It has now been three months since Treasurer Scott Morrison last fronted the media to provide Australians with an update on the Australian Tax Office’s (ATO) surveillance/enforcement efforts against illegal foreign purchases of Australian property.
And while the Treasurer has buried his head in the sand, we continue to receive anecdotal reports of heated sales of existing Australian homes to Chinese, this time from the SCMP:
China’s property buying spree in Australia does not appear to be slowing, with the selling agent for a Sydney harbourfront property touted as Australia’s most expensive house targeting ultra-rich Chinese and said to be in serious talks with several potential buyers…
The seller was currently in serious negotiations with several Chinese buyers…
Cash-rich Chinese have frequently entered Australia’s luxury property market in recent years. In the latest example, a 24-year-old Chinese forked out A$8 million for a luxury harbourside apartment at Point Piper last month…
Andrew MaCasker, Asia head of property South and Southeast Asia at National Australia Bank, said he expected home prices in hot cities such as Sydney and Melbourne would continue to rise this year due to increasing demand from both local and overseas buyers.
While the harbourfront mansion quoted above is said to have received FIRB approval to sell to an overseas investor (which is curious since it is an existing dwelling), we all know that foreign demand – some of which have to be illegal sales of existing homes – is having a profound impact on property values, and by extension a deleterious impact on housing affordability, in Sydney and Melbourne in particular.
In fact, one could argue that foreign demand is a key reason why Sydney’s and Melbourne’s booming housing markets have de-coupled from the rest of the nation, where they have remained subdued.
As noted last week by MB reader Gunnamatta, it appears that cases of potential illegal activity have fallen into a void when passed up the command chain within the ATO, and that surveillance resources are being cut:
My understanding is that the team of people in the ATO doing the data match which was notified last May have been handing up names and addresses and that from there they drop into a void with nothing further heard. I am also told (having just called a mate working there) that the team is being reduced with some personnel moved to other projects.
Another reader, David, noted that he has nominated a bunch of suspect purchases to the ATO but has heard nothing back after FOI requests:
I have nominated to the ATO at least 19 properties in Melbourne’s eastern suburbs where the owner (some very recent / new and some long standing) does not appear on the electoral roll indicating they are most likely a temporary resident. The names of the owners are exclusively of Chinese origin and some of these individuals own multiple properties. When buying, the transfer paperwork often states that their current address on the transfer is the address of the newly purchase property indicating they either do not own a property here yet or they do and they do not want to disclose it. All of this information is available on the public record and I am doing this in my spare time.
FOI requests for the ATO information about the investigation progress has been denied on privacy grounds so I have made another FOI request asking for all FIRB application information on the same group of properties. If they are temporary residents then I assume an application has been made and can be disclosed. If not, my random sample of properties is highlighting a systemic problem with the Victorian and most likely NSW established property markets. I am yet to receive a reply from the second FOI request because the matter I assume is receiving serious attention in case it highlights what the pollies and enforcement agencies do not what us to know.
We are all being dudded and someone needs to call it for what it is and back the powers that be into a corner.
We already know that the Turnbull Government has deferred indefinitely the promised implementation of anti-money laundering rules for real estate gate-keepers, despite warnings from the global regulator, the Paris-based Financial Action Taskforce, that Australian homes are a haven for laundered funds, particularly from China, and similar warnings from AUSTRAC.
Now it appears that the ATO’s suveilance/enforcement actions against illegal foreign buyers has also been put on ice, possibly due to political interference.
Once again, I call on Treasurer Scott Morrison to end his silence and deliver a status update to the Australian people.
In January, he promised Australians that the Government was “committed to enforcing our rules so that foreign nationals illegally holding Australian property are identified by authorities and their illegal holdings relinquished”. We expect this promise to be upheld.
