Industry Rallies Against Additional Foreign Investor Tax
The proposal in the State election by Labor to introduce a 4% stamp duty surcharge on foreign buyers of residential property is a huge shock to the local industry, at a time when WA needs more investment to grow and create jobs.
A Property Council industry survey found 93% of respondents believed a 4% surcharge of foreign investors would have a negative impact on the growth outlook for the WA property industry.
This is a bad policy that shows a lack of understanding of the WA property market. WA has the lowest level of foreign investment in residential property in Australia and putting an extra tax on foreign buyers will lead to a loss of much needed investment in an area of the economy that we actually need to grow.
An increased tax on foreigners will target projects that rely on pre-sales or project finance, like higher density housing in infill areas which Perth is struggling to achieve. These higher taxes could lead to higher development costs and a drop-in supply of housing and thus a decrease in housing affordability.
According to our survey, 77% of respondents believed the 4% surcharge would result in less property sales and 73% also thought the surcharge wold impact ability to raise capital for project finance.
Every state that has introduced a similar tax experienced severe disruption in defining foreign entities in transactions and resulted in a string of patch-up legislation that is continuing. These states also had booming real estate markets and high levels of foreign investment before the tax was introduced, which is not the case in WA.
We are calling on all the major parties to speak to industry about tax reforms that will attract more investment in property, and dump the idea of a foreign investment tax.
You can have your say by completing the survey here: https://www.surveymonkey.com/r/5CB2HHW