think most home owners, who don't own investment properties, will want housing security more than high land values at the end of the day. Most of them will have kids too who need to rend and buy, and grandkids.

          • miwahni on 12/04/2023 - 22:06

            @AustriaBargain: Renters could also have banded together to form a lobby and maybe voted Scomo out in 2019, when Bill Shorten was campaigning to dump negative gearing provisions and CGT exemptions. What stopped them? Innate apathy?

            • AustriaBargain on 12/04/2023 - 22:11

              @miwahni: That's what I'm suggesting renters do, and convince home owner occupiers who don't have investment properties to join too.

              • sakurashu on 21/04/2023 - 09:19

                @AustriaBargain: Just want to throw in that there aren't more renters than non-renters:

                "Overall household home ownership rates in Australia (including dwellings with a mortgage and those owned outright) have hovered around 70 per cent since 1961."

      • brendanm on 12/04/2023 - 16:55
        +1

        If there's more renters than property investors who are eligible to vote, then shouldn't us renters be controlling how the system works?

        There are more owners than renters.

      • Crow K on 12/04/2023 - 16:58

        I guess, if you wanted to base your vote (and then everyone else as well) on a single issue.

        Under that logic actual Nazis and tree-hugger lefties who both don't own properties would get votes on an identical basis?

        Of course, it seems short-sighted to actually suggest someone would make a politi-

        you know what, I wasn't kidding about being too tired for this, here's the link to remind everyone what happens when single-issue parties sprout up: https://en.wikipedia.org/wiki/Australian_Motoring_Enthusiast…

      • Ghost47 on 12/04/2023 - 19:09

        If there's more renters than property investors who are eligible to vote, then shouldn't us renters be controlling how the system works?

        Lol, never assume someone will vote for their own benefit. I bet you plenty of new immigrants actually think the Liberals are politically "liberal" and not actually conservative.

        • AustriaBargain on 12/04/2023 - 19:10

          And that voting for Labor will cause them to have to do more hard "labour" for less money to benefit a higher class. The two parties should really change names and colours.

      • Sinnerator on 13/04/2023 - 07:29

        When the average voter votes based on charisma, good looks or lies then no voter has a genuine say in the matter.

        Do your research before voting, you don't need to vote the big3/4.

    • HeWhoKnows on 13/04/2023 - 12:35
      +1

      Its obvious OP is a renter given the EXTREMELY BIASED nature of their post.

      All I have to say is that Landlords put up all the money where tenants cant, in order for them to have a place to live at a tiny fraction of the purchase price.

      In fact an investor makes more money today earning interest from a bank acount than they do from rent after all the expenses are taken out. Then if you also factor in the cost of painting, carpet, replacing the hot water system and other repairs it doesnt leave much forthe landlord at all.

      Landlords take on ALL THE RISK!
      Renters can walk away anytime and even without paying rent.
      So tenants have absolutely NOTHING TO LOSE !

      Thats all

      • Crow K on 13/04/2023 - 13:12

        If it were as black and white as that ("you make more money by having cash in the bank than having an investment property") then no one would own an investment property.

        Unless there's more to it than that (and there are times where cash has better returns and times when property has better returns). In which case it's foolish to take one example ("cash currently has a better return") and apply it to all cases.

        Also "Renters can walk away anytime and even without paying rent" sounds like nonsense. Wouldn't there be legal consequences of not paying rent?

        Or again, is it "in some circumstances people have been able to break rental agreements without requiring payment" and those specific circumstances are being applied to all cases?

        I know we had a day off from the culture wars but we need to do better than this standard of discussion.

        • HeWhoKnows on 19/04/2023 - 08:13
          +1

          Rents have not been viable for the last 10 years
          They are starting to show a better return now but a landlords net rent after all espenses is still under 3%
          And the landlord must then sacrifice 35-40% of whats left to the tax man.
          So the renters are better off from that too.

          meanwhile some bank accounts are offering up to 5% interest with NO EXPENSES!
          many are paying 4.5% and better right niow

          Most landlords hope to make a profit on the capital gains
          But capital gains are not cash. You cant live off them.
          They are just paper profits until one sells
          And then if the investor does sell and make a profit the tax man takes his share as well
          So the poor old property investor contributes to society there too.
          However some investors end up losing money on the sale as well.
          And those capital loses get locked up in the tax account until the invstor makes a significant capial gain elsewhere (if they do)

          So please dont tell me to pity renters

          They have it all thier way.

          As i said.
          If tenants dont like the agent or the landlord or the property or the rent paid, they are free to move on

          And like I said, many tenants get away with not paying rent for the last few weeks as well, so using up all the bond, so nothing left in the bond to repair any damage caused by such tenants.
          And no, there is no legal recourse for this - because the landlord has no idea of the tenants new address on which tio serve notices
          And there are more of them around then you think

          • bleugh on 19/04/2023 - 08:21

            @HeWhoKnows: you're wrong about the 35-40% tax…
            yes, Rental income is taxable - but…Depreciation and expenses drastically reduce the amount of tax paid.
            or, spin it another way…
            if the tennant pays $100 a week rent,
            your 'banked' income isn't $100-agent-tax

            it's actually $100 MINUS expenses
            your expenses are
            agent - depreciation - expenses (mortgage payments, new stuff bought, maintenance, strata, bills, etc etc) - tax
            so, your 'banked' can often effectively be $120 or more

            ($120…this is 'kind of' negative gearing, where your TOTAL EXPENSES of the property outweigh the rental income……
            so, the government GIVES you $20 of tax reductions on your main job income!)

            so, own enough properties and your main job income becomes tax free

            Note, the above is GROSSLY over-simplified, but now you understand why so many people make a paper 'loss' on rental properties

            • HeWhoKnows on 24/04/2023 - 16:02

              @bleugh: Mate YOU HAVE NO IDEA!
              Im not going to bother explaining
              All I can say is…
              Again you have shown your heavy tenant bias and complete ignorance of how taxation works as well as the risks and costs involved with owning an investment property.
              You are one of them OP!

      • Hackney on 14/04/2023 - 12:52
        +2

        @Amazingone.Yup, they seem to forget owning a property comes with a lot of risk.Maintenance,horrible tenants who do not look after the property(quite common) I could go on & on.

        • HeWhoKnows on 24/04/2023 - 16:05

          And terrible tenants like OP!

  • bdl on 12/04/2023 - 16:16

    why

  • MS Paint on 12/04/2023 - 16:18
    -2

    I'm guessing you're a renter.

    • Bargainitis on 12/04/2023 - 16:30
      +3

      haha i'm done with OZB today.

      See you guys tomorrow.

  • Tight Tim on 12/04/2023 - 16:25
    +1

    Grabs popcorn

  • AustriaBargain on 12/04/2023 - 16:28
    +1

    Being a landlord used to be a profession. It wasn't a get rich quick scheme, though if you were good at it you would end up rich by the time you were old.

    The term you're looking for to describe people who buy-to-let is "property investor".

    • [Deactivated] on 12/04/2023 - 16:30

      What if the term here is 'inheritance'?

      • AustriaBargain on 12/04/2023 - 16:37

        Yeah that happens, but intergenerational wealth doesn't last. The next generation blows it usually, and the generation after certainly does if not. Inheritance is still a problem. When a toddler has millions in their super then you know the system is (profanity).

        • [Deactivated] on 12/04/2023 - 16:39

          I blame Keating!

        • Seraphin7 on 12/04/2023 - 17:03

          intergenerational wealth doesn't last

          Very true. This is a topic that gets lost in the caricatures. Of course, there are examples of "old money", "trust fund babies", and so on, but these are actually very small in number.

          The reality is that simple mathematics often leads to inter-generational wealth dissipating quite quickly. Once the "family trust" gets divvied up across a couple of children and then the grandchildren, the original pool of wealth often gets divided into non-sustainable pieces. Some limbs of the family will sell off the assets for consumption, others may effectively maintain their (smaller) share of the wealth, but few will actually re-create the wealth of the "founding generation".

  • bobbified on 12/04/2023 - 16:35

    Well, they depend on each other.
    Without landlords, there'd be no renters. Without renters, there'd be no landlords!

    (btw, I still hate that word "Landlord!)

  • Mokr on 12/04/2023 - 16:45

    It's because you are renting on the low end of the market.

    Go to the medium and it's nicer

  • netjock on 12/04/2023 - 16:53
    +6

    Done to death. Landlords who don't like it can sell. Tenants who don't like it can go and buy (there is a property for every price point, just not every price point at every location)

    People complain because they feel ripped off. 99% of the time it is people having unrealistic expectations of their role in the whole thing.

  • CyberMurning on 12/04/2023 - 16:56

    To make Australia great again

  • djones145 on 12/04/2023 - 17:28

    agree
    the government should take over all houses and businesses and allocate goods and housing to people
    we then work for the government!

    • AustriaBargain on 12/04/2023 - 17:45
      +1

      The government could strip all buy-to-let investment incentives from existing properties. If investors are getting new properties built sure maybe that's useful. But pumping up the price on existing properties? What, would the properties just sit vacant if they didn't have an artificially high value as an investment? If a home cost 50k would no one bother buying it or renting it out, what's the logic here, why do we need existing properties to have higher values, who does it benefit?

    • mit on 12/04/2023 - 19:23
      +1

      so.. communism? fairly sure that isn't better.

  • Ghost47 on 12/04/2023 - 19:40

    Something they didn't show in Mad Max was that there were temples built and dedicated to landlords. True story.

  • bleugh on 13/04/2023 - 07:56
    +2

    AU is much nicer for landlords due to things like 'negative gearing' and 'dilapidation' and 'depreciation'
    …which REALLY distort the financials to the point where those with multiple properties AND a full time job can effectively pay zero tax :-(

    I have no idea what the solution is for the current crisis, any adjustment will hit the economy HARD and fast..
    I do believe the government should introduce some form of maximum percentage rise in rental and introduce longer eviction periods for longer term tenants.

    Real estate agents are a large part of these rental increases - they're aggressively pushing property owners to increase rental prices…which increases the real estate's income as usually properties are managed on a percentage basis rather than a fixed fee…
    every 10% increase in rent is also 10% more cash in the real estate's pocket…

    There's also the increasing issue of body corporate / strata payments being massively increased, it's a rort where often management companies are set up by the ones that built the places.
    a builder may sell an apartment in a new tower in Chatswood for 20k less than 'market price' to make it look attractive,
    BUT…those $600 a month strata and management fees soon add up long term and need to be paid by someone :-(

    Then there's the insurance needed on a multi tenanted buildings……more value = more income (also equals larger payouts, but stricter terms and more omissions to reduce payouts)
    then the multiple energy / water / gas meters on one lot giving those companies a huge return given the square meters being occupied compared to a semi detatched in the 'burbs
    then the council tax / rates…if the land value increases, so does the tax clawed in by the local council….

    there's too many vested interests in too many companies related to the artificially high value of properties
    all of which push the $$ required to make a return on 'investment' up, which gets passed to the renters :-(

    I'd love to see transparency of income like some countries do - it'll be eye opening some of the stuff we see from the people setting policies

    • humilem servum tuum on 13/04/2023 - 22:21
      +1

      Here's a controversial take:
      Get rid of multiple home ownership. Like why do people need more than one house? That's just greedy. It will then open up/create a great supply of houses on the market especially since ABS for 2019-2020 says there is at least 2 million houses available.
      https://www.abs.gov.au/statistics/people/housing/housing-occ…

      Then all those profits from the house sales can be invested in superannuation, ETFs, shares or whatever.
      And if you are an Australian citizen or permanent resident ordinarily residing overseas, sorry mate, but you've got to sell up like the FIRB does to temporary residents.
      https://www.canstar.com.au/home-loans/australian-property-ma…

      And then another controversial take:
      Only adult human individuals can own homes. So no companies, trusts, superannuations, tax shelters, robots, AI, pets, animals etc. can own homes. None of them can live in and maintain them anyway. We all know those homes are owned by them for tax purposes or some crazy estate/succession planning. Only caveat to this is for the orphaned children, handicapped and intellectually challenged but they have to live in those homes. Also, get rid of land banking. It is a waste of scarce resources.

      And then another controversial take:
      If people insist on having multiple residential investment properties, treat it like a business including mandatory GST registeration which means amending existing tax and GST laws. If this business is not the main source of income, then it will be locked up as a non commercial business. Governments will love this as it will generate heaps of GST revenue and potentially lock up non-commercial losses that can't be offset against other income, saving even more tax revenue. AirBnBs will also fall under this regime. Hotels and motels already operate as business paying/collecting GST. So transition to this regime should be fairly seamless.

      And the reasons why these proposals will never go through:
      * Everyone, including farmers and their mothers have vested interests.
      * The haves do not want a nerf and lower themselves to the level of the have nots.
      * It makes too much good sense.

      • bleugh on 19/04/2023 - 08:30

        sounds sensible to some extent - I do like the 'individuals' owning homes bit..
        no-one truly realises just how distorted the global market is..

        ..don't fancy paying tax abroad on your property? - roll up a trust and just declare the negativley geared income (which will be close to zero for tax purposes)
        the system's set up so those owning one or two properties whilst living abroad costs a fortune in tax as the fees on trusts etc just don't make it viable.
        own a handful of properties and the fees are lower than the tax implications

        an example, if you own in AU and move to the UK for a few years for work, renting out your AU house for a few years…(or vice versa)
        the rent that hits your AU bank account is added to your UK income and taxed in the UK…for most this means 25-40%+
        so, that $100 a week 'income' actually only becomes $60-75 a week, which rarely covers the mortgage

  • Waltervp on 13/04/2023 - 08:40
    +1

    Its a two way street, good manners benefit both parties. But we treat real estate primarily as investments in Australia, and secondary as accommodation. So there will always be this money optimising tactic, where tenants expect everything from landlord and vice versa. Until tenants are made to feel they actually live in a home permanently they wont really care much about anything as the landlord may want to move in himself, renovate or sell or put rents up at end of year…

  • Cartmanizm on 13/04/2023 - 17:28

    Haha, I love this post, it's a real vibe. Landlords and renters, huh? They're like PB&J, can't have one without the other, amirite?

    I mean, yeah, landlords can seem like total money-grabbers sometimes, but hey, they're just trying to make a living too. They give peeps a place to crash and deal with all those pesky repairs (when they're not being lazy, of course). And those taxes? Gotta keep those streetlights shining somehow, right?

    As for the renters, they're just out here doin' their thing. Paying someone else's mortgage might not be the dream, but it's a roof over their heads, and that's gotta count for somethin'. Plus, they add some life to the neighborhood and keep the local shops in business.

    So, like, I dunno, man. Maybe we're all just playin' our part in this crazy game called life. Let's not be too harsh on each other. What do y'all think? Are we all just misunderstood? Let's spill the tea! 🐸☕

    • bhubb18 on 24/04/2023 - 13:26

      Aww jeez

  • 2esc on 13/04/2023 - 22:10

    Ultimately a pointless discussion

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