In its pre-budget submission, the Real Estate Institute of Australia (REIA) has urged the Government to retain negative gearing to encourage property investment and place downward pressure on rents.

REIA chief executive Amanda Lynch says Negativethe evidence is clear that both negative gearing and the capital gains tax discount is crucial to feed the supply-side pipeline at a time of a chronic under-supply of houses in Australia.

“Any alteration to the current arrangements would likely result in a need for a greater investment by the Government in social housing and could potentially increase rents - as recognised by the Henry Tax Review in 2010, which stated that the current provisions placed downward pressure on rents,” she said.

The REIA’s Pre-Budget Submission highlights eight recommendations aimed at contributing to Australia’s continuing economic development and productivity while attracting first home buyers back into the property market and improving housing affordability.