Real estate agents have hit the panic button over the Federal Government’s plan to reward foreign investors with major tax breaks on build-to-rent homes amid a $5.3 billion residential buy up.
Sky News Chief News Anchor Kieran Gilbert breaks down the 2024-25 federal budget delivered by Treasurer Jim Chalmers.
The Federal Budget, handed down on Tuesday night, announced major windfalls for international buyers, with plans to allow overseas investors to snap up build-to-rent properties with a “lower foreign investment fee”.
Treasury officials revealed to The Daily Telegraph that international investors, purchasing build-to-rent properties worth $10 million, would have forked out more than $761,000 under previous residential foreign investor fees.
19/8/22: Tom Pospieszny (cap) and his partner RJ Wikaira and dog Joshie who live within Mirvac’s new build-to-rent development at Olympic Park. They love the security of housing and flexibility within the premium precinct. John Feder/The Australian.
Aidan Collyer of Collyer Property Investments said the move for foreign investment tax breaks “will price young people who want to invest out of the market”.
“This is already an incredibly competitive market, Labor is allowing international investors to make a quick buck at the expense of the great Australian dream,” he said.
“Young Australians are looking to rent-vest because they can’t afford to buy and live in these homes currently available on the market.”
However, with the Federal Government’s new incentive, the same overseas buyer will now be hit with a “commercial foreign investor fee” of just $14,100.
Jim Chalmers’ third budget confirmed the Albanese Government’s plans to “increase available rental housing” by cutting fees on foreign investors buying up Australian residential property in an already flooded domestic market.
An artist’s impression of the twin build to rent towers and public square proposed for Waterfront City East at Docklands.
The Treasurer’s vision is on the condition that the rental property continues “to be operated as a build to rent development”.
Mr Chalmers’ said he wanted to “streamline approvals” for foreign investment.
“We’re easing the cost of living – and we’re building more homes for Australians,” the Treasurer said. “In the five years from this July, we aim to build 1.2 million (homes).
Treasurer of Australia Jim Chalmers. (Photo by Tracey Nearmy/Getty Images)
“Our goal is ambitious – but achievable, if we all work together and if we all do our bit.
“More homes means more affordable homes, and a better deal for buyers, builders and renters alike.”
The Treasurer said the current housing pipeline was “backed up”.
“We’ve already allocated $3.5 billion to address bottlenecks and slash red tape – and this Budget includes another $1 billion to help states and territories build more housing sooner.
“Rising rents are another big part of the inflation challenge, and we’re supporting renters who need our help.”
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The treasury official said international buyers would need to keep the property in the rental market to receive the tax break, with the reduced fee imposed “dependent on the value of the property.
“International investors will now be able to buy existing build-to-rent housing stock under these new incentives,” the spokesman said.
A new build to rent tower is proposed for St Leonards, concept photos of the development and views from the building
A new build to rent tower is proposed for St Leonards, concept photos of the development and views from the building
The move to attract more foreign investor’s to Australia’s rental market comes as the Telegraph revealed residential purchases by international buyers reaching $5.3bn in value in just nine months last year.
Federal Treasury data revealed more than 4700 homes were purchased by foreign investors between January and September 2023, with 1955 homes were bought by Chinese investors, with an estimate $2.5bn in value.
Hong Kong investors purchased more than 400 homes, with an estimated residential real estate value of $300m, followed by Vietnamese buyers snapping up 259 properties and Taiwanese buyers picking up 272 homes across Australia.
A total of 664 homes were bought in NSW in the 2021-22 financial year, equating to an investment value of $1.012bn.
