The Australian has revealed further failings by the Foreign Investment Review Board (FIRB) in regulating Australia’s foreign investment regime into residential property.
Despite some 30,000 approvals for foreigners to purchase pre-existing homes (let alone the thousands of potential unapproved sales), and rules in place to require temporary residents to dispose of their properties once they leave Australia, FIRB has issued just 17 orders to dispose of their illegally held assets since 2003:
FIRB officials appearing before the committee had sought to avoid providing data on the number of times they had forced buyers to sell illegally acquired homes but, under heavy pressure from committee chair and Liberal MP Kelly O’Dwyer, the board disclosed there had been just 17 divestment orders issued since 2003-04.
During that period, foreign investors have been allowed to buy almost 29,208 established homes in Australia — despite the prohibition on this — for a total investment of more than $23bn.
The failings by FIRB to enforce the foreign investment rules come on top of revelations in September that FIRB had failed to prosecute a single foreign buyer in eight years, despite widespread anecdotal evidence of foreigners flouting the rules.
According to today’s article in The Australian, the parliamentary committee examining foreign real estate investment is poised to recommend a range of reforms to the regulatory regime, including:
- Charging foreign investors a fee to purchase properties in Australia, with the revenue raised used to fund beefed-up surveillance activities;
- Changes to data collection policies and processes to ensure that nationality of buyer is recorded; and
- Possible additional stamp duties, as applies in Singapore, where a 10% duty is charged on foreign purchases.
These are all positive steps, which should add some integrity to the foreign investment system. I would also like to see greater fines levied on parties that flout the law, comprising not just the foreign purchaser, but also any real estate agents, lawyers, and the like that aid and abet illegal property sales.
The parliamentary committee is due to release its report later this month.
