The Government’s newly released Options Paper reveals high application fees for foreign buyers.
The Real Estate Institute of Australia’s (REIA) recommendations to strengthen compliance and enforcement and increase penalties for non-compliance have been taken onboard in the Government’s latest Options Paper, but REIA is concerned the proposed high application fees may discourage foreign investment.
REIA CEO Amanda Lynch says, “What is important is that the revenue gained from these penalties will provide the Australian Taxation Office with more resources to ensure all investors are complying with the regulations.”
The Options Paper proposes an application fee of $5,000 for properties under $1 million, $10,000 for properties valued between $1-2 million and $10,000 increments for each additional $1 million in value.
Properties over $1 million would attract a fee of approximately 1%.
“While the proposed fee is less than that applicable in Hong Kong or Singapore, it is higher than that in other countries such as Switzerland and Austria,” Lynch said.
“The UK, the USA, and Canada do not have any residential property application fees.”
REIA encourages the Government to consider the equivalent global rates when deciding the fee level for Australia, to avoid deterring foreign investment that has been proven to increase the supply of new housing at a time of a severe shortage.
“The Options Paper has supported REIA’s proposal that a more effective deterrent, and one that reflects changing market conditions, is to set penalties as a percentage of the property value,” Lynch said.
“The paper proposes 10% and REIA feels this is a fair penalty for foreign investors if a breach occurs.
“For other breaches such as a non-resident acquiring an established dwelling or if a temporary resident fails to sell their property after it ceases to be their place of residence, the proposed penalty is to be the greater of either the capital gain made, 25% of the purchase price or 25% of the property’s market value.”
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