The report on foreign property buyers is out, and the recommendations are significant, and the Foreign Investment Review Board (FIRB) criticised.
The current framework relating to foreign purchases of Australian housing will be retained to encourage investment in new dwellings and increase housing supply. But there are a bunch of recommendations, which cover the bases quite well in terms of enforcement. First, there is the intent to creation of a national land title register to record the citizenship and residency status of real estate buyers. This means that data on residential status will be checked during purchase. Next, professionals involved in real estate transfers (such as lawyers, transfer agents, developers, real estate agents), and family members who knowingly assist foreign buyers to breach the rules will be fined. There would be greater data sharing between the Immigration Department and FIRB to detect offenders. Foreign property investors will pay a fee, to fund FIRB’s investigation and enforcement operations, and the Government would collect any capital gains made by foreign investors who illegally purchased established residential properties. Finally, penalties for breaches of the rules will be linked to the value of the property.
Liberal chair, Kelly O’Dwyer said:
“The Committee has undertaken a thorough review of the foreign investment framework as it applies to residential real estate. We have found that the framework itself is appropriate and strikes the right balance in terms of encouraging beneficial foreign investment in the housing market, however its application is severely lacking.”
“I regard the current internal processes at the Treasury and FIRB as a systems failure. Most concerning is that sanctions seem to be virtually non-existent. There have been no prosecutions since 2006 and no divestment orders since 2007. Suggestions by officials, that this is due to complete compliance with the rules is simply not credible. The data on foreign purchases of Australian houses and apartments is inadequate, making policy evaluations very difficult”…
“Australians must have confidence that the rules, including those that apply to existing homes, are being enforced. Our inquiry revealed, that as it stands today, they could not have that confidence.”
“This report makes 12 common sense recommendations to Government to enable proper enforcement of the existing framework for foreign investment in Australian housing; provide extra resources to do so; and accurately measure the impact of foreign investment by collecting accurate and timely data. These practical measures are critical in order to ensure that foreign investment in Australian housing continues to serve our national interest for future decades.”
This is a good step in increasing transparency in this important area.
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