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Under-fire Aussie landlord hits back after rental crisis backlash

Ann-Maree Eastman told Q&A the proposals to change negative gearing and capital gains tax are unfair.

A landlord has double downed and said she shouldn't have to feel guilty about Aussies struggling in the rental market.

Tenants have been complaining about rising rents in a cost of living crisis but homeowners are also being put under pressure from high interest rates

Ann-Maree Eastman asked a question on the ABC's Q&A show this week and wondered why property owners were being "demonised" by renters and politicians. Her comments didn't go down well with many, but she's not changing her tune.

Landlord Ann-Maree Eastman on Q+A
Landlord Ann-Maree Eastman isn't happy about proposals to change negative gearing and capital gains tax. (Source: ABC)

Are you struggling as a property owner or renter? Email stew.perrie@yahooinc.com

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“I am aware there are people that can’t afford to rent and whatever, but I can’t be responsible for everybody’s life situation,” she said to news.com.au.

“I know there is a lot of homelessness. I know that people are struggling but I’m not the big bad person. It’s not like we have 20-30 properties we just have a few.”

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Eastman knows there are people in Australia who are "worse off" compared to her, but she said that doesn't negate the struggles she goes through as a property owner.

What did Aussie landlord say to rile up tenants?

Greens MP Max Chandler-Mather has suggested rolling back negative gearing and capital gains tax to improve the rental market, but Eastman asked on Q&A why should property owners be penalised for their success.

“Why do politicians feel that they need to keep taxing or changing the rules for how to claim our legitimate business expenses?” she said on the programme.

“Owning property is a business, and takes time and effort to make sure all is running smoothly. I'm just so angry that, as a landlord, I shouldn't have to feel guilty about owning property - or properties in our case.

“Why does it appear that all landlords are demonised and put in the same bracket?”

Changes that could shift power balance in housing crisis

But Chandler-Mather called Eastman’s question “unfair” because there are Aussie tenants who are struggling to keep a roof over their heads at the moment.

In addition to adjusting negative gearing and capital gains tax, the Greens spokesman for housing and homelessness said there needs to be a law in place to prevent landlords from jacking up the rent for tenants.

“We desperately need caps on rent increases right now, because the human consequences of [the current system], the people I've spoken to, single moms choosing between buying their baby's nappy rash cream, or paying the rent,” he said.

When asked how that might affect landlords who are being pushed to the brink by interest rates, Chandler-Mather said at least those property owners have options.

“The worst consequences for that is selling an investment property and making huge capital gains,” he said.

“The interests of landlords get put up against renters if they are equal, but they are not because if a renter loses their home, they're sleeping in their car on the street. If a property investor has to sell their home, that might be bad but they still get a huge sale price out of that home.”

The Greens believe tax handouts for property investors, which include negative gearing and capital gains tax discount, will cost the budget $39 billion in forgone revenue. By changing those handouts, the party said it would stop pushing house prices up and make homes more affordable for first home buyers.

“What’s really unfair is the federal government hands out billions of dollars in tax handouts, to property investors who own multiple homes,” Chandler-Mather said on Q+A.

“What that means is if you are a first homebuyer going to an auction, you’re going to that auction and you’re losing to a property investor.

“Because they can use negative gearing and the capital gains tax discount to bid up the price of housing and screw over first home buyers. It’s deeply, deeply unfair.”

NSW minister for housing and homelessness Rose Jackson was also on the panel and she said it’s not as simple as removing these handouts.

“We’ve got ourselves into such a dysfunctional quagmire and mess that everyone does have to come to the table and certainly that includes state governments … we’ve got work to do, but so does the Commonwealth and so does local government,” she said.

“We’ve got to acknowledge that if there was a lever to pull or a button to press, and it was that easy, we would have done it. There’s a lot of work to do to get our housing market back to somewhere resembling a fair distribution of housing.”

Many landlords are ‘mum and dad’ investors

Domain’s chief of research and economics, Dr Nicola Powell, told Yahoo Finance it's a myth that the majority of landlords are sitting on huge property portfolios and raking in cash.

“Australia's rental market is quite unique in the fact that the largest portion of rentals are provided really by mum and dad investors,” she said.

“And these aren't mum and dad investors who have a giant portfolio. They may have one or two rental properties and the sensitivities to changes in interest rates are actually quite evident.

“You can understand why we saw that trend of people having to offload an investment property and we know that type of investor is much quicker to offload an investment property than an owner-occupier is because, obviously, it's your primary place of residence.”

The vast majority (71 per cent) of the 2.2 million landlords in the country own just one investment property, according to data from the Australian Tax Office. A further 19 per cent own two properties.

What is negative gearing?

Negative gearing is where costs associated with an asset, such as a property, are greater than the income earned from owning it.

One of the big advantages of negative gearing is that Australia provides concessions on capital gains tax – which is the tax you pay on profits from selling assets.

Only 50 per cent of the increase in the value of the asset when sold is subject to capital gains tax, however it has to have been owned for more than 12 months. Owning an asset such as an investment property is viewed as an income under these laws.

That means Aussies can deduct their losses when they do their tax returns by negative gearing.

How does capital gains tax fit into the equation?

The housing market has seen properties jump dramatically in value in a short space of time. As a result, investors can make large profits from buying homes cheaply, renovating them and renting them out before selling them.

However, there are also plenty of 'mum and dad' investors and owners who buy property to rent out, having a tenant covering their mortgage repayments, while they claim expenses such as council tax, strata or body corporate fees and other associated costs.

"While making a loss on an investment property or shares might initially seem counterintuitive, some people are willing to do this in the expectation that the capital gain when they sell the asset will more than offset that loss," the Treasury info sheet on negative gearing explains.

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