Society/Culture Landlords - What is the point?

[faible]

Love it
Create a fake problem (CGT on primary residence)
Argue for a solution that benefits the wealthy (CGT removal for selling investments to "first home buyers")
Throw in some racism (cashed up foreigners will take advantage of this generosity)
Get people to argue about your made up situation

But the wealthy are gifting their equity. They definitely don’t benefit, no sir.

 

[Gralin]

But the wealthy are gifting their equity. They definitely don’t benefit, no sir.

But you have to decide if the government can make them give it to migrants or not

 

[Taylor]

‘Gifting’ clearly means something very different to you than anyone else.

Yes, the younger get money for nothing simply by virtue of them never having bought a house before.

That the wealthy are winning too isn't a problem to me.

Only loser is government.

 

[faible]

Yes, the younger get money for nothing simply by virtue of them never having bought a house before.

That the wealthy are winning too isn't a problem to me.

Only loser is government.

You realise the first home buyer in your scenario is paying money in exchange for a product (a house in this case)?

Which is… not a gift.

 

[Taylor]

You realise the first home buyer in your scenario is paying money in exchange for a product (a house in this case)?

Which is… not a gift.

The government facilitating them buying a $1,000,000 property for $800,000 because they don't tax the seller is a gift.

 

[Gralin]

Not a gift from the wealthy is it

A gift from the tax payer

Also completely made up bollocks that would never happen

 

[faible]

The government facilitating them buying a $1,000,000 property for $800,000 because they don't tax the seller is a gift.

Paying $800,000 is still not a gift.

Are you one of those people who goes ‘look how much I saved!’ when buying a heap of stuff on sale instead of how much you’ve spent?

 

[Taylor]

Paying $800,000 is still not a gift.

Are you one of those people who goes ‘look how much I saved!’ when buying a heap of stuff on sale instead of how much you’ve spent?

No I'm not, keep projecting what you need though.

Not a gift from the wealthy is it

A gift from the tax payer

Also completely made up bollocks that would never happen

From the government, I agree. It encourages those holding assets to sell to those who don't. Their mortgages would be immediately ahead on equity too.

I don't care for the government getting the cap gain, it's not like they are building enough homes for the amount of people coming in anyway.

It's the government's fault, they can wear the cost.

The current owners can get a win, the first home buyers can get a massive win.

 

[barreness]

Do you prefer a reality where wealthier people are taxed or, and strictly or, one where first home buyer are sought out to sell property to at a significant discount for the tax advantage in doing so?

Because it seems to me that you're content with first home buyers being denied a massive leg up as long as wealthier people still get taxed.

And given the debt spending that goes on, I don't think we should look at tax as anything but an anti inflationary tool.

You'd be literally moving maybe hundreds of thousands of dollars in equity wealth to first home buyers but you'd rather continue as we are where the government isn't doing so well helping that so richer people can wear a few blows.

Damn those first home buyers. But you genuinely do need to decide if cashed up migrants are going to count as first home buyers because you're about to be smacked with headlines about how first home buyers have risen lately, politicians patting themselves on the back, and it won't be who you picture.

ok ok, lets go back. Capital gains tax stops downsizing? this was your argument, lets not get crazy, justify your shit

 

[barreness]

Do you prefer a reality where wealthier people are taxed or, and strictly or, one where first home buyer are sought out to sell property to at a significant discount for the tax advantage in doing so?

It's nice that you can set the rules in your fantasy market

I'd prefer a reality where the housing market isn't unaffordable for many

Because it seems to me that you're content with first home buyers being denied a massive leg up as long as wealthier people still get taxed.

Ah yes, I'm the bad person for thinking your fantasy is a farce

And given the debt spending that goes on, I don't think we should look at tax as anything but an anti inflationary tool.

This is true, on the MMT train I see. We could just change the numbers in some bank accounts to pay people to build public housing yes? Don't even need to give already wealthy land holders a tax cut

You'd be literally moving maybe hundreds of thousands of dollars in equity wealth to first home buyers but you'd rather continue as we are where the government isn't doing so well helping that so richer people can wear a few blows.

Paper wealth transferring to bank account wealth for the already wealthy, inflationary stuff

Runs under the assumption that house prices will never drop, just bubble things

Damn those first home buyers. But you genuinely do need to decide if cashed up migrants are going to count as first home buyers because you're about to be smacked with headlines about how first home buyers have risen lately, politicians patting themselves on the back, and it won't be who you picture.

Cool, xenophobia because the state is corrupt? Don't let the mask slip

 

[Captivating]

Rental report

www.dffh.vic.gov.au

Median Rent in Metro Melbourne is currently $560 or $29,120 / pa.

This will rise, annual change was 14.6% for example. A number that renters have no control over really.

It's a lot cheaper to own the house, once you can meet the barrier to entry of a deposit and the repayments.

Most of those things you named aren't even an annual expense, if you're replacing heating or hot water in 5 years that's a pretty bad deal.

Long-term renting is not a great financial option, as there's a point in life where your ability to earn income will be finished and you'll still be at the mercy of the rental market, whereas if you buy you're locked in at whatever the purchase price was at the time, and once you're paid off, you only have maintenance costs which are likely lower than ~ $30k p.a.

So it's probably in one's best interest to buy the principal place of residence if they're able. Investment incentives in the space seem pretty bad to me.

Maybe, maybe not!

If you buy a $800K house with a $700K loan over, say 25 years, then you're paying $762K in interest over 25 years.

So that's $1,562K to purchase a $800K house.

Housing goes up around 6% per annum on average.

Invest that $700,000 in the ASX200 and you make a 8-9% return per annum. Obviously income if taxable, but the interest on the loan deductible along the way.

So if you rent but also take out a home loan equivalent to invest, then you actually probably end up in front. Problem is, renters don't do that.

 

[Ghost Patrol]

Maybe, maybe not!

If you buy a $800K house with a $700K loan over, say 25 years, then you're paying $762K in interest over 25 years.

So that's $1,562K to purchase a $800K house.

Housing goes up around 6% per annum on average.

Invest that $700,000 in the ASX200 and you make a 8-9% return per annum. Obviously income if taxable, but the interest on the loan deductible along the way.

So if you rent but also take out a home loan equivalent to invest, then you actually probably end up in front. Problem is, renters don't do that.

So you think people that are struggling to buy a house can afford to pay rent while paying off a massive loan?

Which bank will lend that sort of money to someone with no assets?

 

[Frank Grimes]

The idea of changing the law to allow first home buyers to rent out spare bedrooms may help alleviate the housing affordability crises.

Though I don't think the banks should take in consideration income of renting out a spare bedroom when giving out a loan. Increasing the loan based on this will just increase house prices even more because it will give people greater borrowing capacity.

I think doing this will technically add to the supply side of housing and may reduce the upward pressure of rent increases.

The other question is if you rent out a room, then should the house need to meet the minimum requirements the Victorian government has set out recently/last few years?

 

[faible]

Invest that $700,000 in the ASX200 and you make a 8-9% return per annum. Obviously income if taxable, but the interest on the loan deductible along the way.

So if you rent but also take out a home loan equivalent to invest, then you actually probably end up in front. Problem is, renters don't do that.

It’s this bit that’s pretty important though, you can’t really go to the bank and get a $700k loan to go invest in shares if you’re a ‘normal’ person.

You can for a house. Also the interest rates are higher and the payback period much shorter, for example:

NAB Equity Builder

Diversifying your investments? Find out how to get share market exposure with a NAB Equity Builder ‘no margin call’ investment loan.

www.nab.com.au

It’s not really a comparable situation at all, the average renter isn’t going to just have $700k in cash sitting there anymore than the average home buyer does. The home buyer can get access to funds from the bank to ‘invest’ in a home, and the money they’re paying in rent goes to paying back that loan over a long period of time. In the scenario you’re renting and somehow got a loan for the equivalent amount and terms as a home owner, you’re still paying rent and paying down the loan.

 

[Gralin]

And margin calls are a thing

 

[Captivating]

And margin calls are a thing

Sure, but so is mortgage stress and a whole range of other issues that come with tying up wealth in one illiquid asset.

 

[faible]

Sure, but so is mortgage stress and a whole range of other issues that come with tying up wealth in one illiquid asset.

Renters have similar stresses, but aren't paying down the asset as they go. Thus the difference, it's not really comparable.

 

[Captivating]

Renters have similar stresses, but aren't paying down the asset as they go. Thus the difference, it's not really comparable.

They aren't comparable as home owners would be in a comparably worse situation. A renter who hasn't tied up their wealth in an illiquid asset can easily convert their asset to cash. Also, the average rent is more than $1,000 per month less than the average mortgage repayment. So they should be putting that $1,000 a month into liquid assets.

So it's more likely someone will encounter mortgage stress than rental stress.

 

[faible]

They aren't comparable as home owners would be in a comparably worse situation. A renter who hasn't tied up their wealth in an illiquid asset can easily convert their asset to cash. Also, the average rent is more than $1,000 per month less than the average mortgage repayment. So they should be putting that $1,000 a month into liquid assets.

So it's more likely someone will encounter mortgage stress than rental stress.

How is a renter converting their 'asset' to cash?

They're paying rent, or they're homeless.

They don't have a $700k mortgage from the bank, because the bank won't lend them $700k if they're not buying a house.

The demographic renting and the demographic buying are also different, renters will trend younger, buyers older.

You're trying to imagine a scenario where renters have somehow acquired a $700k cash loan to invest in Index Funds or some such, on the same terms as a mortgage which AFAIK isn't possible anywhere.

 

[Captivating]

How is a renter converting their 'asset' to cash?

They're paying rent, or they're homeless.

They don't have a $700k mortgage from the bank, because the bank won't lend them $700k if they're not buying a house.

The demographic renting and the demographic buying are also different, renters will trend younger, buyers older.

You're trying to imagine a scenario where renters have somehow acquired a $700k cash loan to invest in Index Funds or some such, on the same terms as a mortgage which AFAIK isn't possible anywhere.

No, I said, like for like, the renter should have extra saved because rental payments are less than mortgage payments. There is no 700,000 loan for index funds. Renters pay considerably less to live in the same house than a mortgage holder.

So renters should find it easier to deal with rental stress than a mortgage holder dealing with mortgage stress.

 

[Gralin]

Sure, but so is mortgage stress and a whole range of other issues that come with tying up wealth in one illiquid asset.

that is not the same as a margin call

 

[Gralin]

No, I said, like for like, the renter should have extra saved because rental payments are less than mortgage payments. There is no 700,000 loan for index funds. Renters pay considerably less to live in the same house than a mortgage holder.

So renters should find it easier to deal with rental stress than a mortgage holder dealing with mortgage stress.

you're assuming the renter and owner have the same income

you're also ignoring the fact that what you can borrow to buy is tied to your repayment ability but rent is not

 

[Gralin]

like I can't tell if we're dealing with financial illiteracy or just someone lying

 

[faible]

No, I said, like for like, the renter should have extra saved because rental payments are less than mortgage payments. There is no 700,000 loan for index funds. Renters pay considerably less to live in the same house than a mortgage holder.

So renters should find it easier to deal with rental stress than a mortgage holder dealing with mortgage stress.

So you've completely made up a scenario that isn't ever going to happen, and ignore that rent goes up whilst mortgage rates are based on the property cost at the time of purchase? You can also pay a loan off quicker and pay less interest on said loan.

Renters, as mentioned, are usually younger so why would they find it easier? You have to live 'somewhere' and the average metro rent in Melbourne is now $560 / week.

 

[faible]

like I can't tell if we're dealing with financial illiteracy or just someone lying

Financial illiteracy + smartest guy in the room + making shit up?