Login
ISCOVER
The head of one of Australia’s top franchise groups has called on governments to impose an additional stamp duty on foreign investors.
Loan Market chairman Sam White said foreign investors should have to pay an extra tax on local properties, although he was non-committal on how much the amount should be.
To continue reading the rest of this article, please log in.
Looking for more benefits? Become a Premium Member.
Create free account to get unlimited news articles and more!
Looking for more benefits? Become a Premium Member.
Mr White said the impost was necessary to help cool an overly hot investor market, while the additional revenues should be used to assist first home buyers into the market.
“If the current cycle continues the way it is going then it is going to turn very hard,” Mr White told The Adviser.
“You have natural rhythm to cycles, and at the moment the cycle in Australia is being driven by foreign buyers and lower interest rates and I think something needs to be done soon or we are going to have a bigger bust.
“In Australia we haven’t done anything around discriminating on stamp duty and I believe there’s a very good argument for it.”
Mr White cited the Singapore market, which slugs foreign buyers a 15 per cent stamp duty, while there were also lessons to be learned from across the Tasman. New Zealand – which has neither stamp duty nor capital gains tax – has had to cool the market by rationing LVRs above 80 per cent and limiting the amount bank can lend to customers, Mr White said.
“Another thing you could do is increase rates, but I don’t think the RBA can do that,” he said.
“And one reason is that ASIC is talking to a lot of the banks around credit quality and that’s one way to influence things.
“The second thing is that we don’t want to go the New Zealand way and that’s to have differential LVRs; so the best way to take some steam out of the market would be to have some sort of handbrake come on in terms of stamp duty.”
The notion of slugging foreign buyers isn’t new. Mr White’s comments mirror those of former Macquarie Group banker Bill Moss who, in October last year, called for a five per cent stamp duty on foreign investors. Mr Moss also called for foreign investment into any one block of units to be capped at 50 per cent.
“We want foreign investment, but on our terms, not if it destroys the housing market,” Mr Moss was quoted by News Corp at the time.
He cited the example of Vancouver in Canada where, he said, Chinese investment had pushed the average price of a family home over the $1 million mark.
[Related: Loan Market aims to recruit 100 more brokers]
