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Foreign investment application fees for build to rent are set to be legislated as low as is possible over the coming year, as the federal government looks to lessen the housing crisis.
The comments have been made my Minister for Housing Julie Collins in an announcement that the government would be implementing a policy of higher foreign investment fees for housing.
She stated that the government “will make sure foreign investment application fees for build-to-rent projects are at the lowest commercial level – no matter the kind of land involved”.
Ms Collins noted that at as the policies currently stand, build-to-rent investors can be subject “to different, higher fees if their projects involve particular kinds of land, like residential land”.
She expressed: “Lowering the fees for these investments will help to ensure our foreign investment framework is consistent and predictable for all build-to-rent investors, and encourage the development of these projects right across the country that are specifically designed, built and managed to provide long‑term rental options for Australians.”
A step in the right direction
It’s a move that’s been supported by the Property Council of Australia, which believes it will “boost the investment appeal of new rental housing supply that offers well-located, secure, customer-led and community-oriented housing”.
Mike Zorbas, chief executive at the Property Council, has welcomed the announcement, flagging that high foreign investment fees are a disincentive for global investment “that is needed to achieve our 1.2 million homes by 2029 housing target”.
“Build to rent has the potential to create 150,000 homes over the next decade, but the settings must be right,” he emphasised.
“To give people the full spectrum of affordable housing choice we need to tap into institutional investment, and today’s announcement is an important step.
“Encouraging overseas investment to go into new assets makes good sense,” he said.
Despite the positive sentiment, the Property Council is also of the belief that “more settings need to change to unlock the potential of global institutional investment into new Australian housing, including critical areas where governments can save money through service aggregation such as retirement living communities and purpose-built student accommodation”.
According to Mr Zorbas, the highly competitive global market for capital means national cabinet needs to think holistically about the tax settings that can help or hinder investment in creating more homes for Australians.
He argues that “cutting against the investment grain are those outright deterrents to long-term overseas investment in our cities and housing, such as looming federal thin cap changes and increasing Foreign Investment Review Board fees.
While acknowledging that the Productivity Commission has “rightly” characterised such fees as taxes on new investment, Mr Zorbas is concerned “federal thin cap changes will still impact the genuine business activities of property trusts, make access to debt more difficult and reduce the allocation of global capital available to build new homes”.
“That is before you account for thoughtless but popular state foreigner taxes on new homes and state treasurers’ devil-may-care attitude to investment-stunting quarterly tax hikes on property,” he continued.
“It is clear that changing property investment rules week in and week out, evident most recently in taxes rushed through by the Victorian and NSW governments, will prevent us reaching our 1.2 million homes target,” he warned.
ABOUT THE AUTHOR
Grace Ormsby
Grace is a journalist across Momentum property and investment brands. Grace joined Momentum Media in 2018, bringing with her a Bachelor of Laws and a Bachelor of Communication (Journalism) from the University of Newcastle. She’s passionate about delivering easy to digest information and content relevant to her key audiences and stakeholders.
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