Pointing out the potential repercussions of the tax to Western Australia’s (WA) property market, Real Estate Institute of Western Australia (REIWA) urged all its members to oppose the foreign owner duty surcharge.
For reference, the WA Labor Government recently announced that it would take after the other states and increase stamp duties on foreign buyers of residential property to 7% starting next year.
REIWA President Hayden Groves, in a disclosure, underscored how the new tax would restrain the foreseen growth of the state’s property market.
“WA has the lowest level of foreign investment and foreign students of any capital in the country, besides Darwin. The state is also on the verge of a skills shortage and we need foreign families to fill that void,” Groves said.
“This type of misguided policy will dampen the incentive for foreigners who are not permanent residents to locate and live here. The WA Government should be implementing policies that attract people to the state, not deterring them with unfair taxes.”
“Those that do come to WA will be forced into the rental market for the duration of their stay, or until they obtain permanent residency. This will cause an upward pressure on rental prices, affecting everyone.”
Moreover, it was noted that West Australians with foreign spouses will bear the brunt of having an additional tax. When they buy a home together, 50 % of the value of the property would be eligible for the 7% tax under the Government’s proposed legislation.
Groves pointed out that the foreign buyer surcharge is not a one-size fits all policy, saying: “[it] has been touted as an investor tax, that only targets the big end of town, but that simply is not the case. In fact, land bought to be developed into eight or more dwellings is exempt.”
Finally, it was highlighted that the surcharge will potentially put a halt to the state’s long history of welcoming migrants to work and raise a family.
“This kind of Nationalistic policy will only dampen the property market and cause skills shortages to the detriment of everyone in WA,” Groves concluded.
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