The NSW government will slash a special tax for some foreigner property investors in a move that has been welcomed by developers and real estate agents.
From July 1 the 9% foreign purchaser surcharge duty for foreign buyers will no longer apply to large-scale build-to-rent developments and retirement villages.
The Budget measure applies to projects with more than 50 dwellings, and is being implemented to support investment as part of an initiative to improve access to affordable, safe and quality housing.
The foreign purchaser surcharge duty on residential property, which will still apply to overseas buyers of individual houses and apartments, was first introduced by the Coalition in 2016 at 4%, was increased to 8% in 2017, and to the current rate on January 1 last year.
Housing Industry Association Chief Economist Tim Reardon claimed the change would increase housing supply, and urged other states to do the same.
“Taxing foreign investment in new housing does not reduce demand. It reduces the amount of capital available to build homes,” he said.
“Their role in the residential market is overwhelmingly concentrated on financing, developing and constructing new housing.
“That is why the NSW decision is so significant. It recognises that housing supply objectives and foreign investor tax settings can be in conflict.”
Peter Li from Plus Agency, which has a large number of foreign clients, told realestate.com.au removing the tax would help “attract foreign capital”.
“This changes the message that NSW is sending out from ‘You are welcome to invest, but please pay first’ to ‘You’re welcome to invest. Just please build more homes’,” he said.
The NSW Labor government’s decision comes after One Nation leader Pauline Hanson earlier this month vowed to force some foreign home owners to sell their properties to Australians.
“Australian homes should be prioritised for Australians,” she said.
Header image: Crowds at an auction in Sydney (supplied).
