Foreign investors who leave their own property vacant will be slugged with charges of upwards of $169,000 under a federal government plan to free up more housing stock.
Key points:
- Fees for foreign investors to buy property will be doubled
- Penalties on foreign-owned homes left vacant will be lifted by six times the current rate
- The measure is expected to net the government an extra $500 million a year
The federal government says that next year it will try to legislate a tripling of application fees for foreign investors to purchase a property, and an increase to penalties for vacant homes that would amount to a sixfold increase to the rate.
Those vacancy fees would continue to apply solely to properties purchased since May 2017 and which are not put on the rental market.
And in an attempt to further incentivize “build-to-rent” projects, foreign investor fees for those properties would be cut.
Treasurer Jim Chalmers said the government welcomed foreign investment where it increased housing supply.
“There are too many empty properties around Australia, part of the challenge here is we do have these tough foreign investor rules but we want to make them tougher,” Mr Chalmers said.
“Every extra house that is built in this economy, every extra property that goes onto the rental market is welcome.”
The treasurer said the measures were expected to raise about half a billion dollars over four years, which would help to fund other housing policy measures.
But Nationals leader David Littleproud said he didn’t expect it to move the needle, because foreign investors were rich enough to afford the hiked fees.
Mr Littleproud said rules that require foreign buyers to hold at least temporary residency should be extended to either suspend foreign-owned purchases during the housing crisis, or ban them entirely.
“While we have a housing crisis, Australians should get a priority on buying homes in Australia. We’ve got a supply issue,” Mr Littleproud said.
“This government wanted to bring in one and a half million new migrants, 500,000 this year. That’s just putting so much pressure on our migration system.”
Compliance boost to uncover true extent of empty homes
Foreign investment generally makes up only a small part of the sales of Australian homes each year.
In 2020-2021, 4,350 of the 588,176 homes sold in that year were purchased with some level of foreign ownership, according to the Foreign Investment Review Board.
Mr Chalmers said it was not clear how many were being left vacant, which was why the government would enhance compliance regimes within the tax office to ensure foreign investors were adhering to the rules.
“Something like 23 breaches were issued in the last year where we’ve got the available numbers, and so clearly I think those numbers are likely to be underdone,” Mr Chalmers said.
“We are confident by increasing the fees in this way we will add to housing stock in this country, we’ll put more properties on the rental market, and that means more opportunities for more Australians to find an affordable home.”
Separately, as the treasurer prepares to release the mid-year budget update this week, Mr Chalmers has flagged gross debt has fallen in forecasts for the forward estimates.
Gross debt is now forecast to be $147 billion lower, falling below the $1 trillion mark to $909 billion by the end of this financial year.
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