Peak body calls on government to rescind surcharges amid the continuing housing crisis
Queensland’s peak real estate body is calling on the state government to rescind foreign investor surcharges due to the continuing housing crisis.
The Real Estate Institute of Queensland has long opposed the 7% surcharge applied to stamp duty, which was introduced in 2016, and the additional 2% surcharge applied to land tax rolled out in 2019. The surcharges apply to Queensland property held by foreign entities.
REIQ CEO Antonia Mercorella said that the additional taxes deter foreign capital from coming to Queensland.
“When the Labor government introduced additional surcharges for property transactions from foreign buyers, the REIQ called it out as a cash grab which would deter desperately needed property investment and would slam the state shut for business,” Mercorella said. “A growing population is a great thing for our economy, but in order to welcome more people and reap these benefits, we also need to be welcoming investment in housing – particularly when it helps get new residential supply off the ground.”
More supply needed
Mercorella said that considering the current housing crisis, it was time for both taxes to be eliminated.
“With about 36% of people in Queensland living in rental accommodation, the supply of rental properties is crucial, and therefore we need investors – both local and foreign – to make important contributions to the stability of the rental market,” she said.
“Queensland Revenue can offer ex gratia relief where projects enhance the community or the economy,” she said. “Given the ongoing housing crisis, surely any projects that provide a roof over the head of Queenslanders and increase much-needed housing stock would meet this criterion. We saw that with build-to-rent projects, the government was prepared to offer this relief to large foreign multinationals investing in that asset class.
She said that relief meant there was a danger of the market skewing toward the build-to-rent asset class when it needed diversity.
“Therefore, the REIQ’s view is that it would be appropriate to extend this exemption to all foreign investors, not just foreign pension funds and developers,” she said.
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Mercorella noted that a recent ruling in New South Wales found foreign investment surcharges to be in violation of Commonwealth Double Taxation agreements.
“This ruling also gives weight to the argument that the QUeensland government needs to fully rescind these additional taxes to ensure Queensland aligns with Commonwealth laws and agreements,” she said.
Foreign buyers are returning to Australia, with some estimates predicting that Chinese property investment in the country could approach US$5 billion this year. Foreign buyers are also making their mark on Australia’s luxury housing market.
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