MIXED FEELINGS TOWARDS BUDGET
FOREIGN SURCHARGE SPARKS FEARS
when it came to the State’s fiscal position, it was pleasing to hear there would be no increases to property tax for WA residents, but a tax on foreign buyers would impact the market.
“The introduction of a new foreign owner duty surcharge could hinder overseas property investment,” he said.
“Despite foreign investors representing only a small proportion of the WA property market, caution must be placed to ensure this section of the market does not reduce further.
“The government expects to create revenue from this surcharge, however it may only worsen the situation in terms of transfer duty revenue, as potential foreign investors may be less incentivised to purchase residential property in WA.”
Urban Development Institute of Australia (UDIA WA) chief executive Allison Hailes was pleased to hear Treasurer Ben Wyatt recognised the property industry had been a soft target in previous years when it came to seeking increases in revenue.
“Despite these assurances, we do think that the new Foreign Owner Duty Surcharge will have a more significant impact on demand for property in WA than what the government might anticipate,” she said.
The surcharge in WA applies to purchases of residential property by foreigners, including individuals, corporations and trusts.
It excludes residential developments of 10 or more properties, commercial residential property such as hotels, student accommodation and retirement villages, and mixed use properties that are used primarily for commercial purposes.
“While the surcharge conditions have been amended since the government announced it a few months ago, it is now directly targeting residential property transactions,” Ms Hailes said.
“If you look at the finance requirements for up to 50 per cent pre-sales for large apartment developments, a lot of that initial demand can come from foreign buyers.
“These buyers might be looking for accommodation for their children while they study or to live in themselves; either way, adding a cost to that investment may be a turn off for potential buyers.
“Here in WA, we should be encouraging foreign buyers to invest in our property market and help in the overall market recovery. We certainly shouldn’t be penalising them.”
The UDIA welcomed the investment in Metronet and the associated potential that the new rail lines would provide in terms of urban precincts around the new stations.