The Real Estate Institute of Australia (REIA) has fronted a Senate Economics Committee to give evidence on the Foreign Acquisitions and Takeovers Fees Imposition Amendment Bill 2020.
REIA President Adrian Kelly has said that fees “should be structured to reflect the cost of undertaking the assessment and administration by the Australian Government, instead of imposing unnecessary impediments on foreign investors in the residential property market”.
He told the committee that foreign investment in the residential property market is the lowest it has been since 2015-2016.
Applications for foreign investment in the residential property market have dropped from 40,000 in 2015-2016, to just 7500 in 2018-2019.
“We understand from our agents working in this area the cumulative impact of Commonwealth and State Government fees has contributed to decreased demand from foreign investors,” Mr Kelly continued.
“It has been our proposal to Treasury, and now this Committee, that fees should be equitable and simply reflect the cost of assessment and processing by FIRB.”
Mr Kelly is concerned about a disconnect between the government’s best practice policy aspirations, and this proposed fee-setting framework.
“This is not just across the board but for each category of fees,” he said.
“That is, residential property applications should not be offsetting or subsidising the cost of administration other categories.
“The proposed fee structure within the ‘Fees’ Bill this Committee is tasked to inquire on ignores all of the above.”
The proposed fee for residential is twice that for agricultural and 50 times that for commercial land and business.
A non-residential asset valued at $210 million attracts a proposed fee of $52,800, compared to a $5 million residential property – also charged a $52,800 fee.
“In short, unnecessary impediments should be removed for foreign investors looking to invest in Australia’s residential property market,” he said.
“We respect all national security considerations but fees should ultimately reflect the cost of undertaking the assessment and administration.”