Plans to restrict foreign investment could see rental stock dwindle and rents become more expensive.
The Property Council of Australia has warned the federal government that overtaxing lawful foreign investment in new housing could significantly worsen housing affordability for all Australians.
“Foreign purchasers of new stock not only provide capital for development, but also add to the rental stock, particularly in our major cities – which helps to keep downward pressure on rents and meet demand,” it said in its submission to the government.
Property Council chief executive Ken Morrison said the “already acute problem” of housing affordability could significantly worsen if “excessively high fees” on foreign investment were introduced.
“Imposing an unjustifiably high new fee will deter foreign investors and drive away the capital that developers rely on to get new housing projects off the ground,” Mr Morrison said.
He said there is no question that improved data on foreign investment was urgently needed and that the existing rules should be properly enforced.
“But this won’t cost anywhere near the $200 million the large new fees are set to raise, which risk deterring much-needed foreign investment in new housing construction.
“The revenue the government estimates it will raise is way beyond what is required for the stated purpose.”
The Property Council’s submission recommended extending the proposal to set up a register of foreign real estate investment to also close information gaps around housing investment and supply.
It said the cost of the extended data would only be modest and would be easily met by lower foreign investment fees.
[Related: Crackdown on foreign investment applauded]