‘The whole economic system will fall apart’: Developer warns against negative gearing reforms

A Sydney developer fears Australia’s entire economic system will fall apart if negative gearing reforms are introduced, after the Prime Minister refused to close the door on them entirely.

A Sydney property developer fears widespread reforms could devastate Australia’s economy, as Anthony Albanese refuses to rule out changing negative gearing tax benefits in the future.

Sydney developer Bharat Patel told The Daily Telegraph negative gearing reforms could be disastrous for Australians and that “the changes will only create more problems.”

“You rely on these tax incentives and without them the whole economic system will fall apart,” said Mr Patel.

Bharat Patel has over 30 properties that are negatively geared. Pictured in Norwest this afternoon. Picture: Sam Ruttyn

The 41-year-old founder of CashFlow properties is a proponent of negative gearing, an incentive that has been instrumental in the development of a housing portfolio totalling 32 properties.

“Negative gearing is the only vehicle for that sort of tax relief, and there will be no incentive to buy these properties without it,” said Mr Patel.

Mr Patel estimates that homeowners could see taxes rise around 40 to 45 per cent higher than the current rate if the Albanese government seeks the changes, a move that he suggests homebuyers will be too smart to pay.

“No one will pay those types of rises, especially in capital cities, said Mr Patel.

On Wednesday, the Prime Minister was asked whether he would rule out negative gearing as an election policy and he did not explicitly rule out future reform.

Bharat Patel believes reforms could be disasterous. Picture: Sam Ruttyn

“What we’re doing is the legislation that we have before the Senate. So I talk about what we’re doing, not what we’re not doing, and what we’re doing is trying to get through that legislation through the Senate,” he said.

Mr Albanese’s comments appeared to conflict with what Social Services Minister Amanda Rishworth said earlier on Wednesday.

Asked about negative gearing, she said: “It is not our proposal to address or to add negative gearing to that.”

Nine newspapers on Wednesday reported that Treasury had been asked to undertake modelling on potential policy options.

This included options canvassing limiting the number of properties that would use the benefit or only allowing the concession to be applied on new properties.

Speaking to media in Launceston, Mr Albanese said he personally had not requested modelling from Treasury but said it was possible it came from other departments.

“Treasury … like other departments, do a range of proposals, policy ideas. I want a public service that is full of ideas,” he said.

He also reiterated his previous points that Labor was focused on its shared equity Help to Buy scheme and Build to Rent, which gives tax concessions to developers to build rent-only housing.

Both schemes remain blocked in the Senate, where the Greens are refusing support.

The minor party says it would be willing to negotiate if the government concedes on its stance on negative gearing and capital gains tax or commits to extra housing.

Originally published as ‘The whole economic system will fall apart’: Developer warns against negative gearing reforms