FIRB forces $36m foreign buyer property sale

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From the AFR:

China’s 15th richest man has 90 days to sell one of Sydney’s finest homes, at whatever cost, or face the prospect of prosecution.

The $39 million Point Piper mansion Villa de Mare was sold last year in contravention of existing laws that prohibit foreigners buying property without government approval, Treasurer Joe Hockey said.

The grand home, once owned by recruiter Julia Ross, was bought by Golden Fast Foods, a holding company ultimately owned by Evergrande Real Estate Group under Xu Jiayin, who is known as and for having strong connections to the Chinese Communist Party and former party premier Wen Jiaobao.

…FIRB staff spent months investigating if the purchase complied with the law.

“The rules are straightforward,” said Brian Wilson, the Foreign Investment Review Board chairman. “It’s an existing property you have to be either a resident, or a citizen or a temporary resident. You can’t be a foreign investor.”

Mr Wilson said the property’s owner, who he declined to name, was “on a number of occasions” given the opportunity to prove to FIRB that he had complied with the law.

You’ll forgive me for observing that if the rules are so straight forward, where has FIRB been for the last decade?

That aside, and before the chardonnay Left arrives with its bodice ripping accusations of racism, let me reiterate that this is excellent public policy. It is enforcement of existing rules not something new. It is very clear that Australians not already in the property market are being priced out by, in part, illegal foreign purchases and the government is right to push back on it. It is also very timely in a macroeconomic sense because the RBA needs a hand cooling housing so it can help address Australia’s real issue which is to improve competitiveness via a lower dollar.

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No doubt the timing is tied to Abbott’s woes and the NSW election but that’s politics and this is a big win for the country.

About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.