Foreign investors who purchase and leave properties unoccupied in Australian cities face a ‘ghost tax’ as part of measures to address housing affordability, media reports suggest.
Unveiling the 2017 Federal Budget on May 9th, Federal Treasurer Scott Morrison said the government would levy an annual charge of at least $5,000 on foreign owners of residential real estate whereby Australian properties are not either occupied or genuinely available on the rental market for at least six months of the year.
In addition, foreign investors will be subject to a 50 percent cap on the number of properties they can purchase through developer pre-approvals.
Morrison said the changes were part of the government’s plan to address housing affordability.
The vacancy tax, he said, would create an incentive for foreign buyers to make properties within their holdings available to Australian buyers for rent.
The ownership cap, meanwhile, would ensure that Australian purchasers gain their fair share of access to new dwellings within these developments.
Though it is not known how the new tax will be applied, The Australian reported in April that one way could be through comparing a national register of foreign owned land which is being constructed by the Australian Taxation Office with water usage levels kept by each state to determine which properties are both (a) owned by foreigners and (b) also sitting vacant.
Momentum toward a vacancy tax has been heating up in recent times amid concerns that foreign purchasers were holding properties vacant and absorbing local housing supply.
Research from the University of NSW suggests that up to 90,000 rental properties currently sit empty.
In March, Labour Shadow Treasurer Chris Bowen indicated that Labour would introduce a tax on properties left vacant by non-resident owners.
Still doubts about the ability to enforce the policy remain.
Melbourne Lord Mayor Robert Doyle said similar schemes had been difficult to police in Vancouver, though he stresses his support for the measure in principle.
Whilst electricity usage could be measured in order to test for occupancy, it was quite possible for owners to fudge this by running their utilities at a distance, Doyle told ABC Radio.