Labour has once again going into the next election saying that they will stop negative gearing on second hand property (new property will still be allowed). Some people are concerned with this saying that it will affect the property market.

I myself personally don’t think it will much effect on my portfolio. I only invest in new property that I have built for myself hence the changes that Labour intends to bring in (if elected) will have no effect on me.

I think what a lot of people don’t realise is that after the last election, the Liberals, once elected actually banned the depreciation of fixtures and fittings in a second hand houses. This should have been encouragement enough not to buy second hand houses as investments.

Can you not see the writing on the wall?

From what we have seen from the intention of both parties, is that they want to slow down the negative gearing on second hand property. This will ensure that it is less attractive to investors who need not only capital growth but also high cash flow/yield to enable them to keep investing and growing their portfolios and will enable home buyers to have a better chance at second hand homes.

I really cant see the big issue with that policy.

What is the best way to avoid any issues? Build new and hold for the long term! Which long term investors should be doing anyway.

Like I preach to my clients. Build new. It will allow you to get all the necessary tax deductions to keep cash flow high. It will maximise your rents and keep your maintenance low. Don’t buy second hand houses as long term investments. They just cost too much to hold and if Labour gets in in the next election, those second hand houses will cost you even more to hold.