Property gives a tick despite FBS concerns

The property and construction industries welcomes the 2017-18 Budget’s focus on Metronet and infrastructure but is concerned about the foreign buyers surcharge.

BUTLER, Yanchep and Gingin property markets are likely to respond positively to the decision not to increase land tax and stamp duty, according to the Property Council of Australia WA.

Property Council of Australia WA executive director Lino Iacomella said the freeze on key property taxes would support early signs of a turnaround in key markets, including the upper-end of residential real estate sales and investment in CBD commercial property.

But the council and other property industry groups all expressed concerns about the state government’s foreign buyers surcharge would deter investors.

In its 2017-18 Budget on Thursday, September 7 the McGowan Government said it would introduce a 4 per cent foreign buyers surcharge, which would apply to all purchases of residential property by foreign individuals and entities from January 1, 2019.

The government said the measure would pay for the freeze on TAFE fees.

Treasurer Ben Wyatt said the change was restricted to residential property.

“It will not apply to purchases of commercial or industrial property, nor will it apply to residential developments of 10 or more properties, commercial residential property such as hotels, student accommodation and retirement villages, or mixed use properties that are used primarily for commercial purposes,’’ he said.

He said it was estimated $21 million would be raised in its first full year (2019-20), and a total of $49m over the forward estimates period to 2020-21.

“WA’s delayed introduction reflects the current softness in the state’s property market and will allow the market to adjust before being applied.’’

Mr Iacomella said the property council was concerned the foreign investor stamp duty surcharge could spook foreign investment it was pleased the government seemed set to avoid the mistake of some eastern states that taxed developers wanting to deliver new supply.

“If a foreign investor surcharge is backed by well-designed legislation, the commitment to exclude investment in residential developments of 10 or more properties means companies simply wanting to create new projects can get on with the task of adding new supply and generating jobs,’’ he said.

“The $1.3 billion funding commitment for stage 1 of Metronet is also important for development and construction companies lining up for work around key stations.

“Metronet will be the biggest urban renewal project Perth has ever seen and it was critical that funding was in the budget to give business the confidence to gear up for the work.

“The industry will want more information however about the $104m revenue expected from land sales and value capture to fund Metronet stage 1.

“We will be consulting with the government about their plans to use value capture and where the land sales will occur.

“A few things that were not in the Budget that the property council will follow-up on, include the potential for more pubic private participation in major infrastructure projects, tax incentives for seniors downsizing and the reconsideration of asset sales to fund infrastructure investments.’’

Real Estate Institute of Western Australia deputy president Damian Collins said given the government had faced challenges when it came to the state’s fiscal position, it was pleasing to hear there would be no increases to property tax for WA residents.

But the institute was concerned the introduction of a new foreign owner duty surcharge could reduce overseas property investment.

Although it too has concerns about the foreign buyers surcharge the Housing Industry Association congratulated the government for committing to the first home owners grant and stamp duty exemptions over the forward estimates.