Renters report sharp increases despite budget predictions | Sunrise

Economists have been sounding the alarm this week warning rents are set to spike as property tax incentives are wound back in the federal budget.So this week we've been asking you, Sunrise audience, if your rent has increased in the wake of that budget and by how much?The response has actually been overwhelming.Let's have a look at this.They've got a scrolling screen to fit them all in.Kay from Adelaide says her rent is going up by $25 a week.

Chris in Brizzy says his has increased by $30 a week since the budget.Kez in Geelong says, I've been told my rent will rise by $64 a week.That will be hard on my already tight budget.Nicole from Logan, an extra $80 weekly.Maggie from Sydney says her rent is set to increase by $100 a week.And this comes despite predictions from Treasury that we're being told rents would rise by just $2 per week.

For their take, let's bring in the Housing Minister Claire O 'Neill and National Senator Bridget McKenzie.Claire, we'll start with you.Are you worried you've created a crisis here?

Well, I think, Nat, if we just step back for a second, we've got a housing system in this country which is broken and it's really hurting millions of people around our country.And I can be really honest with you and say that governments of all political stripes, Labor and Liberal, have not done enough about this problem over decades.And that has changed since our government came to power.Now, when it comes to the changes that are in the federal budget, there are two things we are doing.We are levelling the playing field for first home buyers and we are building more homes for the country.Overall, the pressure on rents will actually be downwards.

That's because we're building more homes and rental prices are set based on how many rental properties we have and how many people are in the market.But, Nat, the thing that renters in this country want most of all, most of them at least, is to become first home buyers.And that's the big intention of this budget.We'll see 75 ,000 rental households today turn intofirst home owning households because of the changes that we've made.So we are the first Australian government in 70 years in this country to have a big comprehensive plan for how we're dealing with housing and the budget last Tuesday was the next chapter in that plan.

And look that's the goal.

and we know we have to build more homes.Unfortunately, they are expensive.I think a basic house and land package around the country, let's call it a million, you know, to get some land, stick a house on it, you know, maybe on the outskirts of a city somewhere, one, 1 .2.if you're lucky.It is hard to get the land.It's really difficult to get it organised.

Building costs are going up.But rents, according to our viewers, are going up now.Landlords might be putting money aside because they are fearful of the budget.I don't know.But Ron in Sydney says our rent went up $50 last week.We are pensioners.

Half our pension now goes to rent.I've got the list.We've got dozens and dozens of people.Were you prepared for the fallout on the rental front?

Well, Nat, I'm really respectful of people's experience.The people who are providing rental properties for the instances that you've just talked about, their circumstances don't change because of this budget.So I'm respectful of what's going on out there.But the evidence of the modelling work that's been done in the budget is that this will have almost no impact on rents.And Nat, if you don't believe me as a politician, listen to people like the Commonwealth Bank of Australia, who've modelled the changes and said the impact on rents will be negligible.to the Grattan Institute, listen to these other respected organisations.

Why is that the case?Because for people who are already providing a rental property, their arrangements are grandfathered, so they're negativegearing arrangements are grandfathered.Until July next year.

So do you think they're prepping for July next year?

No, no, no, sorry, Nat, let me be really clear.If you have an investment property right now, your negative gearing arrangements remain in place.We are not changing those arrangements.And then what happens in July next year?This is about prospective This is about prospective arrangements going forward.So if you want to become a property investor beyond July next year, then we encourage you to do that.

Those generous tax concessions will still be available to you.What we ask is that you build a home for the country.So let me be really clear.Existing arrangements, grandfathered.Future arrangements, new homes only.

And then if you've already negative geared and then you get to July next year, you can't continue to negative gear, can you?

Nat, you can continue to negative gear.Existing arrangements are grandfathered.That means if you are already negatively gearing your property, if you already owned your property before budget night, you can continue to negatively gear your property.The changes are being made in a prospective manner.So that means that after budget night, if you want to negatively gear in the future, you can, but you've got to do it on a new property.Existing arrangements are grandfathered.

Okay.

We've got a messaging problem here, because Australia doesn't understand what on earth is happening.They're ringing their accountants, they're ringing their lawyers, no one understands.What are we doing?Because people are already putting their rents up.

So Nat, really respectful again of the experience people are having, but I just want you to remember something here.We've got a housing market that's broken.Something had to give here and these tax concessions, well we all know that and that is why our government is making these reforms now.Not just in this budget but a comprehensive plan.Well that's why I'm on your show explaining them now.That's why I'm on your show explaining them.

Bridget, we know that she'sright, we know there's a problem.It's hard to buy a house, especially if you're young.In the 90s, you needed around three times the average annual income to buy a house.Today, prices are closer to eight or nine or more times the average income.We do need to do something.

You'd have to agree, something needs to change.

Absolutely, Nat, and mark this day in your diary.This rents will not just increase by $2 as the Minister is attempting to persuade us.This will be another broken promise and your viewers are seeing it now.The two things the Minister didn't mention that were also in the budget that are impacting Australians in the rental market is the demand side is going through the roof under Labor.Let's say the quiet piece out loud.Two million more people wanting to find a home to rent, particularly in the lower end of the market, are coming in under Labor.

So whilst Clare can talk a big game on some of the changes that they're making, if you don't do anything to the demand side, if you are flooding the market with two million more people wanting a rental property to live in at the lower end of the market, you are putting pressure on the system.It's one thing she didn't mention that's also in the budget.And the second thing the Minister didn't mention that's also in the budget is they're planning for inflation to go to 5%.So if you are wanting to build a new house, if you are selling anything right across this economy, Inflation is going to 5%.That drives up the cost of everything, including rents.And so because Labor isn't taking the tough decisions to slash spending and put downward pressure on inflation like everywhere else in the world, we are going to continue to see these horrific price rises going forward.

and thanks for the empathetic words and you hear them and you see them, Clare.You have the great privilege to be the government and it is up to you to understand Economics 101 and to deal with not just the supply side but the demand side that is driving up the price of housing for everyone.

Clare, we know you are trying to build more houses.We've talked about this for a couple of years.We know you are many, many thousands behind.So let's talk about now, if you are a young person, you are now being taxed more on your shares if you're trying to get a housing deposit.You say rents aren't going up.Our viewers say something different.

If you're a young person today trying to get a house, how would you say you should save for a deposit?

Well, the whole point of the budget is putting first home buyers on a level playing field with investors for the first time.So one of the main problems that we've had with housing in our country is that we've got a tax system over here that's massively incentivized investors to come into the market.And every young person who's watching right now who's tried to buy a home will have had an experience of being at an auction and being outbid and outbid and outbid by the investor who's standing next to them.Why has that happened?Because that investor has had the Commonwealth Government behind them, giving them lots of tax concessions.Now, our government has a different view about how the housing market should work.

We believe that first home buyers and ordinary Australians should have primacy.So what we've done is two important things.The first is, the first is that we're backing in first home buyers through the 5 % deposit program.What does that mean?A quarter of a million young people around this country have gotten into their first home just in the last four years with our government's backing.Now we are levelling the playing field between investors and first home buyers.

So when you're bidding against an investor, the first homebuyer is the one who's got the government behind them, backing them in.And we believe that that's the way it should be.Now, the modelling shows us that this is going to get 75 ,000 renting households into their first home.And that's a really good thing, not just for those young people who get into homeownership, but for our country.We used to live in a country where ordinary people could get into their first home after saving for just three or four years.

That situation has deteriorated over 40 years.And, you know, Bridget's got a lot of critiques there.I get what she's saying, but let me just I'm not alone.The experts are with me.The only people who are defending the status quo and saying that this system is working are Bridget and her colleagues.No, we are seriously, Clare, that is not true.

It is crazy to say that housing is working, we need to form this system and that's what our government is doing.

Bridget, can I please say something?And then we've got to go.Experts are also saying, Clare, that rents aren't going to go up by $2 a week under your government's plans.They're going to go up between 3 % and 10%.If you're watching from Bankstown this morning, your $650 per week rent that you're paying right now will go up in excess of $20 a week up to $650.$65 a week under the modelling by experts, Clare.

So if you're so confident that it's only going to go up two bucks a week, release the modelling.Have an inquiry into these changes.

You're backing the $2, Clare?You reckon Treasury's right.Rental only go up two.That's what Treasury said.

That's what the Commonwealth Bank of Australia said.We're hiding behind Treasury.That's what Solace Lake said.That's what Solace Lake said.

That's what the Grattan Institute said.Mark this day in your diary, viewers.

Sunrise viewers, this isn't Double Bay in Sydney.This is Brisbane and Mackay and Canberra and Moreton Bay and Adelaide and Sunshine Coast and Tassie and Geelong.They're already going up, Clare.So this is what Sunrise viewers are saying.saying and we're a week in.Do you reckon the modelling's wrong?

Really respectful of what people's experience is Nat, but I just repeat to you that for anyone who is in a rental right now that's being provided by an investor, the arrangements for negative gearing for those people are grandfathered.You're saying that shouldn't be going up?Those arrangements for negative gearing have not changed.So I'm not going to tell them what to do.So they're going up for other reasons like interest rates.

What I'm saying to you is that one of the reasons that the government is going up for other reasons because we've got too many people in the country like the opposition and other economists are saying and interest rates.Well, that appears to be what Bridget is saying.All I'm talking to you about is the impact of the budget.

That's what's happening.

Because you can't get the capital gains discount and people are preparing.OK, look, tell us on the hotline what you're experiencing.Thank you very much.I think we have both sides of the story there.