Foreign investors face crackdown on Australian property purchases
Foreigners who have bought Australian properties without proper approval have until the end of November to come forward or face penalties, the Coalition says.
Under a crackdown on foreign property investment, new penalties include fines of more than $100,000 and up to three years jail for individuals and fines of more than $600,000 for companies.
They will apply to foreign buyers and those who facilitate illegal property sales, including developers and real estate agents.
The package announced by the government on Saturday also includes a range of new fees for all foreign acquisition applications and new lower review thresholds for foreign purchases of rural land ($15m, down from $252m) and agribusiness ($55m, down from $252m).
The prime minister, Tony Abbott, claimed existing rules controlling foreign acquisition of real estate were not being enforced under Labor.
Foreign investors mostly aren’t allowed to buy existing residential real estate but, subject to approval, can buy new residential property on the basis that this drives demand for housing stock.
But there’s growing concerned that rules have been widely flouted, with foreign buyers pricing locals out of heated city property markets.
Under the new regime, there’ll be better enforcement through transferring residential real estate functions from the Foreign Investment Review Board to the better-resourced Australian Taxation Office.
It will be able to use its extensive data-matching systems to identify possible breaches.
Abbott said foreigners were illegally buying into the existing residential property market and driving up prices.
“We want to ensure that locals are getting a fair go, that the playing field is at least level and, if possible, slightly tilted towards the locals,” he told reporters in Sydney.
The treasurer, Joe Hockey, said there would be a moratorium on enforcement of the new rules.
Illegal foreign investors have until 30 November to come forward without penalty. However, they’ll still be forced to divest.
Hockey said this would help build confidence in foreign investment.
“They ensure that the laws that are in place are properly enforced and importantly, they give Australian investors and Australian home owners confidence they are competing on a fair and level playing field,” he told reporters.
The announcement produced mixed reactions.
Labor frontbencher Stephen Jones said the government was declaring Australia open for business and in the next breath saying “but let’s check your passport”.
“We will have differential arrangements for different countries. The government needs to send clear messages about foreign investment,” he told Sky News.
The federal Nationals leader, Warren Truss, said this was a win for common sense, giving the public reliable information about real levels of foreign ownership of agricultural land and agribusiness.
“There are plenty of stories of the existing rules being ignored or being circumvented through scams, front companies and contrived arrangements,” he said in a statement.
The Business Council of Australia chief executive, Jennifer Westacott, said they were disappointed the government had decided to implement a fee regime on all overseas investments in Australia.
“Given the great progress made by the government in concluding key free trade agreements, it is disappointing they have made a decision which would undermine those deals and potentially discourage much-needed foreign investment in Australia,” she said in a statement.
The Property Council of Australia welcomed toughened compliance measures but said the new fees were too high.
Chief executive Ken Morrison said a more moderate fee would more than cover the FIRB approvals process and ensure taxpayers are not out of pocket.
“But the government seems determined to use this process as an opportunity to raise revenue,” he said in a statement.
Morrison said this set a dangerous precedent for the states, with Victoria already announcing increases in stamp duty and land tax for foreign buyers.