Australia to hike fees on foreign owners of empty homes
Australia’s Labor government has announced plans to dramatically increase fees on foreign buyers of existing homes who leave them empty, in an effort to address the country’s rental crisis. Rental prices have surged by 7.6% nationally in the year to September 30, the largest increase in 14 years. Treasurer Jim Chalmers stated, There are too many properties empty around Australia, and emphasized the need for more homes to be made available for Australians in need.
The new legislation aims to encourage foreign investors to put their money into new housing developments instead of purchasing existing properties. Currently, foreign buyers are prohibited from acquiring established homes in Australia unless they live in the country for work or study, and they are usually required to sell the properties when they depart. The existing foreign investment fee they pay, which is dependent on the home’s price, will be tripled under the new scheme. Additionally, foreign owners who leave established homes vacant for more than six months will face a higher annual vacancy fee, doubling the current level. This combined approach will result in a six-fold increase in annual fees for foreign owners who leave their properties vacant.
However, it remains unclear if foreign ownership of existing homes poses a significant issue for the rental market. The treasurer pointed out that the vacancy fees imposed on foreign owners of established homes currently only generate around AUD 5 million per year. According to a recent report, there were just 23 such breaches in the past year, although Chalmers believes the actual figures are likely higher.
The government’s plan also includes lowering fees for foreign investors in build-to-rent projects as well as establishing an AUD 10 billion investment vehicle to increase the supply of social and affordable housing. These measures are intended to further alleviate the rental crisis and provide more accessible housing options for Australians in need.
By implementing these fee hikes and incentives, the Australian government aims to encourage foreign investors to direct their resources towards new housing developments, which would help increase the housing supply and alleviate pressure on the rental market. The proposed legislation, set to be introduced next year, will prioritize the availability of homes for Australian residents while addressing concerns of rising rental prices.
With tight housing supply affecting renters across the country, the government’s focus on housing accessibility and affordability is seen as a crucial step in rectifying the rental crisis. As the rental market continues to grapple with high demand and limited supply, the government hopes that these measures will incentivize foreign investors to contribute to the creation of new homes, ultimately providing relief for renters and promoting a more balanced housing market.
