Buying an investment property in Australia has just become more expensive.
The state government of Western Australia declared they would hike its Foreign Buyers Surcharge to 7%.
Foreign investors planning to buy a property in Western Australia will now have to pay a 7% surcharge.
The news has been announced in a new state budget measure released on Thursday (10 May).
In 2017-18 budget the Foreign Buyers Surcharge was at 4%. However, this year it has been increased as the government needs some cash inflow into the budget. The primary reason, according to the government, is to match other states that levy a surcharge.
From January 1, 2019 the surcharge will apply on the dutiable value of residential property purchased by foreigners, including corporations and trusts, in WA. This will be in addition to the normal transfer duty payable on the property. The surcharge is restricted to residential property, with commercial transactions and significant residential developments remaining exempt.
The 7% rate brings WA in line with New South Wales, Victoria and South Australia, all of which currently levy their surcharges at seven or eight percent. Queensland has also announced an increase in its rate to 7% from July 1 2018.
The increase will boost up the total estimated revenue from the surcharge to $123million over the period of 2018-19 to 2021-22.
A number of investment and urban development institutions have expressed their disappointment at the hike.
The president of the region’s Real Estate Institute Hayden Groves is worried the decision will actively discourage any foreign investment in the region’s property. He is supported by CEO of the Urban Development Institute of Australia Allison Hailes who said, that the Foreign Buyers Surcharge could have a negative impact on the property market recovery in Western Australia.