Plans to amend negative gearing arrangements are misguided and would cost tenants, according to the Real Estate Institute of New South Wales. 

In a speech to the NSW ALP state conference in Sydney on Saturday, Opposition Leader Bill Shorten said if elected the ALP would deny buyers of existing real estate access the tax write-off from July 2017.

Removing negative gearing from existing homes will not drive investment in new housing. 

It is foolish to think that only allowing negative gearing on new dwellings will fix anything as new dwellings are always going to be more expensive than existing properties.

Existing properties are where most tenants are living due to more affordable rent. The vicious cycle continues and even today we are seeing the lowest ratio of negative gearing to income/expense variation in a decade where low interest rates and mid range yields are seeing the negative gap diminish. 

Under this policy investors would abandon the housing investment market for more favourable and lucrative opportunities which will put pressure on supply. Suggestions that landlords are going to absorb costs are mistaken. The loser in this misguided policy will be tenants paying higher rents.

Housing supply is currently impeded by a convoluted and expensive planning system and a punitive state based taxation regime.