More reports of foreign buyers evading FIRB

ScreenHunter_06 May. 06 09.27

By Leith van Onselen

Another day, another report of foreign investors in Australian property slipping through the Foreign Investment Review Board’s (FIRB) net, this time from The AFR:

Real estate agents and property lawyers are willingly helping foreign investors to illegally buy prestige homes in Melbourne and Sydney, says buyers’ agent David Morrell…

Mr Morrell likened the powers of the FIRB to “a slap in the face with a wet lettuce”. He said estate agents, whom the FIRB relied upon to report foreign buyers flouting the rules, were looking the other way in return for higher commissions…

He said Chinese nationals were buying homes at 20 per cent to 30 per cent premiums to the local marketplace, causing a domino effect where other vendors believe their properties are worth more, meaning local buyers cannot compete.

…he said, FIRB rules needed to be enforced and there needed to be much harsher penalties for those that break the law. He also called for agents and lawyers to be disqualified and banned if they facilitated illegal deals.

When viewed in light of recent reports from the Australian Bureau of Statistics, real estate agents, industry professionals, UBS investment bank, and the Australian Treasury, it is clear as day that the official FIRB data on foreign property investment is inaccurate. Taken together, these reports also categorically debunk the notion that foreign purchasers of Australian property are an insignificant share of demand and are not working to price locals out of the market.

So what should Australia do? Another AFR article over the weekend suggests that Australia should raise taxes/fees on foreign property buyers:

A proposal to hit Chinese property ­buyers with extra stamp duties or fees is under active consideration by a ­parliamentary committee charged with finding a solution to the nation’s housing affordability crisis…

The parliamentary committee is looking at a number of options, ­including a charge on Foreign ­Investment Review Board approval for residential property.

An even more dramatic measure to be considered by the joint-Coalition and Labor committee – due to report in October – is whether extra stamp duty should be imposed on all foreign buyers…

Proponents argue that as well as ­generating extra revenue for government, the measure would be similar in concept to the royalties charged by states like Queensland and Western Australia on iron ore shipments.

I have no issue with such charges being levied on foreign buyers, although I doubt they would be particularly effective.

The major problem with foreign property buying is that the FIRB’s rules are not being adequately monitored or enforced. For instance, FIRB has, since 2010, failed to prosecute any foreign buyer for breaching the foreign ownership rules, and has also admitted that it is incapable of monitoring/enforcing whether a foreign temporary resident has sold their home within three months of departing Australia. Surely properly monitoring and enforcing the rules, including applying stiff penalties for foreign buyers and facilitators of transactions that flag the rules (e.g. lawyers and real estate agents), should therefore be the first point of attack?

While we are at it, why not also require that all buyers of pre-existing housing in Australia provide proof of citizenship/residency, with real estate agents required to highlight the rules at the point-of-sale and conveyancers required to check-off and report breaches at settlement?

As it stands, the foreign ownership requirements in Australia appear to be nothing more than window dressing, and the first best solution is to ensure that compliance with the rules is properly monitored and enforced.

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115 Responses to “ “More reports of foreign buyers evading FIRB”

  1. The Patrician says:

    Can we start by having an audit of last 12 mths sales of Syd/Mel existing dwellings for purchasers residency status? Please? Kelly?

    We are not even sure we have a problem. Everyone is flying blind. Why are we forced to guess about what could be multi-billion dollar fraud?

    • Leviathan says:

      12 months ?

      Last decade.

      Every sale needs to be completed with residency papers – period.

      • bskerr2 says:

        Why not get a list of all the people who work at FIRB, or I should say the senior managers, find their address details and allow the general public to take their complaints directly to where they live.

        I think this is in fact the only way because it’s clear you have a broken government that is willing to sell out local people so a few cashed up rich people can get advantage.

        It’s also clear that some of those real-state agents are knownly selling property to people who don’t have a right to buy in Australia and maybe are breaking the law.

      • Andy! says:

        @bskerr2 yes accomplices to crimes must be punished accordingly

      • rich42 says:

        CURRENT legislation provides for confiscation of illegally FOREIGN BOUGHT property

    • Strange Economics says:

      Why would the govt and banks want to enforce these rules at all.
      Buyers paying 20 to 30 % extra for medium price properties up is 20% more RE commission, 20% more stamp duty, and the seller then spends that on their next place. Competing locals get 20% more mortgage, and 20% more interest paid to the big banks.
      Its win win win for the big end of town.
      Bad luck FHBs.

      At least charge 10% extra stamp duty (as is done in Singapore or HK). Also there is no reason a temporary resident needs to buy an existing house (except as a speculative activity of course).

      • jimbo says:

        AT LEAST! Stamp duty on a $1.5m Victorian property is about $80K. An extra $8K is a drop in the ocean. In fact, knowing the mindset, they’d see it as a negative risk of more future change, forcing a greater frenzy to get in before they’re banned.

        How about a flat 5% annual tax for foreign owners. If they want it that bad………….

        Of course, none of this will ever happen because the phenomenon has been politically engineered. Why would they change it?!

      • rich42 says:

        “Bad luck FHB”…Come and read the half brains refuting this…

        “the problem was most severe at the top end of the market (homes priced above $10 million) and those priced between $1.5 million and $3.5 million in the inner cities.”
        Yeah, really squeezing out Aussie battlers, and first time buyers………..hmmm”

        Read more: http://www.smh.com.au/business/markets-live/markets-live-harvey-norman-rallies-again-20140901-3enkz.html#ixzz3C1pEHH9S

      • Schillers says:

        “there is no reason a temporary resident needs to buy an existing house (except as a speculative activity of course).”

        This really is one of the key points. I don’t particularly care how many new apartments foreigners buy, as long as enough new stock is sequestered for local buyers. It used to be a maximum 50% of new units could be sold off shore. There are no limits now.
        This is just plain wrong. Only the HarryTriguboffs of the world benefit by this. Madness.

        As for existing housing stock, how on earth is it deemed “ok” for non-residents to splash millions on them, just because they can? As long as they have a relative studying here, it’s now all “ok”.
        I (and many others) think the changes to the FIRB rules in 2010, suck big time. Foreign money is responsible for significant house price inflation in established suburbs and it’s contributing to pricing a generation of younger Australians out of the market.

        Time to go back to the FIRB rules as they were pre 2010. In fact, get rid of the current department at FIRB in charge of policing residential property compliance and properly fund a new cop on the property block.

        Kelly O’Dwyer are you listening?

    • LordDudley says:

      Why would we do that?

      Enquiries and audits are now for things like the home insulation program, and trade union governance and corruption:

      http://en.wikipedia.org/wiki/List_of_Australian_Royal_Commissions

      If it’s not politically driven, it doesn’t happen. This is the Australia of today, folks. Sir Robert Menzies is very, very dead.

    • StatSailor says:

      bskerr,

      It’s a pretty short list (8 people) and they are people with enough of a public profile that it shouldn’t take more than 5 minutes of googling.

      For example, the FIRB reports to:

      Mr Joe Hockey
      Level 6, 100 Mount Street
      Cnr Mount and Walker Street
      North Sydney 2060

      From recent FIRB appointment coverage:

      “Appointments to the FIRB are purely within the discretion of the Treasurer. There is no legislation or guidelines that determine the establishment of the FIRB. The Foreign Acquisitions and Takeovers Act 1975 does not refer to the FIRB and the Government’s Foreign Investment Policy simply assumes that it exists.”

  2. hamish says:

    Agree, enforce the rules we already have, then see if anything more needs to be done.

    • StatSailor says:

      We should enforce the rules.

      The problem is that as a body that apparently is expected to sit a handful of times each year and review a small number of high profile foreign investments, and perhaps rubber stamp a moderate number of lower profile investments, the FIRB and its administrative wing are as suitable for monitoring investment transactions in great number as the 1938 Czechoslovakian armed forces were at repelling massive forces on its borders.
      Irrespective of whether we are talking about new or old laws, what is missing is a willing and capable bureaucracy to do the work. At this stage, it is time to side step the FIRB completely and constitute a FREIRB board or similar which may actually be effective.

      • The Patrician says:

        +1 Sack Wilson. Sack the board.

        Investigate if Wilson has personally benefited from failing to commence a prosecution in 4yrs despite being surrounded by illegality. A job for our new Federal ICAC.

      • hamish says:

        Have to admit that I don’t know much about the actual structure and operations of the FIRB, but if your description is correct statsailor, using the FIRB without upgrading it’s resources, could be seen as more evidence that the govt has only intended to give the appearance of doing something about this issue.

      • Gunnamatta says:

        Have a look through the Treasury Annual report – last one here (pdf)

        http://www.treasury.gov.au/PublicationsAndMedia/Publications/2013/Treasury-Annual-Report-2012-13

        For the staffing and purpose of the FIRB, as well as their major reasons for being and performance against them……

        From memory they are a fairly small part of the Markets Division

      • StatSailor says:

        My view is that the FIRB was set up and resourced to deal with a completely different problem. Since then, this problem regarding O/S RE investment has emerged, and the FIRB’s paymasters – effectively the Treasury – have not re-directed the FIRB or changed the resourcing level.

        The Treasurer (this one and at least the last couple of predecssors) and head of Treasury receive the FIRB’s reports that they have not detected any untoward O/S investment in Real Estate and take no action of any kind.

        If you are a general and one of your commanders fails in battle once, it’s that commander that is wanting, but if the same platoon commander fails repeatedly and the general does not relive that commander of command and changes no aspect of the battle orders, it’s the general who is wanting.

        By tolerating the FIRB’s current performance, the Treasury and Treasurer are confirming to the FIRB and the world that the FIRB are performing exactly as intended.

      • fitzroy says:

        No prosecution for 4 years the audit should go back 4 years. The current FIRB are pulling wages for doing no work. If they are not up to do their job replace them with people who can and will. It should be fully resourced to prevent the bidding up of Australian property with ill gotten gains. This costs other home buyers a fortune.

      • The Patrician says:

        Either way, whatever they do it has to start with comprehensive independent audit.

        Get the data. Publish the results.
        Why hasn’t this happened yet?

      • StatSailor says:

        Get the data. Publish the results.
        Why hasn’t this happened yet?

        Very simple – the people who control Treasury don’t want it to happen.

      • Gunnamatta says:

        from the FIRB annual report earlier this year…..(p6)

        The Treasurer has provided an authorisation (effectively a delegation) to the Executive Member and other senior Division staff to make decisions on foreign investment proposals that are consistent with the Policy or do not involve issues of special
        sensitivity. Just over 93 per cent of proposals, mostly real estate, were decided under this authorisation in 2012-13. These arrangements streamline the approval process and facilitate a timely decision on applications.

        So this effectively means that it is Treasury staff (Markets Group, Foreign Investment and Trade Policy Division, currently headed by Jonathon Rollings) that is actually ‘approving’ the purchases on the grounds that they are ‘are consistent with the Policy or do not involve issues of special sensitivity’.

        p9

        Consideration of proposals and enquiries

        In 2012-13, a total of 13,322 applications for foreign investment approval were considered, with 12,731 approved, none rejected, 446 withdrawn and 145 exempt as not subject to the Policy or the Act. Of the 12,731 applications decided in 2012-13 (that is, those approved or rejected but not those withdrawn or exempt), 11,840 were decided within the Division under the Treasurer’s authorisation and 891 were decided by a Treasury minister.

      • fitzroy says:

        Patty, it is very difficult to get the AFP to do anything. They would consider this to be of minor importance notwithstanding it is the most serious economic crime this country faces. As I said to your comment below; there should be a prosecution for a summary offence and then an application to seize the property under section 35 Proceeds of Crime. Whether there is confiscation or not is a matter for the court.

      • Gunnamatta says:

        If you go to the chart on p22 of the most recent FIRB annual report it shows the number of real estate applications against the rest for each year since 2007.

        At a guess I would say auditing the last 4 years would involve auditing circa 40 thousand transactions.

      • fitzroy says:

        Reverse onus, with supporting documentation with the rate notice on pain of forfeiture should do the trick Gunna. Just depends on how brutal you are.

      • Andy! says:

        @gunna, do you know if Chodley was included in those stats?

      • StatSailor says:

        @gunna,

        wrt number of transactions to be audited, I have a time saving suggestion – limit the audit to the most recent 500 transactions in Balwyn, Glen Waverley and the top 2 equivalent suburbs of Sydney.

        Prosecute the approximately 498 illegal transactions they are likely to find and the problem should dissipate considerably either directly through the deterrent effect of knowing prosecution is possible or by crashing the housing market when the resultant uncertainty puts many people on the sidelines.

        EDIT: In some ways, the simplicity of this step just underlines the fact that it is not incompetence, ignorance or some kind of accident that the prevailing situation has emerged, it is policy at the highest level i.e. Treasurer and PM, both past and present.

      • The Patrician says:

        Gunna,

        You misunderstand my proposed audit. I am not suggesting we audit the FIRB applications.

        I propose an audit of NSW/VIC titles office records of sales of Syd/Mel existing dwellings to check that the purchaser either is
        1. AUS citizen/Permanent resident or has
        2. FIRB approval

        There will have been at least 40,000 relevant sales in the last 12mnths. It is probably closer to 100,000.

      • rich42 says:

        Declare an amnesty to sell before the audit…or…lose the property after the audit. FIXED.

      • Gunnamatta says:

        Sorry chief, I am actually working on something completely and utterly unrelated, and just switching over intermittently.

        I do like the Fitzroy approach though.

      • md says:

        It’s great to have all these ideas and suggestions. But who is going to actually carry them out? My guess is nobody. And the problem will continue for a long time to come. In any case, why would anyone in the government see it as a problem when the aim of inflating the housing bubble has been achieved even better than expected?

  3. The Claw says:

    dramatic measure to be considered by the joint-Coalition and Labor committee – due to report in October – is whether extra stamp duty should be imposed on all foreign buyers

    Darling, I’m home from the Auction.
    Did you buy us a house this time, my hunk, or did those Chinese outbid you again?
    Darling, I was outbid again, but don’t worry. The Government charged the naughty Chinese some extra stamp duty. Does that make you feel better?
    Yes, my hunk. I feel much better now.

    The major problem with foreign property buying is that the FIRB’s rules are not being adequately monitored or enforced.
    The major problem with foreign property buying is that there are NOT ENOUGH HOUSES for the locals to start with. Selling scarce houses to foreigners makes THE SHORTAGE WORSE.

    • Peachy says:

      Exactly. Putting a (duty) price on it would just legitimize it AND addict the government to the extra revenue over time.

      It is better to do the opposite: delegitimize it (forbid it, with criminal sanctions, including immigration blacklist) and make it stamp-duty exempt (to give state Givernments a reason to make sure that these sales don’t happen, and only dutiable sales do).

      • Opinion8red says:

        “Putting a (duty) price on it would just legitimize it AND addict the government to the extra revenue over time. “

        Shame that so many here are unable or simply unwilling to apply the same logic to the notion of “putting a price” on “pollution”.

      • Lachlan says:

        Agree absolutely Peachy. Pricing and thereby legitimizing this behaviour would be a terrible outcome. Enforce the existing freaking law.

    • Stomper says:

      A Chinese-Australian at work is close to going postal having lost out once again in her house horny bid to become one of the mortgage oppressed.

      She laments “F*&%ing Chinese-Chinese coming in and buying up all the apartments and out bidding the Chinese-Australians out of the market”

      It’s hurting everyone!!!

      • fewlish says:

        Heh, Same here with a (Chinese origin) Malaysian-Australian mate – its hilarious to see him come over here and be consistently out bid by MLC’s (Mainland Chinese) – makes for great story time on Mondays

        He has had to lower his expectations (ie suburb) due to all the extra pressure.

        You can’t expect RE and Lawyers to ‘self police’ (look what that did for fin. advice….) – the simple answer is juice up the fines and penalties and make the FIRB run like a business – set some targets like the rest of the world and get on with it. Unlawful existing transactions are occurring everyday which if properly prosecuted with a decent fine would cover the cost of the APS members salary in moments

        It wouldn’t take long before the tide would turn…

      • LordDudley says:

        I’m sympathetic, because your friend has come to live and work here. That puts her in the same boat as all the other poor slobs.

        Ask her to remember it whenever she talks to her friends about politics, or votes.

        A large group of pissed Aussie-Chinese would quickly help defuse the ‘racism card’ (although I’m not sure if it’s being played as much as some people claim).

      • tmarsh says:

        Can we stop characterising people trying to buy a home to put a roof over their heads as “slobs” (insert other adjective).

        J#sus.

        I am, and was, far from being a slob when +1 and I were trying to buy in Melbourne.

        Lazy. And wantonly wrong.

      • LordDudley says:

        Apologies tmarsh…

        I personally own no property, which makes me a ‘slob’ too.

        The way I write is part of my tendency to satirise by adopting the terminology of the self-congratulatory corrupt set.

        I agree that it is a travesty of the highest order that many/most people trying to put a roof over their heads can no longer to afford to. However, make no mistake that many of those who have made out like bandits think of those who missed the boat as slobs/lazy/stupid.

  4. Lachlan says:

    The only time I have ever seen the foreign investment rules bite was when I acted for an Englishman who had signed a contract in good faith but ignorant of our rules and paid a deposit to a local shonk who was refusing to complete on the sale. I had to try and get his deposit back under what was an unenforceable contract. I dare say this kind of behaviour still goes on at the margins.

    • The Patrician says:

      This is an interesting point. Will we see the more and more for these unapproved illegal sales challenged in the courts?
      Our unregulated land title system is swimming in a rising tide of unapproved and illegal sales……all on the watch of our do-nothing FIRB.

      The O’Dwyer inquiry has not asked one land title bureaucrat/property lawyer about the validity of these unapproved sales and what long term effect this may have on the integrity of the land title system.

      Could the state land titles offices be sued for registering unapproved and illegal transfers of titles?

      • Lachlan says:

        As for suing the Titles Office I see two problems. One is that a stranger to the transaction would probably lack standing. Two is that I don’t think the FI Act actually makes the instrument of transfer void. Contract of sale is unenforceable, and property may be subject to confiscation but I think the transfer if duly executed and delivered is valid (this is based on recollection from 10 years ago, so I could be wrong). Those instruments are creatures of statute (State based) so there might be a constitutional reason why the Feds can’t invalidate them.

      • fitzroy says:

        Patty,

        I think the remedy is section 5 of the Proceeds of Crime Act 1987 which applies to summary offences. I wouldn’t worry about civil litigation, many of these transactions are crimes and all involved are jointly liable. The property is derived from illegal activity and can be seized by the Commonwealth and forfeited.

  5. LordDudley says:

    “While we are at it, why not also require that all buyers of pre-existing housing in Australia provide proof of citizenship/residency, with real estate agents required to highlight the rules at the point-of-sale and conveyancers required to check-off and report breaches at settlement?”

    That’s easy. Real estate agents are in general a group of spivs who will sell anything to anyone if they think they can get away with it, and governments are addicted to stamp duties and the ‘wealth effect’ of rising house prices, plus they’re comprised of older people who own a lot of property.

    This insanity will continue until one of two things happen:
    1. it either becomes a big enough election issue that governments fall over it, which won’t happen until there are more renters than owners, and those renters vote as a bloc (i.e. aren’t distracted by ‘stop the boats’, ‘axe the tax’, ‘gay marriage’ topics).
    2. the entire economy has been fed to the beast, and the music stops.

    My prediction is number 2.

    • Lachlan says:

      “Real estate agents are in general a group of spivs who will sell anything to anyone if they think they can get away with it, and governments are addicted to stamp duties and the ‘wealth effect’ of rising house prices, plus they’re comprised of older people who own a lot of property.”

      Add property lawyers to that list. Never seen a deal they didn’t like. Every flip = more fees. Aiding a foreign national to purchase a property in breach of Australian law should be professional misconduct and practicing certificates could and should be on the line.

      • Andy! says:

        +1
        surely there’s some budding young lawyers looking to make a name for themselves!

      • Jagster says:

        Yeah.. A as long as they wont mind being strung, drawn and quarted.

        There is no benefit to anyone working or collecting from the property industry for this to occur so it wont… That doesnt just include the government, the FIRE sectors, buyers and sellers.. There are a many vested interests involved!

  6. Bluebird says:

    This is exactly what they want. Tally ho good sport. More usury to pay for for the dynasty.

    We can’t have those stinking scum moving up in the world.

  7. Janet says:

    Citizens are going to get mighty angry about this sort of behavior. And when they do, the response might be:
    “A gunman is on the loose following the shooting ( in an equivalent to your Centrelink offices) about 10am on Monday. Police say the man escaped the scene on a bicycle…”

  8. waltK says:

    The media seem to be much more careful now on how they word record sales – last week it was ‘Chinese buyer’,…. now it is ‘local investor’ or ‘local downsizer’

    http://theage.domain.com.au/real-estate-news/top-5-most-expensive-sales-20140831-10ajte.html

    Lies.

  9. Wing Nut says:

    Nothing short of a Royal Commission is needed but don’t expect to get too much support from the MSM’s given one of their main revenue streams is real estate advertising.

  10. Powermonger says:

    This goes beyond FIRB approval, we have entered an era where Chinese buyers are been given exclusive and preferential treatment to property purchases.

    We now have house and land packages in the Hills area and Central Coast being sold to Chinese buyers.

    Meanwhile the average Australian has to go in more and more debt in order to finance a house purchase for themselves and still deal with inadequate supply, which when added is being sold to foreign investors anyway.

    A clear demarcation is happening across our cities.

    • LordDudley says:

      Even better, the Aussie buyer has to go into debt at Australian variable rates. Foreign buyers get fixed multi-decade rates that are much lower than Oz variable rates.

      This cannot end well.

  11. reusachtige says:

    LOL! Stop whinging and buy your own investment properties to sell to the Chinese later.

    • Rent Seeking Missile says:

      Whaddya mean ‘later’??

      • Jagster says:

        Buy a well chosen and researched property in Syd or Melb today and make +10% pa growth on your geared investment. Then in 2 – 3 years time sell to an increasingly more desparate Mainlander!!

        My hunch is that the Tsunami hasnt even arrived yet… Get ready for the onslaught!!

      • md says:

        Jagster, I think you might be right. Even if something is eventually done, it’s not going to happen for years.

  12. boomengineering says:

    The Chinese are here to take the fall for us when the crash comes, be grateful.

    • tmarsh says:

      When the crash comes, there are plenty of MLC with cold hard currency.

      We could see a massive transfer of wealth to non-citizens.

      I don’t care where they come from or what they look like either.

      They’re not citizens. And that’s wrong.

      HOW TO FIX 101 with tmarsh from Macrobusiness.

      1. Up the non citizen property purchase tax to 50%. Money to fund rollback of stamp (?) and/or social housing.

      2. Give any non citizen purchaser in the last 10 years 2 months to sell, or seize the assets with zero recourse or compensation. Use the money to fulfil #1.

      Problem solved within 2 months, guaranteed.

      • Stomper says:

        +1 try breaking the laws in China and see where that gets you.

      • Gunnamatta says:

        I am actually waiting for the moment the boys in Beijing casually mention to the boys in Canberra that they think a lot of their crowd have been breaking the law buying Australian RE (chinese movement of money laws if nothing else) and ask what the Canberra boys are going to do about it………

      • Andy! says:

        @gunna I look forward to that day too. Couldn’t happen to more deserving people.

      • StatSailor says:

        @gunna,

        suspect that if there is any danger of a slowdown in the Chinese economy with any hint of blowback on the central government, the PBOC central committee will be looking for both scapegoats and easy ways to claw back some cash. I’m visualising televised show trials with photo displays of mansions in Kew and Bellevue Hill. I strongly suspect that the list easy to attack miscreants has already been drawn up, and is in someone’s locked filing cabinet awaiting the right time to hit the ‘go’ button.

      • McPaddy says:

        Or the flipside @Gunna: A miracle occurs and the fly-blown carcass of the Australian pretence to a “fair go” twitches to life. Foreign ownership law is enforced. Cue the boys in Beijing explaining gently to Tony that they are becoming very concerned about the damage being done to the property portfolios of their brothers in arms / families / proxies. Much like Putin’s expressions of concern about the Ukraine…

    • flyingfox says:

      @boom

      Their loans from our banks are guaranteed by you. Prices go up, they win. They go down, you pay….

  13. The Patrician says:

    Leith, Can we stop using the term “slipping through the FIRB net”?

    It perpetuates the myth of regulation.

    There is no “net”. There is no regulation. There are no checks.

    • StatSailor says:

      Correct.

      The FIRB do not have a net and if they did they are under strict instructions to never use it.

    • LordDudley says:

      Nailed it.

      If a net has never caught anyone ever, then if we adopt Occam’s razor we should conclude that the net simply does not exist.

      • Freddy says:

        Maybe it is like the shark nets around Sydney beaches? The nets are about 2m tall and deter the odd shark but most just swim under it.

    • Powermonger says:

      Think of them more as guidelines, that can be adhered to if a party wants to but are under no obligation.

  14. Prometheus69 says:

    I wonder if this will lead to some sort of “premium area” gentrification where the usual buyers of traditional middle class suburbs are pushed out and have to look elsewhere.
    As an owner of property in the far less fashionable inner west of Melbourne, I can’t help but wonder if the longer term, the flow on effect will mean that my property value will benefit as a result.
    This is assuming that the whole property ponzi scheme does not come crashing down or at least corrects.

    • Powermonger says:

      Happening right across the North Shore, Northern Suburbs and Northwest of Sydney already.

      • Prometheus69 says:

        If I was to look at this from a purely selfish, short term perspective I’d say; Bring it on.
        But I have strong reservations and concerns that in the long term this will not end well or bide well for future generations.

        Australia is not “open for business”, Australia is open for sale.

        There is a BIG difference.

      • Opinion8red says:

        Spot on P69.

        I literally shuddered, hairs prickling on back of the neck stuff, when Abbott uttered those words on election night.

      • Powermonger says:

        100% correct Prom, unless of course ‘selling’ is the ‘business’ they are talking about? Question the level of selling to foreigners and you get labelled with xenophobia though.

      • Prometheus69 says:

        As a long time resident or the Melbourne Inner West and at the risk of sounding politically incorrect, as far as demographics go, one thing that could be keeping some potential buyers away is the strong Lebanese presence in the area.

        That and rather ordinary schools.

      • StatSailor says:

        What counts as inner West for you?

        Living in Seddon and Kingsville I’ve only encountered a handful (encountered quite a few more when working in Tottenham though, but they lived further out e.g. Sunshine)

        Schools, yes, that’s a big one, especially dearth of high schools/ quality of the few high schools there are.

    • jimbo says:

      In the longer term? Where ya been? I’ve got friends who recently paid well over a mill in outer Yarraville/West Foots. Both high income earners who 10 years ago would have been buyers in Kew, Hawthorn etc. They wanted inner east but had absolutely no hope. Ripple effect alive and well.

      • StatSailor says:

        Yarraville gentrification is old news – predates any of this malarkey.

        Probably a good thing for West Footscray to get a bit of voter diversity. With a bit of luck, buyers who are refugees from Kew and Hawthorn have the sort of connections that will get the area a high school and help find an alternative place for B-doubles to park during peak hour other than Somerville Road.

        EDIT: And a functioning public hospital would be nice too.

        Extra EDIT: The eastern suburbs mentioned are in the electoral division of Kooyong. It seems likely that suburbs in the electoral division of Higgins are also affected. What happens when the pre-selectors in those divisions realise their children have been forced to move, and they have to drive over that horrible bridge and breathe truck fumes every time they visit their grandchildren?

      • Prometheus69 says:

        The gentrification of Yarraville and Williamstown began in the mid 80′s when Yuppies from the Eastern suburbs of Melbourne couldn’t afford areas like Prahran. They bought houses close to train stations along the Williamstown/Werribee line and the rest is history.
        Later on, the gentrification also spread to the East side of the railway line (Williamstown side) of Newport

      • Prometheus69 says:

        If the petrol refinery and other such industry was removed from the Altona area, local prices would well and trully skyrocket overnight.

      • StatSailor says:

        Yes, that’s what I was saying – like the settlement of Glen Waverly by people from China it is a 20 year plus trend.

        Looking forward to more people whose families have been in the Liberal party dress circle moving into the area, making the local electorates more marginal and pushing via family connections for a few extra amenities such as they were accustomed to in Hawthorn, Balwyn and Kew. All the coffee shops, rebirthed cinemas and gourmet supermarkets are fine as far as they go, but a really good high school or hospital would be another thing altogether.

  15. Jim says:

    How about the FIRB actually doing their job and only allowing foreigners to purchase newly built property (i.e. previously wholly vacant and un-used piece of land) and including a tax to fund the surrounding infrastructure?

    Would fix housing affordability pretty quick – take foreigners out of competition for established dwellings and greatly boost the supply of new dwellings, creating a few hundred thousand jobs in the meantime?

    Its time to start a public campaign to name and shame the FIRB. I am sure we could get hold of data on property sales and prove with hard facts FIRB is not doing its job. I have actually seen the data. Maybe take a full page spread in a tabloid with the data, the name of the ministers responsible for upholding the law and the senior management of FIRB responsible for doing their job. Hold them truly and publicly accountable for it. Maybe gain some petition traction from all those priced out of the market because of the FIRB failure.

    • StatSailor says:

      (Ir)-Relevance of FIRB to situation has sort of been done to death, but I’ll help with the name of the Minister responsible – Joe Hockey (the named recipient of the most recent FIRB report, and the individual with statutory responsibility and authority to act on it).

      Apart from his predecessors in that job, the only name that counts.

    • The Patrician says:

      “I have actually seen the data”

      Please explain

    • md says:

      Naming and shaming sounds good. But how do we get hold of the data? How do we know who is buying and in whose name? And it’s something that would have to be done again and again and again to have any impact. But if there’s a way to make this happen, then bring it on!

  16. The Patrician says:

    On the issue of money laundering and Austrac surveillance, this from the Commonwelath AG to the KO’D inquiry

    “Standing Committee on Economics Inquiry into Foreign Investment in Residential Real Estate.
    Attorney-General’s Department input.
    Australia’s Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act) applies to businesses that provide certain services, known as ‘designated services’, which are defined within the AML/CTF Act. Businesses which provide these services are known as reporting entities and
    have certain obligations under the AML/CTF Act. Financial, gambling and bullion services are regulated under the AML/CTF Act.
    The provision of services related to the sale or purchase of real estate is not a designated service under the AML/CTF Act. Therefore, real estate agents and lawyers who may facilitate real estate transactions are not reporting entities under the AML/CTF Act, unless they also provide designated services (for example financial services).
    The AML/CTF Act requires that reporting entities that send or receive an instruction to transfer money to or from a foreign country must submit an international funds transfer instruction (IFTI) report to AUSTRAC. IFTI reports must be submitted within 10 business days of the reporting entity sending or receiving the instruction.
    IFTI reports are submitted to AUSTRAC from banks and other financial institutions, casinos and remittance service providers.
    AUSTRAC received 79 million IFTI reports (covering funds flowing into and out of Australia) in 2012-13 and the total value of these reports was more than $3.5 trillion. These reports represented a 47.54 per cent increase in the volume of IFTI reports received, compared to 2011-12.”

    Yes that is 79 million transactions last year totalling $3.5trillion in value.
    An increase of 45% on the previous yr!

  17. dan the man says:

    This really makes me furious…this is war

    write and speak on the phone to every member of parliament you can think of….senators etc

    write to 4 corners, ACA…whoever….get this on the front pages, talked about

    I have just written to 4 corners

    no use winging, do something

    • fitzroy says:

      I’ve winged to Kelly today

      • jimbo says:

        Isn’t she presently engaging in the delights of China with her colleagues? Banquets of fresh Australian abalone, Italian truffles, skinned live dog. I’m just not sure who’s schmoozing who though.

  18. Sool says:

    Why don’t we get rid of the FIRB? Not much point continuing to pay them if they don’t actually do anything.

  19. flawse says:

    When you cut off all the foreign money coming into RE I hope you have some alternate cource of foreign funds to pay for our profligate existence. More farms sold? More food processors (well the few that are left)? More mines (of the 20% that is left)?

    • dumpling says:

      Don’t worry, flawse. Worrying too much isn’t good for your health…….

      Once we are done with selling 100% of our farms and mines, we can start selling our clean air.

      I heard that filthy rich Chinese in their heavily industrialized megacities would pay top dollar for clean air.

      • aj. says:

        We can also sell our institutions and governance, like the rule of law etc. We have already started selling of our institutions so the process is underway.

        Also we are selling our ecology and environment – so lots to sell.

      • md says:

        There’s plenty more to sell yet. We haven’t even sold off half the properties to foreign buyers so we still have a long way to go before the transition is complete.

    • Bluebird says:

      That’s it. Who’s honestly up for a depression. I often say I am but I’m behind a keyboard and I’m tough.

      However that attitude simply ignores any other avenues and a tonne of other variables.

      No one is really exploring other ways. The Wilberforce award is still unclaimed. Although it’s only on offer to people under 30, which to me makes it seem as though he’s not serious.

      http://dicksmithpopulation.com/wilberforce-award/

  20. 2big2fail says:

    According to this article, FIRB does not have the means to ensure foreign nationals comply with Australian foreign investment rules:

    http://www.propertyobserver.com.au/financing/tax-and-legal/35049-how-e-conveyancing-can-help-ensure-foreign-investors-comply-with-rules-reia.html

    They say that “later in the year the first national e-Conveyancing platform will be rolled out.”

    Makes you wonder what the f*** they have been doing all along?

    So they have the budget to chase people fleeing for their lives and arriving by boats, but when it comes to very substantial amounts of money crossing borders without detection they are helpless. Talk about getting priorities right..

  21. 2big2fail says:

    More data:

    http://www.propertyobserver.com.au/forward-planning/investment-strategy/property-news-and-insights/32237-firb-powerless-to-identify-or-stop-illegal-residential-purchases-as-chinese-investment-surges.html

    “Approved proposed investment (that is foreign investment approvals, clarification is mine) for the first nine months of 2013-14 was around $24.8 billion, 44% higher than the $17.2 billion approved during all of 2012-13.”

    “On average, around 35% of dwellings in a development have been sold to foreign persons.”

    Another paper from rba:

    http://www.rba.gov.au/publications/bulletin/2014/jun/pdf/bu-0614-2.pdf

    This is from the rba paper conclusion (sort of gives you an idea what their concerns are):

    “The benefits of any additional reporting requirements would need to be carefully balanced against the added administrative burden”.

    Unbelievable.