Renters resort to paying for tents and shared rooms due to high cost of living

News AU (Australia) ^ | 17 March 2017

[Lorianne]

RENTAL prices are about to soar even higher in Melbourne, but people are already on the brink and living in dodgy conditions just to be close to the city.

People have been so desperate for cheaper rent, they have even resorted to paying about $100 a week for tents set up in backyards and on balconies, that were advertised on Gumtree.

Others share a small living space, with a number of curtains strung up so each housemate can have their own space.

Renters are also sharing bedrooms, with one ad on Gumtree offering a bed in a room with three others for $120 a week.

There is a rental crisis in Melbourne and young people are either forced to stay at home or move into small share houses.

But it’s about to get even harder and landlords are about to pass on extra costs to their tenants.

According to the Herald Sun, landlords will be forced to charge more rent due to expensive land tax bills.

Melbourne landlord Greg Antippa said the inner-city space he rents out went from an annual cost of $7000 last year to $23,000 this year.

“I will have to increase the rent, which is not fair on the tenant, but I have to pay for it somehow.”

Property owners in Victoria have to pay a land tax but it may be exempt if you live in your own home. According to the State Revenue Office, land tax bills increased in 2017 after last year was a property revaluation year.

The value of the majority of properties increased, affecting the cost of land tax.

Owners only pay land tax when the property they own is valued at more than $250,000 — meaning most homeowners have to pay it.

[Lorianne]

Renters never understand that THEY pay the property taxes (and all other taxes).

[Alberta's Child]

Some renters understand that perfectly well.

That's why they're renters ... so they can pack up and move somewhere else when the neighborhood goes to crap or the taxes get too high.

[Blue Jays]

Renters do have the luxury of not "sweating" the overall condition of their space or neighborhood in which it is situated.
As a homeowner, that is something contemplated by me nearly everyday in terms of it being my biggest investment.
I know people who have rented for decades. A distinct advantage they have is far greater flexibility.

[Harmless Teddy Bear]

You are correct and they don't realize that the tax they pay is much higher then they would pay if they owned the property.

In my state we have five levels of taxation. Rental property, business property (owned), single house currently occupied, farm, vacant.

People who have moved and are trying to sell their empty house get a great big tax bill and an even larger one if they decide to rent out the property.

[lacrew]

Not long ago, I compared home prices vs inflation from 1970 to present day. I concluded that the 2008 housing crash really deflated a bubble that had been forming, between inflation and home values, and got the two back in sync.

I can’t imagine that a new bubble will start to form for at least 10 years...while the excess housing stock is still relatively new.

So this makes buying a house now somewhat unattractive. I do own my home and I realize there are a lot of advantages to ownership...but there are also a lot of costs and risk...and a 7% realtor fee to make the investment liquid.

Another factor is taxes. Sure renters pay taxes too...but its to the point where most people can’t retire in their own homes because of taxes, much less pass it down to their kids.

Bottom line, if I were 25 years old today, I would rent.

[Blue Jays]

"...Bottom line, if I were 25 years old today, I would rent..."

---

Absolutely concur. My taxes increase at a rate far beyond my occasional raises at work. Not even for demonstrable reasons.
Renting allows one to fine-tune their situation with greater ease. One can add or delete roommates and/or switch to a different place.
While those avenues are somewhat available to those who own their residences, there is much more affiliated complication.

[Oatka]

Where possible, get an RV and settle down in an RV park.

When I was in contracting, I lived in my RV at a KOA or other place that had decent bathrooms and rec rooms. Even at 8 mpg, I could afford the drive to work. No messing with a rental lease - most condo owners wanted one year, while my contracts were usually six months. There was also the freedom of moving on if your contract was suddenly terminated (happened to a few I knew - company/project ran out of money).

[lacrew]

I should also add - I live in flyover country. Its about a wash filing taxes with standard deduction vs itemized deductions. If I lived on the left or right coasts, the mortgage interest deduction would become more meaningful to me, but as it stands now it doesn’t really matter.

A co-worker worked hard to pay off her house early, only to discover that 40% of her house payment had been escrow stuff for taxes and insurance. A house is never truly paid off, sadly.