Experts are concerned there could be fewer home buyers in Western Australia (WA) after the state government increased its Foreign Buyers Surcharge.
Overseas investors wanting to buy a property in WA will now be hit with a 7% surcharge, thanks to a new state budget measure.
The state government released its budget on Thursday (10 May), announcing an increase in the amount foreign investors would have to pay.
The 2017-18 budget included a 4% Foreign Buyers Surcharge, after an election commitment from the McGowan Labor Government. That surcharge has been increased to 7% this year to help the state’s finances and to match other states that levy a surcharge.
From 1 January 2019 the surcharge will apply on the dutiable value of residential property purchased by foreigners, including corporations and trusts, in WA. This will be in addition to the normal transfer duty payable on the property. The surcharge is restricted to residential property, with commercial transactions and significant residential developments remaining exempt.
The 7% rate brings WA in line with New South Wales, Victoria and South Australia, all of which currently levy their surcharges at seven or eight percent. Queensland has also announced an increase in its rate to 7% from July 1 2018.
The increase brings the total estimated revenue from the surcharge to $123million over the period of 2018-19 to 2021-22.
The government will introduce legislation into the state parliament in the near future.
WA treasurer Ben Wyatt said: "Increasing the Foreign Buyers Surcharge to seven per cent will bring Western Australia in line with other States, and provide this Government with additional revenue to help the State's financial position.
"Importantly, this decision increases a surcharge that will only apply to foreign investors. Western Australian households and businesses will not pay the surcharge.
"It is fair for foreign owners of residential property, who benefit from our services and infrastructure, to make a contribution to Budget repair."
The Urban Development Institute of Australia (UDIA) has voiced its disappointment at the decision. CEO Allison Hailes said, “The government is underestimating the impact that the increase to the Foreign Buyers Surcharge could have on the property market recovery in WA.
“The fact of the matter is, the WA property market is in a completely different situation to those on the east coast and we don’t have anywhere near the level of foreign investment that those states do. Particularly when you look at the viability of some big apartment projects around Perth, this could be devastating.”
