Fees to double for foreign real estate investors
Vacancy penalties will also increase but lower charges for build-to-rent projects will encourage overseas interest, the Treasurer says.
The government will raise fees and penalties for foreign investors in local real estate “to help boost Australia’s housing stock and provide more homes for Australians”.
The moves, announced at the weekend by the Treasurer, included higher fees for the purchase of established homes, increased penalties for those that left properties vacant, and stronger scrutiny of foreign investment in residential property to ensure it was in the national interest.
The changes would simultaneously encourage foreign investment in build-to-rent by cutting application fees.
“We welcome foreign investment because it plays a crucial role in our nation’s economic success,” the Treasurer said. “These adjustments are all about making sure foreign investment aligns with the government’s agenda to lift the nation’s supply of affordable housing.”
He said the changes included a tripling of foreign investment fees for the purchase of established homes, which currently start at $4,200 and rise in tiers depending on the value of the property up to $112,800 for a house worth $4-5 million.
They would also double vacancy fees, which were payable where a property had been unoccupied for six months out of a year. The vacancy fee was generally the same amount as the foreign investment application fee, so the effect of the combined measures was a sixfold increase in vacancy fees for future purchases of established dwellings.
The measures would also enhance the ATO’s compliance regime to ensure foreign investors complied with the rules, including selling a residence when required.
Foreign nationals were generally barred from buying existing property but could do so in limited circumstances such as when they came to live here for work or study. They were required to sell the property if they failed to become a permanent resident before leaving the country.
“These changes further encourage foreign nationals to buy new property instead and help to ensure that those who do get approval follow the rules,” the Treasurer said.
“The higher fees for established dwellings will encourage foreign buyers to invest in new housing developments. This creates additional housing stock, jobs in the construction industry and supports economic growth.
“The increased vacancy fees will encourage foreign investors to make their unused properties available to renters.”
In addition, the government would ensure foreign investment application fees for build-to-rent projects were at the lowest commercial level whatever the kind of land involved.
Currently, build-to-rent investors could be subject to higher fees if their projects involved particular types of land, such as residential.
“Lowering the fees for these investments will help to ensure our foreign investment framework is consistent and predictable for all build-to-rent investors,” the Treasurer said.
It would encourage the development of projects that provide long‑term rental options across the country.
The application of commercial foreign investment fees to all future build-to-rent projects would apply after 14 December while the government would introduce legislation next year to implement the new fees and penalties.
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