house-second-headeraa1jpg-1Consumers who attempt to build, extend, renovate or do repairs are totally unprotected and we can prove that this has been the case for the last 23 years. Many independent inquiries have confirmed this fact, but no government will listen or act to stop what is essentially ‘legalized’ building fraud. Just read some of the stories of those whose lives have been ruined, Then come join us and be part of bringing about genuine change. 

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Most of us know someone who is an investor. It’s nothing new. Once it was mostly share investors, but now it seems to be more about houses… perhaps because superannuation took over the shares side of things.

But buying a home is getting much more difficult particularly for first home buyers.

And that’s nothing new either… except that 50 years ago it was one bread winner per family struggling to make ends meet… and now it’s two who can’t make it happen as regards purchasing a house. There’s no more flexibility left. The 7% growth of house and land has outstripped the 4% wage growth by over 100% in just over one generation.

So now to negative gearing…

The 50% of us who cannot afford a house, pay rent to the landlord, courtesy of the fact that investors buy up about 50% of available houses, units & apartments. About half of us (including the investors) own houses: and the other half pay rent and pay the investors.

Then the landlord investor declares his income and tax deducts his costs (loan repayments, legal fees, maintenance (if the tenant is lucky) from that income.

So the tax department receives a fair bit less than it would have, if the deduction to the landlord did not apply... and the landlord makes more profit than he would have, if the deduction had not applied... but it did… giving him well over a 3% leeway over work income and cost of living price rises… a sort of super-profit so to speak.

That leaves the workers over 3% behind; and carrying more than their fair share of the overall tax burden of the nation… giving the investor a free bonus ride.

And the investor can use this advantage to put it towards his next house purchase… and so on…. raising demand on a dwindling supply of available houses. AND THIS EXTRA DEMAND PUTS THE PRICE OF HOUSES UP.

And this same demand has made it harder and harder and harder for first home buyers… to the point today that many cannot afford to buy a house at all, unless they are prepared to live past the limits of the outer city boundaries. And that is a long way from the job centre of say Melbourne, where these new home owners need to travel as much as 50 kilometres to work each day… along roads that are just not designed to cope with such peak hour(s) traffic.

This travel time is close to 2 hours to and from work for a rapidly increasing number of commuters.

But the Victorian government cannot afford to pay for the necessary upgrading of these choked commuter roads… for many reasons including the growing number of retirees and pensioner, but also partly because they are not getting enough tax from investors… so the problem is hurting building consumers from two directions… increased commutes and/or exorbitant prices.

With sustained low interest rates for several years now, this problem has been exacerbated by the accelerating difference between wage rises and the ruthless 7% annual growth of house prices… even though loan repayments are reduced somewhat… but these rates are still way above annual wages increases.

The present Federal Government (it says) “has slammed the brakes on investor lending by restricting interest-only loans to less than 30% of new home loan approvals” (The Age July 12th 2017).

But this seems very likely to be a quick-fix Band-aid and will merely alter the methodology and assets break-up that investors use to get what they want. There have been less investor home loans recently, but there has also been a spike in house prices that would deter investors at present. Clever tax consultants will work around this hiccup we feel certain. Time will tell… soon.

Readers on this site know a fair bit about Band-aiding… and it usually results in considerable pain for building consumers.

We all saw the first home buyer grants and what they did to house prices.

Whichever way you look at it, the Victorian and New South Wales governments (at least) need to do something extraordinary (and soon) about exorbitant house prices in our cities… or the Great Australian dream of owning a home will be shattered from now on.

Perhaps far greater incentives could be given for businesses who re-locate to regional cities (and disincentives to those who outsource to overseas labour to pay for need for greater infrastructure).

Or fast rail connections to satellite regional centres could recuse our massive urban sprawl and reduce commuter time.

But it needs to be made top priority by our governments.

VBAG keeping building consumers informed.
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Are we first to expose what we’ve heard is the move towards deliberate15 year apartment building pull-down planning by developers?

Think about it… it makes sense in a greedy (forget the wastage) kind of way... particularly if costs can be negatively geared. Negative gearing works for individuals and the super-rich, so why not for developers?

The thinking might go something like this…

Australia keeps on inviting swags of immigrants to OZ if they have enough assets… not dissimilar to banks.

Last year Australia invited in 180 000 immigrants (Victoria got a record 88 000 of them… and they will all need to be housed. This increasing immigration seems to be basically what keeps the economy going via its stronger and stronger building industry… aided and abetted by the minimum assets per immigrant regime introduced during the Howard era.

So the developers buy land in a good position, where there will progressively be re-zonings that relax the rules on maximum height. If business need, governments will invariably come to the party. Governments also favour enterprise over consumers (those things called people)… FACT.

So it’s virtually a given that permission will be granted in 15 years to double the permitted maximum height of apartment towers… if a developer asks for such permission. If one government won’t, the next one will… given the right incentives of course.

Too bad that there is just standing room in the nearby park on a sunny weekend. (The kids can play in the Mac Donald playroom).

So why build the apartment tower to last more than 15 years when maintenance starts being a real nuisance. Isn’t that also about the current frequency for crashes/checks in the industry? And isn’t there one right now?

So we might as well import everything… the cheapest available at the time.

And let’s not sell them when they’re completed... we’ll rent them for 15 years!

And we’ll negatively gear the apartments… somehow… perhaps via syndicates of investors who give us 30% of the profits (developer risk rate).

FAIT ACCOMPLI… and to hell with the wastage! Profit is the ballgame.

So in 15 years we’ll kick everyone out, demolish and build a 25 storey tower to replace the 12 storey one.

VBAG informing (?) building consumers of trends in the market. (And if you picked up a hint of cynicism, you just might be on to something).
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Victoria’s building industry is failing consumers

September 3, 2016

Victoria’s building industry is failing consumers Fifth Estate 2 July 2015 Anne Paten, Victorian Building Action Group | 2 July 2015 The verdict on Victoria’s domestic building industry is in and on the public record. And it’s not pretty. The evidence of the Victorian Auditor-General’s Office Audit into Victoria’s Consumer Protection Framework for Building Construction … Read more

The Great Australian Dream: Spin, Lies and Fantasy

September 3, 2016

The Great Australian Dream: Spin, Lies and Fantasy 69 SHARED THIS Contributor: Anne Paten Published: 21 September 2015 Victoria’s ‘Great Australian Dream’ industry is supported and stimulated by spin, lies and fantasy. The building companies’ spin includes the ‘dream’ as a star fantasy feature. The standard slogans include ‘Build your Dream into Reality,’ ‘Create Your Dream … Read more

Consumer Protection Reform Strategy Fails. Dodgy shonky bad builders prevail.

September 3, 2016

Why the Consumer Protection Reform Strategy Fails and dodgy shonky bad builders prevail. By Anne Paten Sourceable 15 July 2015 LINK: https://sourceable.net/why-the-consumer-protection-reform-strategy-fails 88 people shared this article No 10 of Top 10 articles for July 2015 It is clear that the Domestic Building Consumer Protection Reform Strategy was created as a mirage, to give a … Read more

Was Australia’s Unaffordable Housing Crisis Avoidable?

September 3, 2016

Was Australia’s Unaffordable Housing Crisis Avoidable? Over recent decades, the price of Australia’s housing stock has continued to soar. Now in 2016, we have reached a crisis point where, for so many Australian families, the dream of owning their own home is no longer achievable. However, Australia’s ‘unaffordable housing syndrome’ did not happen inadvertently or … Read more

What Lies Ahead in Construction: Leadership or More Licentiousness?

September 3, 2016

What Lies Ahead in Construction: Leadership or More Licentiousness? Published in Sourceable 31 August 2015 143 people shared this article By Anne Paten Link: https://sourceable.net/what-lies-ahead-leadership-or-more-licentiousness It is clear that we have a major crisis in the Victorian building industry. Hundreds of thousands of Victorians are living in limbo, casualties of a blatantly non-compliant and completely … Read more

The Truth Behind the ‘Consumer Protection Reform Strategy’

September 3, 2016

                        The Truth Behind the                        ‘Consumer Protection Reform Strategy’ Anne Paten in Sourceable 6 July 2015 109 shares 23 Comments https://sourceable.net/the-myth-and-reality-of-the-consumer-protection-reform-strategy/ After the damaging Auditor-General’s Report of 2011 and the Ombudsman’s Report of … Read more

Over the last fifteen years, there have more than one hundred (100) Inquiries into the building industry and its governance. These have included parliamentary inquiries and investigations by the Auditor-General, the Productivity Commission, the Ombudsman and other independent organizations. 

The Victorian building industry has suffered from systematic and systemic failure for decades. We now have overwhelming evidence to confirm that this ‘system’ has been malfunctioning for the last 22 years.

After decades of criticism of  the Building Commission’s failure as the ‘industry regulator’, and following damning Reports from the Victorian Auditor-General (2011 and 2013) and a scathing Report from the Victorian Ombudsman in 2012, the Government decided that the Building Commission’s record was so tarnished that it had to be abolished.