Australia Announces Major Overhaul of Foreign Home Buyer Fees to Tackle Housing Crisis
In a bold move to address the national housing affordability crisis, Australia’s centre-left Labor government has announced sweeping changes to the fee structure for foreign purchasers of existing homes. Treasurer Jim Chalmers revealed on Sunday that fees will be significantly increased as part of a broader strategy to boost the availability of affordable housing for Australians.
Chalmers stated, “Higher fees for the purchase of established homes, increased penalties for those that leave properties vacant, and strengthened compliance activity will help ensure foreign investment in residential property is in our national interest” (Reuters). This move aligns with the government’s commitment to addressing the pressing issue of housing scarcity and affordability.
According to Reuters, the newly announced measures are expected to generate approximately A$500 million ($300 million), funds that the government plans to invest in priority areas like housing. In 2022, Chalmers had already doubled the fees for foreign investors buying assets in the country, a decision projected to yield an additional A$455 million over four years.
The Manila Times reports that these measures are a response to the escalating rental crisis in Australia. With a significant 7.6 percent increase in rental prices nationally in the year leading up to September 30, the sharpest rise in 14 years, the government is under pressure to act. “There are too many properties empty around Australia. There are not enough homes available to Australians who desperately need them,” Chalmers commented in an interview with Sky News Australia.
Under the new policy, foreigners purchasing existing homes will face a tripled foreign investment fee. Additionally, foreign owners of established homes that remain vacant for more than six months will encounter a doubled annual vacancy fee, culminating in a six-fold increase in annual fees for those who leave homes unoccupied.
However, the effectiveness of these measures in addressing the rental market’s issues remains a topic of debate. Chalmers acknowledged that vacancy fees imposed on foreign owners of established homes have so far raised only about Aus$5 million a year, with just 23 breaches reported in the past year. This raises questions about the actual impact of foreign ownership of existing homes on the rental market.
In a balancing act, the government also plans to lower fees for foreign investment in “build to rent” projects, encouraging the construction of more homes. This is part of a broader A$2 billion initiative announced in June to deliver thousands of new affordable homes nationwide.
While these measures mark a significant shift in Australia’s approach to managing foreign investment in residential property, their long-term impact on the housing crisis remains to be seen. As the nation grapples with one of the world’s most expensive housing markets and a growing population, these policy changes are a crucial step towards ensuring that the housing needs of Australians are met.
References:
https://www.reuters.com/markets/australia-triple-fees-foreign-purchasers-existing-homes-2023-12-09/
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