What if the rules are changed?
It is important to note that a very high percentage of elected politicians own investment property. If they changed the rules to the detriment of investors, they would be on the receiving end of such change. In 1985 the Labor Government of the day quarantined negative gearing. In its place they introduced a 4 per cent capital allowance on the construction of new buildings, assuming that this strategy alone would stimulate the housing industry. The move backfired and investors shied away from investing in property. A lack of investors resulted in a shortage of rental properties. With high competition from prospective tenants, rents skyrocketed, causing an unprecedented housing crisis. Not surprisingly, negative gearing was reintroduced in 1987, only 18 months after it had been quarantined. The Government understands that negative gearing leads to increased rental property in the market. This reduces pressure on the Government to provide new public housing, which bites into the Federal B
