Australia to triple fees on foreigners buying existing homes, penalise them if they leave properties empty

The centre-left Labor government said it would introduce new legislation next year to help alleviate tight supply that has left many renters struggling to find somewhere to live.

As supply dwindled, rental prices surged 7.6 per cent nationally in the year to September 30, the sharpest increase in 14 years, official statistics show.

“There are too many properties empty around Australia,” Treasurer Jim Chalmers said.

“There are not enough homes available to Australians who desperately need them,” he added in an interview with Sky News Australia.

The measures aim to push foreigners to invest in new housing developments instead of buying existing stock, the government said in a statement.

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Foreigners are already barred from purchasing established homes in Australia unless they live in the country for work or study, and they are usually required to sell the homes when they leave.

To buy an existing home, foreigners currently pay a foreign investment fee that varies depending on the home price – for example, A$28,200 (US$18,500) for a median-priced Sydney home of a little over A$1 million.

Under the new scheme, the fee will be tripled.

In addition, foreign owners of established homes that are vacant for more than six months will face a higher annual vacancy fee.

That fee – now the same level as the foreign investment fee – will be doubled under the new plan.

The overall effect of the double-blow would be a six-fold increase in annual fees for foreigners who leave existing homes vacant.

The changes announced on Sunday will generate around A$500 million, which the government could invest in priority areas like housing, Chalmers told reporters in Brisbane, according to a transcript.

“These adjustments are all about making sure foreign investment aligns with the government’s agenda to lift the nation’s supply of affordable housing,” Chalmers said in the statement.

It is unclear, however, if foreign ownership of existing homes in Australia is a big problem for the rental market.

Australia’s treasurer said vacancy fees imposed on foreign owners of established homes raised only about A$5 million a year.

One report indicated there were just 23 such “breaches” in the past year, Chalmers said, though he believed the numbers “are likely to be underdone”.

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The government said it would also lower the fees for foreign investors in build-to-rent projects.

“We welcome foreign investment because it plays a crucial role in our nation’s economic success,” Chalmers said.

Last month, the government established an A$10 billion investment vehicle to help increase the supply of social and affordable housing.