BUD­GET BOUQUETS, BRICKBATS

WA OWN­ERS SPARED BUT FEARS OVER NEW SUR­CHARGE ON FOR­EIGN BUY­ERS

Kalamunda Reporter - - Lifestyle -

FIRST RE­PORTED AT WA PROP­ERTY own­ers have been given a re­prieve, with no in­creases to prop­erty taxes in the State Gov­ern­ment 2017-18 bud­get.

How­ever, the Gov­ern­ment is plan­ning to in­tro­duce a 4 per cent for­eign owner duty sur­charge on pur­chases of res­i­den­tial prop­erty by for­eign in­di­vid­u­als and en­ti­ties from 1 Jan­uary 2019.

This is ex­pected to cre­ate $49 mil­lion in rev­enue by 2020-21.

In­dus­try bod­ies have wel­comed the gov­ern­ment’s as­sur­ance that the lo­cal prop­erty sec­tor would not be taxed to as­sist in bud­get re­pair, but said they were con­cerned over the for­eign own­ers sur­charge.

REIWA deputy pres­i­dent Damian Collins said given the gov­ern­ment had faced chal­lenges 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 only rep­re­sent­ing 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.

“The im­proved con­nec­tiv­ity and the un­lock­ing of the po­ten­tial for in­creased den­sity and the cre­ation of vi­brant com­mu­nity hubs around these precincts is very ex­cit­ing,” Ms Hailes said.

“Prop­erty own­ers in ex­ist­ing ar­eas will also ben­e­fit from the im­proved con­nec­tiv­ity and amenity and ser­vices that these precincts could pro­vide.”

Both REIWA and the UDIA would have liked to see the gov­ern­ment address the is­sues of hous­ing af­ford­abil­ity in WA.

UDIA WA chief Al­li­son Hailes.

Reiwa deputy chief Damian Collins.

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