Labor Blowing Up the Nation’s Wealth
The federal government’s agreement with the Greens to ban new limited recourse borrowing arrangements (LRBAs) for self-managed superannuation funds (SMSF) in return for the minor party’s support for its housing tax overhaul to change capital gains tax (CGT) and negative gearing laws threatens to “blow up” the wealth of many Australians, says a leading brokerage.
Evolve Lending and Finance Managing Director, Mark Stevenson, said the Albanese government’s approach shows they have no ideas about what to do to fix the issue of housing affordability.
“So instead, they have thrown a grenade to blow up the whole thing and are just waiting back to see where the body parts land,” Mr Stevenson said.
“The wealth of every homeowner in Australia has evaporated into thin air because of these changes, without any clear idea or forecast of the upside, and who will actually benefit from them.
“The deal with the Greens gives even more fuel to the idea they just wanted to do something – anything – with complete disregard for the real-world impact on those who it serves.
“This isn’t just impacting a faceless group of wealthy investors, but the impact is much broader and it’s impacting everyone from mums and dads, aspirational property owners/investors, and even first home buyers who purchased in the last 12-18 months at high LVR who are now faced with the reality of having negative equity on their homes.
“There are many of this later group who have also turned to borrowing within an SMSF structure to be able to enter the property investor group. Already, house values and auction clearance rates have both fallen, some significantly.
“What will happen to those who have exchanged contracts with off the plan and future settlements only to find either through legislation or lenders adapting to the market that there is no way to complete on their purchase, potentially losing hundreds of thousands of dollars paid in deposits and other costs?”
Mr Stevenson said brokers will be pivotal in helping customers deal with these changes.
“Brokers will need to be at the forefront of lender changes and feedback, looking at refinancing options or options for off-the-plan purchases with settlement risks, non-SMSF options and commercial property options,” he said.
ENDS
Further inquiries:
Steve Connolly Mb: 0414 296 379