In a bid to address the pressing rental crisis and bolster the availability of homes for Australian citizens, the centre-left Labor government of Australia has announced plans to significantly raise fees for foreign buyers of existing homes who leave them vacant. Official statistics reveal a nationwide surge of 7.6 percent in rental prices over the past year, marking the sharpest increase in 14 years. Treasurer Jim Chalmers expressed concern over the abundance of unoccupied properties across the country, emphasizing the urgent need to redirect foreign investment towards new housing developments.
To tackle this issue, the government is set to introduce legislation next year aimed at encouraging foreign investors to contribute to the expansion of housing supply. Currently, foreigners are prohibited from acquiring established homes in Australia unless they reside in the country for work or study, with mandatory sale requirements upon departure. Under existing regulations, foreign buyers pay a variable foreign investment fee, such as the current Aus$28,200 fee for a median-priced Sydney home exceeding Aus$1 million.
Under the proposed scheme, the foreign investment fee for owners of vacant homes would be tripled, constituting a substantial increase. Moreover, foreign owners of established homes left vacant for more than six months would incur a higher annual vacancy fee, doubling the existing rate. The cumulative impact of these measures would result in a six-fold increase in annual fees for foreign owners who leave existing homes unoccupied.
While the extent of foreign ownership’s impact on the Australian rental market remains uncertain, Treasurer Chalmers acknowledged the relatively modest contribution of about Aus$5 million per year from vacancy fees on foreign-owned established homes. Despite indications of a limited number of reported breaches—23 in the past year—a potential underreporting is suspected.
In conjunction with these measures, the government is also set to reduce fees for foreign investors participating in build-to-rent projects. This initiative aligns with the recent establishment of a substantial Aus$10 billion investment vehicle, aimed at augmenting the supply of social and affordable housing in Australia.
