The Foreign Investment Review Board (‘FIRB’) application fees were doubled effective from 29 July 2022 across various property classes including new residential, agricultural and commercial land.
Foreign investors, who for decades have played a very significant role as purchasers of new residential real estate in Australia, are now paying hefty FIRB fees as follows:
- Residential land for $1m or less – fee is $13,200 (previously $6,600)
- Residential land for $2m or less – fee is $26,400 (previously $13,200)
- Residential land for $3m or less – fee is $52,800 (previously $26,400)
The Labor Government quietly implemented this fee hike, without public consultation, in an effort to assist Australians to get into the housing market by increasing tax revenue to fund the ‘Help to Buy’ scheme. However, it might have been a futile exercise because we have already seen a dramatic reduction in foreign purchase activity which we believe is attributable to these higher fees. Or at least these higher fees coupled with the fact that foreign investors are already required to pay additional stamp duty at a rate of 8% of the purchase price (on top of the standard 5.5% – 6.5% rate) if they buy residential real estate.
Sadly for developers, this fee increase has come at a time when many projects across the nation are being shelved due to cost escalation and labour shortages. And now it seems as though presale targets will be much more difficult to achieve with developers having to rely primarily on a domestic buyer pool.