The property investor and the owner-occupier: while their primary motivations for buying a property might be different, they both have legitimate and equally important reasons. Consider this scenario. Mary (an owner-occupier) and Jane (an investor) are both interested in buying a particular property worth $450,000. Mary is motivated by how the property satisfies her and her family’s important lifestyle needs at this stage of their lives. Jane is motivated by the (just as important) goal of being able to afford a particular lifestyle later in life. Which a (forever shrinking) taxpayer-funded pension will not provide. However, the costs to the property owner are quite different, depending on whether it’s Mary or Jane who becomes the eventual owner. For the purpose of this exercise, let’s assume this property is located somewhere in the state of Queensland. Mary will pay approximately $8,400 in stamp duty for the property, while Jane will be slugged an extra $7,000 if she buys the property with the intention of providing shelter for third parties, as opposed to herself. All property owners would hopefully acknowledge the importance of neighbourhood parks, footpaths, roads, and services such as rubbish removal which are funded by council rates. But, even though they quite possibly don’t directly benefit from any of these services, many city councils charge a higher levy to an investor than an owner-occupier. Even though Mary and Jane may have borrowed the same amount of money to buy this hypothetical $450,000 property, in this financial climate, Jane will pay between $1,500 and $2,000 extra interest on her loan each year than Mary. Recent interventions by APRA have resulted in investment property loans incurring 0.6% to 1% higher interest rates. Fast forward (say) ten years from now, and Mary or Jane decide they wish to sell the property. Mary’s personal circumstances may require her to move house whereas Jane’s equally important circumstances may necessitate her to sell to support her retirement. If Mary sold the property as an owner-occupier she would retain 100% of the sale proceeds whereas Jane would be liable for capital gains tax (a figure that could be six digits). This scenario provides important context for the segment of Australia’s population, whom (quite strangely) seem to think that investors have advantages over owner occupiers. To the contrary, investors pay extra in more ways than one! So, no, it’s not a level playing field – investors well and truly pay full freight! At the end of the day, it shouldn’t be an us (owner-occupier) versus them (investor) thing. The personal motivations of Mary and Jane are both important and ought to be respected accordingly.
