There are a number of issues I plan to cover in this Real Estate Insider Series where we pay attention to both the pros and cons of buying properties for owner occupier or investment purposes, while offering some insights from someone with many years of experience in sales and acquisitions of a whole variety of property classes for a number of purposes. Yet my perspective and my interests are far broader these days than merely the real estate industry, yet the learning acquired elsewhere most certainly has significant implications for the modern real estate industry of today, implications you are unlikely to read about from any other real estate business.
One of the issues that should be considered is the considerably significant impact that government policies can have on both owner occupied and investment property. Policy impacts in a number of areas, value is a major one where price is an indicator although not the only determinant factor of assessing value, however policy can have an effect on both. Legislation offers tax advantages to investors on the one side of the coin while home buyer grants combine with tax breaks to artificially increase demand in the housing market, much to the delight of the banks, property developers, builders and those holding real estate assets over the long term. Adding to the prices of course are the infrastructure “ contributions” which are just one class of the various imposts demanded by the various tiers of government that developers and builders must fork out and which are obviously passed down to the buying customers who must also contend with all the other forms of tax and revenue raising “initiatives” that governments set, not to mention interest on the extra borrowings.
Although rapid capital growth has offered many owners and even speculators windfall gains it has made affordability a real problem for younger couples wishing to enter the market particularly in an environment where full time employment opportunities are just not there as in previous decades, in addition wage growth has flat lined, while the general employment situation, also attritubutal to deliberate government policies, combine to create the spectre of a perfect storm that could reasonably be expected to cause a dramatic collapse, devastating thousands of lives
This of course may not happen but either way caution and care is appropriate because obviously real estate is not an island, meaning that prospects for capital growth are intrinsically connected to the country’s economy on the whole, and the economy is directed by government which is not necessarily of the representative variety. As I write I see a news report indicating a sizeable fine is to be issued to a property owner over some compliance issue which is consistent with Victoria’s Labor government, indicating it will invoke new laws in a “local government act” allowing councils to effectively confiscate property from owners for them failing to meet energy efficency compliance requirements, with council officers being granted the right to enter properties, without any warrant to do so, in order to conduct energy audits, which the owner must comply with at whatever personal expense, or face penalties. The fact that governments can compel private property owners to observe “rules” in their interactions with tenants indicates that they have a “right” to do so, no matter that their actions impact on an owner’s return for investment. The subject of property rights is a subject which coincidentally, offers a segway into the main issue as I see it, which is, who owns property that is purchased on the open market? who legally holds the title to properties that people buy? It may come as a surprise but it is not the buyer of a property who actually holds the title, regardless of whether a mortgage exists on that particular property or not.
Let’s imagine my name is William Bloggs, which is usually spelt using correct English, the first letter of each name is uppercase and the balance of letters lowercase, however if you check your bank statement, your driver’s licence, car registration, any parking or speeding fine or significantly your land title’s you will find the whole name is in all capitals eg. WILLIAM BLOGGS which in terms of correct English is incorrect, indeed it is not actually text but a symbol that represents a corporate entity, one that the government created when the birth certificate was processed, it is what is known as a Cestui Que Vie trust signifying the birth of a strawman, and the commencement of a trust of which the sentient being is a beneficiary while the governments acts as administrator, and occasionally the courts do as well. This trust is a corporate fiction that has been created to facilitate interaction between a corporate body, i.e. government, and a flesh and blood, living, breathing, sentient being, your real self, which governments are incapable of regulating for the reason that the government is a corporate fiction, created by people, not the other way around. Much of the current law in Western countries is based on biblical scripture, such as Canon Law where for centuries it has been deemed that the created cannot regulate the creator. An interesting site to learn more on this subject is to be viewed at the following location: https://freedomriver.wordpress.com/living-in-the-private/
However this particular fraud is based on contract law and is fraudulent by merit of the fact that lawful contracts require full disclosure between the contracting and importantly consenting parties, nonetheless it has survived for hundreds of years largely due to the ignorance of the massess ( lets not discuss the education system or the media) and a degree of secrecy between the legal fraternity, the lawyers who dreamed the entire system up, powerful religious leaders of the times, the elite bankers and political leaders and bureaucrats who have used their citizens working lives and the tax revenue they create as collateral for stock offerings on the world’s stock exchange, for the purpose of raising money to finance infrastructure and the like.
It is not a particularly pleasant realisation to discover that we have been effectively enslaved, not without remedy fortunately, but for the time being it is important to realise that we are in effect tenants of the property we naturally presumed we own. We do not actually own the home we have devoted our lives to paying off, neither our cars which explains how they can take your licence or crush your car, acts which can only be performed by the holders of the title, we ourselves, even our children are not our own, we have handed the government effective control of our children’s lives at the time of the birth certificate registration. Buyers do however, hold an equitable interest in a property they purchase, or in a a car they’ve bought, and obviously can dispose of it and realise a profit on the sale and of course plenty of people have, some have become millionaires (whatever that actually means) through investing, dealing or developing properties and this newsletter does not seek to encourage or discourage people dabbling in the property market but has been produced to ensure readers go into the property market fully aware, with eyes wide open as it were.
Another issue under the apparent control of government is the behaviour of banks which we now know has been less than satisfactory. Whether the banks are under control of the government is an interesting question, I suspect it is actually the other way around given that banks have been permitted to create money out of thin air much like a counterfitter. Banks do not actually lend real money to finance mortgages, a word derived from old French, mort, meaning death and gage meaning grip, or as translated, death grip. A credit is simply created on the strength of an applicant’s signature, which on an application for a mortgage is basically a promissory note which is, like cash or cheque, a negotiable instrument which the bank securitizes in due course while locking the borrower into repayments to repay monies that were never actually lent in the first place, the promissory note is the payment, and people actually finance themselves through its use. A great resource for gaining an understanding of how our financial system works is the book “Truth In Money” which can be downloaded here: https://giftoftruth.files.wordpress.com/2016/04/truth-in-money-book.pdf
Last but by no means least, buyers are on a hiding to nothing when it comes to defaults which happen in reality quite often and are to be expected in life as circumstances change with deaths, sickness and accidents, employment status, changes in relationship statuses, new additions to a family any number of reasons but the result is always the same for those not capable of meeting mortgage payments, eviction, repossession and devastating loss. I once knew a reasonably wealthy fellow who had many properties and always seemed to want to buy them for a song but wanted the earth when he sold and when asked why he should be treated any differently to others he replied, “I don’t have to buy, and I don’t have to sell, “have to” being the operative words that affect many others that do not have access to extra funds through one means or another.
When dealing in property it is wise to be cautious and measured, we do not live in the same country that we did 40 or 50 years ago when our government was a de-jure body politic, and not a corporation registered in Washington D.C. as it is today along with local councils, state governments, police and other government departments all replete with ABN’s that signify their corporate profit driven nature. Historical capital growth rates going back over forty years can no longer be relied on as an indicator of future growth in face of the changes that have taken place over recent decades and which continue on, the employment scene, the floating of the dollar by Keating, the signing of the Unidroit Treaty by Whitlam in the 70’s which virtually removed Common Law courts and replaced them with Admiralty Law and an administrative system that operates under the Uniform Commercial Code, effectively the basis of international Contract Law, primarily concerned with money, with absolutely no concern for justice or morality, in short it is a vastly different and a brave new world we live in today than the utopias we have left behind without even noticing.