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The federal government has officially introduced legislation to increase foreign investor fees in an effort to stop Australian homes from sitting vacant and free up housing stock for residents.
At the same time, the government is hoping that these changes might funnel that foreign investment still occurs in Australian property into new builds as a way to grease the wheels of the construction industry, which has seen new home starts fall in part due to high interest rates and an associated lack of capital among home builders.
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The laws contained in the The Foreign Acquisitions and Takeovers Fees Imposition Amendment Bill 2024 include higher fees for the purchase of established homes and increased penalties for those that leave properties vacant. Application fees for foreign investment in Build to Rent projects, however, have been reduced.
Current fees for foreign investors start from $4,200 for property valued at under $75,000 to upwards of $100,000 for homes valued $5 million and over.
The government’s amendment would see these figures tripled if the home in question is an established dwelling.
It will also double vacancy fees, which apply when a home is not occupied by the owner or a tenant for more than half the year. The vacancy fee is generally the same cost as the foreign investment application fee. This effectively serves as a sixfold increase in vacancy fees for purchases of established dwellings.
Foreign nationals are generally not allowed to buy existing property in Australia, but can do so in some limited circumstances such as when they are living in Australia for work or study. When they leave the country, they must sell any property acquired if they have not become a permanent resident.
An announcement from the Treasury at the introduction of the bill described the fee hike as further encouragement for foreign nationals to buy new property instead of existing homes and “help to ensure that those who do get approval follow the rules”.
“The higher fees for established dwellings will encourage foreign buyers to invest in new housing developments. This will help create additional housing stock, jobs in the construction industry and support economic growth,” said the release, which was jointly issued by Treasurer Jim Chalmers and Housing Minister Julie Collins.
“The increased vacancy fees will encourage foreign investors to make their unused properties available to renters.”
[RELATED: Foreign investment changes a ‘step in the right direction’: Brokers]
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