Another agent to add to ATO’s foreign buyer hit list

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By Leith van Onselen

Another day, another report of real estate agents deliberately flouting Australia’s foreign investment rules, which preclude non-residents from purchasing established homes. From The AFR:

Melbourne estate agents Hodges are using the lure of rising foreign buyer appetite to encourage residents in the south-eastern suburbs to think about putting their homes on the market.

A letter sent to a resident in Caulfield South and forwarded to the Australian Financial Review says that property prices in Caulfield are “booming” and that one of the reasons the market is so strong is “because there are many foreign buyers looking to purchase property in the Caulfield area”.

It goes on to say that Hodges Caulfield has hired a new agent (who speaks fluent Mandarin) to “work closely with buyers” and urges the resident, if they are considering selling to “contact us at your earliest convenience”…

Hodges Caulfield director Alex Flamm said it was not up to estate agents to verify whether foreign buyers were legally entitled to purchase existing property. “It’s up to solicitors and conveyancers to verify that”…

Actually Mr Flamm, under the new foreign investment regime, which comes into effect on 1 December 2015, “third parties that knowingly assist a foreign person to breach the Act” will face either:

  1. Civil penalties: $45,000 for an individual or $225,000 for a company; or
  2. Criminal penalties: Individual — 750 penalty units ($135,000) or 3 years imprisonment; Company — 3,750 penalty units ($675,000).
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If I was the Australian Tax Office, which is responsible for enforcing the new regime, I would add Hodges real estate to my hit list.

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About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.