Melbourne property \u2018best buy in 25 years\u2019 after budget tax changes<\/a><\/p>\n Doctor\u2019s housing plan hits Albo roadblock<\/a><\/p>\n The forecast from Found It indicates rent rises will completely wipe out the Australian government\u2019s promised relief of a $250 tax break promised for working families, in the next financial year. <\/p>\n By July, rises would far exceed the $2 a week rent increase forecast by the nation\u2019s Treasury in May\u2019s federal budget \u2013 a sum $4 less than Found It\u2019s $6 projection.<\/p>\n The property technology and research platform\u2019s analysis noted there was already existing momentum in rising rents that would soon be compounded by a supply crunch, with new homes being outpaced by population growth, as well as rising interest rates pushing investors to recoup costs.<\/p>\n They are anticipating the situation will worsen ahead, with changes to negative gearing and capital gains tax likely to cut back on the number of investors buying property \u2014 creating a thinner market for rentals.<\/p>\n The upshot for Melbourne is hefty rental increases. <\/p>\n At the upper end of the rental increases will be Bayside, tipped for a $13 rise in house rents, equivalent to $675 more a year, and $12 for units, as well as Stonnington, where tenants in houses and units will be out of pocket an extra $11 a week.<\/p>\n The minimum expected for houses is a $6 a week higher rental payment in Sunbury, Tullamarine and Broadmeadows, Brimbank, Melton and Bacchus Marsh and Wyndham.<\/p>\n The smallest anticipated increases for unit rents were $8 a week upticks expected in more affordable areas like Frankston, Brimbank, Sunbury, Whittlesea and Wyndham.<\/p>\n Property management firm boss and former Real Estate Institute of Victoria president Leah Calnan said she was unsurprised to hear suggestions that treasury\u2019s modelling for projected rent increases could come in so low. <\/p>\n \u201cI don\u2019t know where they were able to achieve $2 from,\u201d Ms Calnan said. <\/p>\n \u201cIt does concern me that we are going to see rents rise without the financial tax benefits that investors would normally have, it does raise the question of how much more can an investor support the renter in their care.\u201d<\/p>\n Noting that with rising interest rates and land tax costs, many would more frequently have to consider rent rises if they did not have access to negative gearing.<\/p>\n The outspoken rental advocate behind the S\u2014t Rentals Australia social media accounts, Jordan van den Lamb, also disagreed with the $2 estimate.<\/p>\n \u201cAs soon as the Treasury modelling came out, I tweeted that it hadn\u2019t modelled for landlord derangement,\u201d Mr van den Lamb said. <\/p>\n He noted that he had seen comments across landlord social media threads indicating existing investors who had their tax benefits protected were planning to raise rents as a protest over the tax changes.<\/p>\n Mr van den Lamb added that there should be more stringent enforcement of Victoria\u2019s vacant residential land tax and greater capacity to compel owners to make empty homes available to tenants, with Prosper Australia recently indicating 100,000 Melbourne homes were empty or under-utilised. <\/p>\n While building costs remain high, he noted building new homes would just lead to more expensive residences that lower-income tenants could not afford and if the nation was to build its way out of the rental crisis it would need to be the government producing more public housing. <\/p>\n \u201cPeople are struggling to keep a roof over their heads, we are seeing more and more people living in homeless encampments and we can\u2019t afford higher rents, particularly while wages are moving so slowly and inflation is expected to be so high,\u201d Mr van den Lamb said. <\/p>\n \u201cBut the rents will continue to rise.\u201d<\/p>\n Tenants Victoria chief executive Jennifer Beveridge said while it was too soon to predict how the budget measures would impact rents, Victorian tenants had some protections.<\/p>\n \u201cConsiderations include, but are not limited to, the size of the increase relative to the current rent, the rate of increase compared to Melbourne\u2019s Consumer Price Index, rents for similar properties in your neighbourhood, and the overall state of repairs and condition of your home,\u201d Ms Beveridge said.<\/p>\n \u201cIf renters believe that a rent increase is excessive, they should challenge it to Consumer Affairs Victoria within 30 days of receiving the notice.\u201d<\/p>\n However, she noted that the state needed more social housing with an extra 8000 homes needed each year going forward to accommodate those who could no longer afford market rent.<\/p>\n HIGHEST RENTAL INCREASES \u2014 HOUSES<\/p>\n Bayside \u2014 $13 more a week<\/p>\n Stonnington \u2014 $11 more a week<\/p>\n Boroondara \u2014 $11 more a week<\/p>\n Stonnington \u2014 $11 more a week<\/p>\n Darebin \u2014 $10 more a week<\/p>\n Port Phillip \u2014 $10 more a week<\/p>\n Yarra \u2014 $10 more a week<\/p>\n Glen Eira \u2014 $10 more a week<\/p>\n Manningham \u2014 $10 more a week<\/p>\n Brunswick \u2014 $10 more a week<\/p>\n HIGHEST RENTAL INCREASES \u2014 UNITS<\/p>\n Bayside \u2014 $12 more a week<\/p>\n Melbourne City \u2014 $12 more a week<\/p>\n Glen Eira \u2014 $11 more a week<\/p>\n Keilor \u2014 $11 more a week<\/p>\n Manningham \u2014 $11 more a week<\/p>\n Monash \u2014 $11 more a week<\/p>\n Port Phillip \u2014 $11 more a week<\/p>\n Stonnington \u2014 $11 more a week<\/p>\n Whitehorse \u2014 $11 more a week<\/p>\n Yarra \u2014 $11 more a week<\/p>\n Location names reflect statistical areas, not suburbs or municipalities<\/p>\n Source: Found It<\/p>\n The Budget\u2019s Big Changes For Property Investors<\/p>\n Negative Gearing<\/p>\n \u2013 From July 1, 2027, negative gearing is limited to income you are drawing from rental properties, and you can\u2019t deduct against your full income;<\/p>\n \u2013 Losses that are not claimed can be rolled forward into future tax years, up to and including when you sell the home, then deducted against future rental income or against the capital gains tax at the time of sale;<\/p>\n \u2013 Homes bought after 7.30pm, May 12, can only claim negative gearing until July 1, 2027;<\/p>\n \u2013 Homes bought before 7.30pm, May 12, will have negative gearing grandfathered;<\/p>\n \u2013 Exemptions: commercial property, new builds, off-the-plan purchases, homes bought as part of a Self Managed Super Fund;<\/p>\n Capital Gains Tax<\/p>\n \u2013 From July 1, 2027, the 50 per cent capital gains tax discount for investment properties owned for more than a year will be replaced by indexation and a minimum 30 per cent tax rate; <\/p>\n \u2013 Inflation will be deducted from the capital gain, then any real gains left over will be taxed at your marginal tax rate \u2014 though not less than 30 per cent;<\/p>\n \u2013 The major change is that under the older system 50 per cent of the capital gain was not taxed;<\/p>\n \u2013 It is believed homes bought after 7.30pm, May 12, and sold more than a year after that date, but before July 1 will be able to claim the old 50 per cent discount \u2014 however this may yet be clarified differently by the government;<\/p>\n \u2013 100 per cent of any gains made for a home owned less than a year are subject to taxation;<\/p>\n \u2013 Homes bought before 7.30pm, May 12, will have capital gain fixed on July 1, 2027, with the home valued at that time and the new tax setting applied for any future gains thereafter;<\/p>\n \u2013 Exemptions: Your primary residence (100 per cent tax discount applies), buyers will be able to choose the old system or the new one when they purchase new builds and off-the-plan properties, superannuation funds are exempt from the changes;<\/p>\n \u2013 Experts believe properties that achieve annual growth below 4.5 per cent a year will likely be better off under the new system, which is fairly common for commercial investments;<\/p>\n Sign up to the Herald Sun Weekly Real Estate Update. Click here <\/a>to get the latest Victorian property market news delivered direct to your inbox.<\/p>\n MORE: Vic home building boom takes $370m hit<\/a><\/p>\n China-based buyer snaps up Sam Newman\u2019s ex-Melb pad<\/a><\/p>\n Portelli reveals supermarket take over for Melb\u2019s west<\/a><\/p>\n Originally published as Melbourne rent rises to triple government forecast, kill tax relief<\/a><\/p>\n<\/p>\n