Benjamin Naddaf was preparing to become a rentvestor when the federal budget landed on May 12 and, in his words, wiped out his financial blueprint overnight. The 24-year-old says the changes to negative gearing and capital gains tax turned a potential property purchase into a far smaller proposition almost immediately.
Naddaf said his purchasing power on an investment property effectively fell by about $100,000 to $150,000. He lives with his parents in Sydney and works in the real estate division of an investment management team, but even with that background he said the new rules forced him to scrap the plan he had been building around.
“My purchasing power has effectively declined by approximately $100,000 to $150,000 on a potential investment property, and my strategy — previously heavily reliant on negative gearing — has had to be completely rethought,” he said. That is the kind of number that changes a purchase from realistic to out of reach for a first-time investor, especially one trying to buy while renting elsewhere.
The budget changes mattered because rentvesting depends on the maths working in two places at once: paying rent in one home while owning an investment property somewhere else. Once that calculation shifts, the strategy loses its edge. Naddaf’s experience mirrors a wider scramble among would-be buyers after the government altered the tax settings tied to negative gearing and capital gains, a shift that has already prompted lenders and property watchers to reassess the market, including in coverage such as Anz updates lending rules as negative gearing changes start to bite and Australian Federal Budget to end negative gearing for established homes.
What makes his case stand out is that he is not walking away from property. Naddaf remains bullish on investing, even as he says the budget changes mean the plan had to be completely rethought. That leaves him with the same problem facing other rentvestors: experts say there are now three broad paths left, but no single one restores the buying power that vanished when the budget landed on May 12.
For Naddaf, the immediate damage is clear. The unanswered question is which of those three routes rentvestors will actually choose — and how many can still afford to stay in the game.
