Anthony Albanese’s latest budget leaves The Block facing an uncertain future.
The Block’s most prolific investor has revealed he’s more interested in buying the show’s ‘Bunnings’ shed than the homes this year after a “s**t show” federal budget.
And that’s only so he could relocate the super-sized structure being used as an onsite construction depot, material hub and film studio to another of the properties he’s already bought from the show.
The most reliable buyer for Channel 9 since 2012, Danny Wallis has described last week’s budget as a repeat of mistakes made in the Victorian budget three years ago that turned him off wanting to buy investment properties in the state.
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“Now, it’s don’t invest in Australia,” Mr Wallis said.
The entrepreneur and megamillionaire described the budget as a “s**t show” and added that he had significant concerns over Anthony Albanese changing his position on negative gearing and capital gains tax, after saying he would not in the lead up to the last federal election.
“And it’s bad that they’ve lied. You can’t really trust what anyone says now,” Mr Wallis said.
“You wouldn’t be so mad at the budget if the money was being used to pay off debt, but it’s being spent. They’re trying to bribe people.”
He noted that it was too soon to know how investors would respond broadly to government changes to negative gearing and capital gains tax announced in the federal budget last week.
The 109 Old Mornington Rd, Mt Eliza, site that is being used to create this year’s homes for The Block will have new builds added to it — safe from the tax changes.
The reforms restrict negative gearing for residential property to new builds from July 1 2027. After that, rental losses on existing residential investment properties bought after budget night can only be offset against other residential property income.
The 50 per cent CGT discount would be replaced with a system in which you will most likely pay a higher amount of tax, but only on the actual capital gains — and not on increased costs caused by inflation.
The big switches will be grandfathered for existing investments, and new builds will keep the option to use the 50 per cent discount to help boost supply.
The Block this year focusing on new builds, which means there are exemptions.
Negative gearing will still be available to investors who buy new builds, and they will be able to choose whether they use the new CGT model or the old one for a new build.
But it does present a problem for The Block’s traditional method of operation: renovating existing homes and auctioning them.
A render showing how builds proposed for the site were intended to look, prior to The Block buying the site last year.
In that scenario, the home would not be deemed new, and the tax deductions would not be available.
Some of the biggest results in the show’s history have come from the likes of richlister investors with the likes of Danny Wallis, Adrian Portelli and ex-accountant David Brandi frequently claiming the keys.
Property Investment Professionals of Australia chair Cate Bakos said The Block was facing a crossroads with the reality investor appetite for renovations would be reduced.
“The Block has quickly morphed into a show where buyers advocates buy for investors, but I don’t know if that was what they initially intended,” Ms Bakos said.
“I think the future of The Block will need to encourage owner buyers. It’s (the budget) certainly been a game changer. So they have to rethink their audience and their bidder profiles, or their dwelling type.”
The BMT Tax Depreciation firm has drawn up depreciation schedules and quantity surveys for the majority of the show’s seasons, establishing the vast sums that investors could depreciate the homes for — often more than the purchase price over a 25 or 30-year period.
Another render showing how the homes could look, prior to The Block taking over.
Chief executive Bradley Beer said while this would still be feasible for a new build, investors would have to find other motivations for a renovation format to succeed in future seasons.
He added that this could be a problem for the show, as in recent years the majority of the biggest prices paid above reserve had been from investors.
If that funding is part of what is attracting contestants, seeing less outlandish sums in future iterations could be problematic.
“They do need to make it look like the contestants can make some by giving up some of their live, so it does have some risk,” Mr Beer said.
The show might struggle to lure investors this year, despite the tax benefits remaining on the table, with Mr Wallis noting he wasn’t thrilled by what he’d seen at a recent site visit of the show’s Mt Eliza site.
He lamented that block sizes were small enough that the homes felt too close together, and two of them would really struggle for buyer appetite given they did not appear to have water views in their features list.
Danny Wallis has become The Block’s most reliable buyer, but he’s not interested in buying this year’s builds — except maybe the shed. Picture: Jake Nowakowski.
“I don’t really like them much,” he said.
“I will go to the auctions, but I don’t think I will buy one.”
However, he does have his eye on one part of this year’s proceedings.
“I would buy the Bunnings shed they have built,” Mr Wallis said.
“I’d relocate it to my Block in Gisborne.”
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