Two Dollars or Thirty Per Cent? The Rent Forecast Agents Cannot Treat as Fact

Australian property managers are about to become the frontline interpreters of one of the most politically charged housing arguments in the country.

The federal government says its changes to negative gearing and capital gains tax could add approximately $2 a week to median rents in the near term.

A scenario examined by NAB has produced a far more dramatic number, suggesting rents in Sydney and Melbourne could rise by between 25 and 30 per cent if rental yields increased by one percentage point.

Those figures are not competing forecasts of equal status.

The government figure comes from Treasury modelling of the legislated tax changes. The NAB number is scenario analysis based on a particular movement in rental yields. It does not establish that landlords can, or will, increase rents by that amount.

That distinction matters because the reforms are no longer hypothetical.

From 1 July 2027, negative gearing for residential property will generally be limited to new builds. Properties held before 7.30pm AEST on 12 May 2026 are exempt from the new restriction.

Investors who acquired established housing after that cut-off can still deduct losses against income and capital gains from residential property and carry excess losses forward. They will not be able to deduct those losses against non-property income such as wages.

Capital gains tax arrangements will also change from 1 July 2027. The existing 50 per cent discount will be replaced by inflation-based indexation and a minimum 30 per cent tax on real capital gains. Investors in eligible new builds will be able to choose between the existing discount and the new arrangements.

The government says the changes will redirect investment towards new housing and improve the position of first-home buyers. The legislation passed Parliament in June.

Treasurer Jim Chalmers has rejected the more severe rental scenario as speculative and incomplete. Property market analyst Tim Lawless has also noted that renters’ capacity to pay places a practical limit on rent increases, regardless of what landlords may seek.

That is where the real estate industry must exercise care.

Property managers should expect landlords to arrive with headlines, social media commentary and simplified claims about the tax changes. Some will assume that a change to their future tax position automatically entitles them to a substantial rent increase.

It does not.

Rent remains a market decision subject to state and territory legislation, notice requirements, local competition, the condition of the property and the tenant’s capacity to challenge an increase. An economic scenario cannot replace a comparable rental analysis.

Agencies should also avoid presenting themselves as tax advisers. Property managers can explain the operational implications of the rental market, but individual owners should obtain advice from a qualified accountant or financial adviser about how the reforms apply to their circumstances.

The immediate task for rent roll leaders is preparation.

Teams need a consistent explanation of what has changed, what has not changed and which questions must be referred to tax professionals. Rental appraisals should remain evidence-based. File notes should record the market information used to support any recommendation, particularly when an owner has requested an aggressive increase based on political or media commentary.

The reforms may also alter investor behaviour over time. Some owners may sell established properties, while others may redirect capital towards new housing. Agencies with development, project marketing or investor services may see new opportunities, while rent rolls could experience increased movement as owners reconsider their portfolios.

But none of those outcomes makes a 30 per cent rent increase inevitable.

The responsible message for landlords is less dramatic and more useful. Tax settings are changing, the rental market may respond, and every property still needs to be assessed on the evidence available in its own market.

Property managers do not need to choose between the $2 figure and the 30 per cent figure. They need to explain why the two numbers measure different things, and why neither number should be pasted automatically onto the next rent review.