Stephen Rees-Carter was “pretty annoyed” to receive an email from his real estate agent warning him against changes to negative gearing laws.
McGrath property management’s email to him and his wife, who rent in the electorate of Ryan in Queensland, warned that Labor’s proposed legislation to remove negative gearing from certain property types “could see the killing of the goose that has laid millions of golden eggs for millions of ordinary Australians”.
Rees-Carter was unmoved and described the emailed pamphlet as election “propaganda spam”.
“We’re a young family on a single income and housing affordability is a big thing for us,” he said. “We live in an area where basically every time a family home goes up for sale, it’s bought for an inflated price by investors and turned into a rental. This is one of the reasons we’re still renting – because negative gearing investors are taking all of the family homes, so families have no choice but to rent.”
He responded to the email, telling McGrath he was “incredibly disappointed in this thinly veiled political attack against the Labor party”.
“Next time you’re going to send out Liberal propaganda spam, at least have the spine to call it what it is,” he wrote back.
A response back from Rob Fearnley, head of McGrath property management, denied the email was communicating a political message.
“Our intent was only to share information with you on how any changes may affect you,” he said.
Similar letters are being sent by numerous real estate agencies including Barry Plant, McGrath, LJ Hooker and Raine & Horne to their clients via email and post. They contain material from the Real Estate Institute of Australia [REIA] warning that Labor’s plans to wind back negative gearing and reduce the capital gains tax discount would reduce property values.
A spokesman for the Australian Electoral Commission said the commission had received numerous complaints about the emails, letters and social media posts. While the AEC had authorised comments about negative gearing for the REIA’s 2019 Election Campaign website, the REIA was not authorised to share ads and posts on social media on issues being debated in the election campaign.
“Accordingly, in line with normal practice, the AEC will in the first instance contact the REIA to advise that the AEC has received complaints about negative gearing advertising on social media that appears not to be authorised,” the spokesman said.
In a letter targeted towards landlords, the REIA says: “Economists say that if the planned changes to negative gearing go ahead, property prices will fall … unemployment will rise and our whole economy will be in jeopardy.”
In a letter targeting tenants, the REIA warns: “Rents will rise.” While the material does not specifically mention Labor, it warns a change in government would be detrimental, and it is Labor that has proposed the policy changes.
The REIA president, Adrian Kelly, said the institute had not received any negative feedback about the advertising. This is despite people taking to the REIA’s Facebook page to express their anger. One recipient, Angus Gibbins, wrote: “This is highly unethical REIA. It’s because of rubbish organisations like you that real estate agents have the reputation that they’re the scum of the earth.”
But Kelly said he had only received “much supporting correspondence”.
“We have even been asked [by people] how they should vote. A question we will not respond to as our campaign is issues based, not party based. There has been no pushback from the real estate industry and individual agent participation is optional.”
Targeting tenants and landlords in this way represents “the low point” in the election campaign, leading economist and competition policy expert Danielle Wood said.
Wood, who is the Grattan Institute’s budget policy and institutional reform program director, said: “The real estate agents involved are abusing their position of trust in sending letters to renters claiming rents will rise.
“The changes to negative gearing and the capital gains tax discount proposed by Labor will have some downward impact on house prices – we estimate in the range of 1-2% given the size of the tax changes.”
Like the Grattan Institute, modelling from the New South Wales Treasury and commonwealth Treasury has found Labor’s policy would modestly improve housing affordability.
“Every one of the more sensationalist claims about the effect of the changes on house prices come from the property industry or modelling commissioned by people connected to the industry,” Wood said. “Landlords aren’t able to put up rents just because they lose tax concessions. Rents depend on supply and demand in the market for rental properties. Yes, fewer investors does mean fewer rental properties, but those properties don’t disappear – homebuyers move in, and so there are also fewer renters.
“Negative gearing would affect rents only if it reduced new housing supply.”
She added that it was unclear how the real estate industry justified its claims about the impact on the economy or unemployment, but that “it requires suspension of disbelief that the economic drag from a $3bn-$4bn annual tax change will have a material effect on a $1.8tn economy”.
Letter recipients spoken to by Guardian Australia said they had been sent material by people who were not their landlord and who they had never dealt with before.
Principal of the Raine & Horne in Hervey Bay in Queensland, Graham Cockerill, sent a letter with Raine & Horne branding to tenants which read: “The REIA have never been involved in politics but feel the changes that will occur if we have a change in government will be devastating.” Cockerill refused to comment to Guardian Australia beyond saying he was just doing what the REIA had requested of him.
Michelle Kapaufs, who rents in the electorate of Wills in Victoria, received an email from a senior property manager at the agency she rents through with a REIA pamphlet attached. When Kapaufs complained, the property manager told her the email had been “automatically generated by head office”.
“It’s evidence of the contempt in which real estate bodies and investors hold renters,” said Kapaufs, who is hoping to soon buy her first home. “To abuse a tenancy database to spew outrageous claims about property prices falling (the irony on the benefit this would have on a renter is clearly lost on these fools) and about unemployment rising, without a shred of reliable data to back this up is a disgrace, is precisely why I complained to my real estate agency.”
The Australia Electoral Commission did not respond to questions about whether it was legal for agents to share election material from the REIA with clients in their database. The REIA pamphlets have been authorised.
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