Australia to triple foreign investment fees on existing homes
What's the story
Australia's Treasurer, Jim Chalmers, has unveiled plans to triple foreign investment fees on existing homes and impose penalties on foreign owners who leave properties vacant for over six months. This new legislation, set to be introduced next year, aims to tackle the tight housing supply that has left many renters struggling to find a place to live. In fact, rental prices skyrocketed 7.6% nationally in the year leading up to September 30, marking the steepest increase in 14 years.
Details
New scheme details and expected revenue
Under the new plan, foreign investment fees will be tripled, and annual vacancy fee for established homes vacant for more than six months will be doubled. This means a six-fold increase in annual fees for foreigners leaving existing homes vacant. The changes could generate around A$500 million, which the government could invest in priority areas like housing. Chalmers stated, "These adjustments are about making sure foreign investment aligns with the government's agenda to lift the nation's supply of affordable housing."
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Uncertainty over impact of foreign home ownership
It remains unclear if foreign ownership of existing homes in Australia is a significant issue for the rental market, as vacancy fees imposed on foreign owners raised only about A$5 million last year. One report suggested there were only 23 such "breaches" in the past year. Chalmers though expressed the belief the figures "are likely to be underdone."
Scenario
Lower fees for build-to-rent projects
The government also plans to lower fees for foreign investors in build-to-rent projects. Chalmers highlighted the importance of foreign investment, saying, "We welcome foreign investment because it plays a crucial role in our nation's economic success." Last month, the government established an A$10 billion investment vehicle to help increase the supply of social and affordable housing.