Thursday, December 26, 2024
Finance Funds Update
Investments

Tax hike for foreign property buyers in Australia

December 9, 2023


Key Points
  • Taxes for foreigners who buy existing houses in Australia will triple.
  • Fees for those who leave dwellings vacant will double.
  • It’s hoped these measures will raise about half a billion dollars and increase the number of available rentals.
Foreign investors will be slugged with higher fees and steeper penalties for buying existing homes and leaving them empty as the government aims to address housing affordability.
The federal government on Sunday announced new rules tripling taxes for foreigners who buy existing houses in Australia and a doubling in fees for those who leave dwellings vacant.
Through these changes, the government is estimated to raise about half a billion dollars and boost the number of available rentals.

Australia’s rental vacancy rate dipped to a record low of 1.02 per cent in October.

An view of Melbourne homes on a cul-de-sac from above.

With housing affordability an issue in Australia, the federal government is looking for ways to make the most of existing housing stock. Source: Getty / Ingrid_Hendriksen

Boosting housing stock

Treasurer Jim Chalmers said as well as encouraging foreign buyers to make their unused properties available to renters, the new rules would encourage foreign buyers to invest in new housing developments.
The government will encourage foreigners to invest in build-to-rent projects by cutting application fee costs to the lowest commercial level.
The change will standardise fees paid by foreigners investing in rental projects across different land zones.

“Currently build-to-rent investors can be subject to different, higher fees if their projects involve particular kinds of land, like residential land,” Chalmers said in a joint statement with Housing Minister Julie Collins.

Foreign nationals are usually barred from buying existing property but can do so in limited circumstances such as working or studying.
They are required to sell the property once they leave the country if they have not become a permanent resident.
“It’s about boosting housing stock and getting more homes onto the rental market,” Chalmers told Sky News on Sunday.

“It recognises that the rules are already pretty tight, but we want to make them tighter.”

Fees for homes left vacant

Vacancy fees help raise about $5 million per year, Chalmers said but only 20 or so breaches were issued in the last year.
“Those numbers are likely to be under done,” he said.
The government is also aiming to boost compliance by funding the ATO, which will also provide an improved understanding of the size of the problem.

“Every extra house that is built in this economy – every extra property that goes on to the rental market – is welcome,” Chalmers said.

Apartment building in inner Sydney suburb.

About a million homes in Australia are vacant at any one time, for a number of different reasons. Source: Getty / Elias Bitar

Australia’s housing crisis

Government agency Housing Australia has forecast with a shortage of rentals contributing to sharp increases in prices.
There has been much public debate about whether .

However, a paper released by the Business Council of Australia (BCA) earlier in the year dismissed concerns that the post-pandemic migration surge was responsible for the housing crisis.

The business group instead said the problem primarily stemmed from inadequate policy and planning.

The rules to implement the new fees are set to be introduced into parliament next year.



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