New South Wales in Australia has doubled property taxes for foreign real estate buyers.
The step was taken to dispel anger among locals, who blame foreign nationals for skyrocketing property prices.
Until now, foreigners had to pay a 4% surcharge when buying properties in New South Wales. The surcharge has now been increased to 8%.
New South Wales has become the second state in Australia to increase taxes for foreigners. Victoria announced a similar measure last year.
The Australian government has also announced fines on foreign buyers who keep their homes unoccupied for more than six months in a year. The government has expressed concern about properties bought by foreigners lying vacant, adding to housing shortage.
A major chunk of foreigners buying properties in Australia are Chinese investors, accounting for two-thirds of a total A$47.3 billion (US$47.3 billion) invested in the property market in the 2016 financial year, according to government figures.
In a recent budget, the government announced that tax deductions relating to expenses incurred while visiting properties in Australia will be completely scrapped. Until now investors could claim a tax deduction on travel costs when visiting a property they owned, with no limit to the number of times an owner can visit each year.
The government also plans to impose a 50% limit on foreign ownership in new developments, which the government sees as a way of ‘increasing the housing stock for Australian purchasers’.
The Australian Prudential Regulation Authority (Apra) has also asked financial institutions to restrict interest-only loans to 30 % of all new residential mortgages. Several banks in Australia have already raised rates on interest-only investor loans.