‘Not a good move’: Property industry slams new stamp duty plan
Slugging foreign buyers with an even higher stamp duty levy and land tax would not improve housing affordability in NSW and may instead choke supply, according to the property industry.
The warning comes as new figures show there were more overseas investors
than first home-buyers entering the market in the September quarter last year,
following the introduction of the foreign investor stamp duty surcharge.
But both sides of state politics appear to be moving towards imposing a higher
surcharge on foreign buyers as housing affordability has become the barbecue stopper of 2017.
NSW Opposition leader Luke Foley announced on Tuesday that if elected Labor would lift the foreign investor stamp duty surcharge from 4 to 7 per cent and double the land tax surcharge to 1.5 per cent, in line with Victoria, “to make housing affordable in NSW”.
Treasurer Dominic Perrottet said the government was considering a similar move, but said “the jury was still out” on whether increasing the levy would improve housing affordability.
He said the Office of State Revenue data which suggested 11 per cent of buyers in the September quarter last year were foreigners was “concerning”. “If that is at the expense of young people not being able to get into the property market, as a government we need to look at ways to ease that. It’s not a panacea to the housing affordability crisis. We’re working on a package of reforms to do that,” he said on 2GB radio.
Data released under freedom of information laws by the Office of State Revenue showed that in the three months from July last year, following the introduction of the foreign investor levy in NSW, foreign nationals counted for 11 per cent (2995) of residential property purchases in the state compared with 7.51 per cent to first home buyers.
It is the first time foreign buyer data has been available from the federal government’s National Register of Foreign Ownership of Land Titles, introduced last year amid an emotive debate about foreigners squeezing out local buyers.
The property industry slammed the move to increase the surcharge as ill-conceived, cynically populist and counter-productive.
Developer lobby group the Urban Taskforce said it would put the brakes on supply at a time when Sydney was still delivering new homes at below the Department of Planning’s target rate of 40,000 a year.
Chris Johnson from the group said “lifting the surcharge on foreign investors will obviously slow down to some extent that market which provides homes for renters in Sydney. Throttling down supply is not a good move.”
Glenn Byres from the Property Council said foreign investment funded large scale developments and boosted pre-sales.
“Adding more taxes to foreign investment would actually hurt supply, particular at a time when lending conditions are more stringent on offshore income,” he said.
Premier Gladys Berejiklian has repeatedly said that boosting supply was the key government response to the housing affordability crisis. Steven Mann from the Urban Development Institute of Australia NSW said foreign buyers were an easy target.
“By targeting a group of people that are unable to vote our politicians are showing a predilection to winning votes rather than obtaining the best outcome for the greater good,” he said.
NSW Treasury calculations released in a call for papers after the 2016 budget showed that the government’s own modeling predicted foreign buyers would be discouraged from the NSW market by the 4 per cent foreign investor levy.
Treasury estimated a modest decrease of about $30 million a year in its stamp duty collection from foreign buyers for 2016-17 after the levy was imposed.
Labor pointed to this as evidence that increasing the surcharge would improve housing affordability.
Shadow Treasurer Ryan Park said it was “not a silver bullet” but committed Labor to putting revenue raised from the change directly into housing affordability measures including stamp duty relief, reducing charges, and bringing land or infrastructure forward.
In Victoria, the introduction of the 7 per cent levy had made no impact on foreign buyers, which have stayed at 2 per cent of the market for the past 18 months, according to a spokesman from the Victorian Premier’s office. Mr Perrottet’s office confirmed the government was considering a range of other measures from lifting the foreign investor surcharge to taxing vacant properties and government equity buy-ins in preparing its package of housing affordability reforms ahead of the state budget in June