Having just gotten half way through a 6 townhouse development in Sydney, I support the ALP's idea. I am typically a LNP voter.
If anyone has been through the process of developing multiple dwellings at one time, it is a lot risker and much harder to finance than throwing the banks $$ on existing/established properties with potentially existing tennants. Banks prefer to lend to the later type of investor.
Now if investors were incentivised to INVEST IN DEVELOPING/BUILDING new properties and bringing on more housing supply, than simply punting the banks $$$ on existing stock, there would be more affordable places for young families to live closer to the city - and that's a good thing.
Rents won't sky rocket because it's all based on the return. Being a landlord is like running a business, you need to spend time managing the property and tenants and you need the rental income to support your loan. No rental income to cover payments and the bank will start asking questions. If you hike the rent too much beyond market expectations, tenants will looks elsewhere -- there is a limit to how much people are willing to pay, and they have options to rent elsewhere or buy and become an owner occupier.
It's not just an assumptions that rents will go through the roof. People only have a limited capacity to pay, you can't just hike the rent. At the end of the day the buck stops with the landlord to cover their INVESTMENT and get a return on the asset.
