The NSW State Government looks set to follow the Victorian Budget’s lead and increase taxes on foreign purchases of dwellings, and this has angered the property lobby. From The AFR:
Referring to media reports that the NSW Treasury could impose a 1.5 per cent surcharge on land tax on foreign investors to help housing affordability, the Urban Taskforce said a surcharge could do the opposite.
“Foreign investors often help make development projects become feasible by underpinning the pre sales with up to 15 per cent of purchases and this helps local purchasers buy into a viable project,” Urban Taskforce chief executive Chris Johnson said…
The Property Council of Australia said by following in the footsteps of Victoria – which has raised the tax on foreign purchases of residential property to 7 from 3 per cent – NSW could lose its competitive investment advantage. This could, in turn, slow down the pace of Sydney’s housing production, needed to reduce prices and fix affordability.
Other non-property industries such as education would stand to lose if a new tax is introduced, Chinese property portal Juwai.com said…
Raising the land tax on foreign buyers is excellent policy, since it would provide much needed tax revenue for infrastructure, education, health, or other worthwhile initiatives, thus benefiting the resident population.
It would also discourage foreigners from keeping their homes vacant, which is common among Chinese investors, in particular. After all, what good is all this apartment construction if many of the dwellings are withheld from the market for rent?
Hopefully the other states will follow pronto, bringing Australia into line with its Asian counterparts, where explicit taxes on foreign purchases are commonplace.
