Has Jim Chalmers lost the plot completely or was he making a shallow pitch to voters on the eve of a Federal Election?
To suggest that investor owners are in a position to hand out financial benefits to tenants because of this one, very small, isolated reduction in their costs suggests that Chalmers is either divorced from reality or he’s having a cheap shot at landlords to win favour with renters and maybe a few extra votes.
I have to say that the more I see Chalmers in action the more I am convinced that he is one of Australia’s slimiest politicians.
Has the Federal Treasurer forgotten that this isolated, not-to-be-repeated-any-time-soon interest rate drop was preceded by 13 interest rates rises – and then more than a year of persistently high interest rates?
Is he unaware that, in addition to paying the massive hikes in loan costs, which still remain prohibitively high, property owners have also had higher taxes, higher council rates, higher insurance premiums and higher maintenance costs.
Properties that paid their own way (in other words, the rent covered all the costs of ownership) prior to May 2022 when the first interest rate rises happened, have long since ceased to be cashflow positive or cashflow neutral.
Rental properties that previously paid their own way have become businesses that lose money week after week. Owners are having to put in part of their weekly wages to prop up rental properties, because the rent doesn’t come to covering it.
Many owners have sold up and left the rental property business because they could not afford to keep going – keeping in mind that most owners are mum-and-dad investors on average incomes and can’t afford to lose money week after week because of the repeated interest rate rises all that occurred while Jim Chalmers was Federal Treasurer.
And this small interest rate reduction, which is no thanks to Chalmers and his government, does not change that situation.
Chalmer by name, but certainly not by nature.
One of the nation’s news media outlets responded to his comments by interviewing small investors who own one or two properties and have been struggling with the high costs of ownership.
One of them said the first interest rate cut in more than four years would save him about $100 a month on an investment property and he commented. “In the grand scheme of things, it’s a small saving. Any suggestion that mum-and-dad investors should pass that on to tenants, is absolutely ridiculous.
“As investors, we’re already paying so much to hold our property. Land tax has gone through the roof if you’re in Victoria, along with skyrocketing insurance costs, council rates and compliance.
“We get a measly 0.25 of a percentage point rate cut, and we get asked to pass that to tenants. It’s simply a ridiculous suggestion, given that everyone who has a mortgage, including us landlords, have been hurt by the 13 rate rises in the past three years.”
Couldn’t agree more.
