AAP FactCheck Investigation: Will rents rise regardless of who wins the federal election?
The Statement
"The big problem for the prime minister is the report that he refers to shows rents going up under his government as well, shows rents going up under a Liberal government with no policy change."
Labor treasury spokesman Chris Bowen. May 14, 2019.
The Verdict
True - The checkable claim is true.
The Analysis
AAP FactCheck examined Mr Bowen's claim that the report from property investment analysts SQM research showed rents will rise under a coalition government as well. [1]
Negative gearing laws allow property investors making a loss - when costs outweigh rental income - to deduct the loss from their taxable income. [2]
The Labor Party plans to reform housing affordability and negative gearing if elected, limiting the tax breaks to new investment homes from July 1, 2020. All property investments made before January 1, 2020 would be fully grandfathered. [3]
Mr Morrison said Labor's plans would have a significant and negative impact. The prime minister quoted research from SQM stating under Labor rents could rise by 22 per cent in Brisbane. [4]
SQM Research is an investment research house, founded and run by property analyst Louis Christopher, which specialises in providing research and data to financial institutions and investors. [5]
The report states Australian housing is worth approximately $6.8 trillion. "It is a significant component of the Australian economy, its wealth and its social fabric," the report said. [6]
Under Labor's negative-gearing policy the report found rents changes are initially "likely to be negligible due in part to a current oversupply in Sydney and some other cities".
However, there may be an acceleration from 2021 due to an expected sharp fall in dwelling completions. Under Labor rents could rise between seven to 12 per cent across capital cities from 2020-2022 on average, assuming there was an interest rate cut of half a per cent. "Brisbane and Perth are likely to record the largest rises in rents," the report said. If interest rates aren't cut, rent could rise between eight and 15 per cent on average. [6]
The report also calculates the impact on rents should a coalition government be returned. It showed rent costs could rise three to nine per cent if interest rates are cut by half a per cent under the coalition. [6]
The figure Mr Morrison quoted of a 22 per cent rise in Brisbane rents is based on the upper limit of an increase in Brisbane if there is no interest rate cut under a Labor government. It is the highest increase listed across all capital cities or national average. There was no comparative figure of the impact of no interest rate cut under a coalition government as this scenario was not modelled in this report. The closest comparison was a half per cent interest rate cut under a coalition government which showed rents in Brisbane would also rise between eight to 13 per cent. [6]
AAP FactCheck found Mr Bowen's claim that the report Mr Morrison used to attack Labor's negative gearing reform also shows rents rising under his government to be true.
The Verdict
True - The checkable claim is true.
The References
1.'Leaders getting heated about housing', by Rachel Baxendale. The Australian. May 16, 2019: https://www.theaustralian.com.au/nation/politics/leaders-getting-heated-about-housing/news-story/e89c4cdce6d31ebf3feae78d6ff80841?from=htc_rss
2.'Expenses you can claim'. Australian Taxation Office. October 8, 2018: https://www.ato.gov.au/General/Property/Residential-rental-properties/Expenses-you-can-claim/
3 'Positive plan to help housing affordability'. ALP: https://alp.org.au/negativegearing?gclid=CjwKCAjw8e7mBRBsEiwAPVxxiHIaVxeFl6HqmbN7H6msfiS4nrq5UUmfkjQ5j3WmSzXEnrAevLA_JhoCHmcQAvD_BwE
4. 'Scott Morrison expressed interest in overhauling negative gearing, according to official documents' by Dan Conifer. ABC. May 13, 2019: https://www.abc.net.au/news/2019-05-13/scott-morrison-expressed-interest-overhauling-negative-gearing/11105830
5. 'About Us'. SQM Research: https://sqmresearch.com.au/about-us.php
6. 'Labor's Negative Gearing Policy: A Market Update (2019). SQM Research (Page 3 and 4): https://sqmresearch.com.au/labors-negative-gearing-policy.php
* AAP FactCheck is accredited by the Poynter Institute's International Fact-Checking Network, which promotes best practice through a stringent and transparent Code of Principles. https://factcheck.aap.com.au/
Australian Associated Press
