From the ABC:
Bill Fuggle, the head of financial services at global law firm Baker MacKenzie, says Australia has greater restrictions than many comparable countries.
“If we compare ourselves to our peers in places like New Zealand, the US, Canada, UK … those countries have very little restrictions,” he said.
“By contrast, if you want to buy an established property you essentially have to be a resident here.”
Foreign investors can only buy newly-built properties, which is the Government’s way of boosting construction.
But there is scepticism with some real estate agents suspecting that rules are being bent.
Ballard Property Group’s Bill Bridges sells multi-million-dollar established homes in Sydney’s eastern suburbs and says he has seen a big jump in interest.
He says he always asks whether paperwork is in order and “the main answer to that is they say ‘Well, we’ll take care of that, that’s not a problem'”.
Mr Fuggle says buyers can easily circumvent the rules by getting a resident to buy property on their behalf.
“And that would be very difficult to detect and I think it would be quite difficult to police … anecdotally it seems to be a relatively prevalent activity,” he said.
Australian banks are also allowed to offer products which facilitate foreign nationals to circumvent the rules.
To qualify for residency under the Significant Investor Visa program, $5 million must be invested in Australian Government approved products for four years.
Real estate is not an approved product.
But Macquarie Bank is lending the $5 million back to investors, which Mr Fuggle says can then be legitimately put into real estate.
“Proceeds of that loan are essentially unregulated money so they invest that wherever they like,” he said.
…Banking analyst Martin North says this shows regulation is weak.
“I’m not sure that the policing is that real. It’s a process that everybody goes through but if you think about the 6,000 applications they receive every year, are they really going to look at every one?” he said.
…Figures from FIRB can be more than a-year-and-a-half out of date by the time they are released, and Mr North says they lack crucial detail.
“The FIRB numbers will record as a single application 100 new units being built on a site but that’s counted as one application and yet there are a whole bunch of individuals buying those properties,” he said.
“We don’t actually have data of the number of people who actually buy under one of those umbrella approvals.”
…The lack of information is fanning fears in the community, according to the Australia China Business Council’s Jim Harrowell.
“I would hope that this committee, although the terms are very general, will actually get to the facts,” he said.
Too right. the committee’s number one recommendation should be improving and tightening information flow.
