The Australian government has reduced the fees it charges to foreign investors funding build-to-rent (BTR) projects in a major policy overhaul on foreign investment in residential property.
Federal Treasurer Jim Chalmers said the government would ensure foreign investment application fees for BTR projects were at the lowest commercial level regardless of the type of land involved.
Currently BTR investors can be subject to different, higher fees if their projects involve particular categories of land, such as that zoned for residential development.
Adoption of the initiative would end a current anomaly under which, for example, a proposed A$50m (€30.5m) investment would attract a A$1.1m fee on land zoned residential purposes but only A$13,200 on land zoned for commercial use.
Announcing the changes at the weekend, Chalmers said lowering fees for these investments would help ensure Australia’s foreign investment framework was consistent and predictable for all BTR investors.
The changes are intended to encourage development of housing projects across the country that were being specifically designed, built and managed to provide long-term rental options for Australians.
The application of commercial foreign investment fees to all future BTR projects will apply after 14 December 2023.
The Property Council of Australia (PCA) said moving foreign investment application fees for BTR projects to the lowest appropriate commercial level would boost the investment appeal of new rental housing supply that offered well-located, secure, customer-led and community-oriented housing.
PCA chief executive Mike Zorbas welcomed the announcement, noting that high foreign investment fees were a disincentive for the global investment needed to achieve the Australian government’s housing target of 1.2m new homes by 2029.
“BTR has the potential to create 150,000 homes over the next decade, but the settings must be right,” Zorbas said. “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.”
But PCA also warned that the industry needed to see legislation that follows through on a May 2023 budget promise to halve the 30% withholding tax on foreign investment in BTR to 15%.
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