Australia’s largest industry body representing independent buyer’s agents has warned that Labor’s proposed changes to negative gearing could see a rise in property spruikers marketing high-risk off-the-plan and new property investments.
Real Estate Buyers Agents Association (REBAA) president Rich Harvey said the existing negative gearing policy had allowed the private sector to satisfy demand and provide housing that the government would otherwise need to provide.
“These incentives help support the building and construction industry, without negative gearing investors are less attracted,” said Mr Harvey.
“If negative gearing only applies to new property as Labor is proposing, then this could distort investment into greenfield locations that may not actually need an increase in housing supply. Greater housing supply is typically required in high demand locations closer to job nodes.”
In last week’s budget, the coalition is encouraging housing demand outside of major cities with significant road and rail infrastructure earmarked in regional areas.
If elected, Labor has vowed significant reforms to negative gearing to ease housing affordability.
According to Harvey any changes will see rising rents and an increase in property spruikers attempting to sell new developments to unsuspecting buyers.
“Homebuyers and investors need to be aware that abolishing negative gearing on established properties will see an increase in property spruikers offering seminars on new housing or apartment developments that could result in big financial losses, if investors buy without adequate research or advice” he warned.
Mr Harvey said it was important to clarify that any property investment advisor was truly independent and was not being paid by any third party.
“If they accept sales commission from vendors or developers then they cannot be classified as independent as they are acting in the interests of the seller,” he said.
“Another key question to ask is the nature of their relationship with other service providers.
“Are they disclosing any commissions or kick-backs from builders, inspectors, sales agents or other companies that are closely associated with the purchase?”
He said it was unfair of the government to target property alone and not apply the same policy to other investments that could be negatively geared.
“Regardless of tax policy, investors and home buyers should take considerable care in deciding where and what to buy,” said Mr Harvey.
“In a constantly changing economic and policy environment it pays to get independent advice from professional buyer’s agents who can provide clear guidance and support.”