Hi Property Lovers
I came across this article on Australian Property Investor that I thought I'd share.
Temporary residents of Australia who purchase an existing property within Australia will need to sell the property when they leave the country, under freshly revamped rules for foreign investment in residential real estate.
The changes reverse the relaxation of the foreign investment rules the Federal Government introduced in 2008 and 2009.
Some homebuyers and real estate agents have complained in recent months about foreign investors outbidding locals at auctions.
Assistant Treasurer Nick Sherry says the changes are "precautionary", as the Australian property market has weathered the storm of the global financial crisis and remains attractive to foreign investors.
Sherry has confirmed the Foreign Investment Review Board (FIRB) is examining 50 cases of possible breaches of the foreign investment rules.
The changes mean temporary residents are again subject to the same compulsory notification, screening and approval requirements as foreign investors, a provision the government lifted in 2008.
Sherry says there are three major changes for temporary residents.
"There'll be a requirement for pre-screening (and) notification to the Foreign Investment Review Board," he says.
"Secondly, when a temporary resident leaves the country they'll now be required to sell that property back into the Australian housing market."
"And thirdly, in the event of (the purchase of) vacant land, they'll be required to build within 24 months and if they don't they'll then have to sell the land back into the market."
The government is also introducing a tougher compliance and penalty regime for breaches of the foreign investment rules.
The FIRB will use computer data matching to monitor property sales and compare that information with the immigration visa status of purchasers.
"I've had a long, hard look at the compliance regime and the penalties, and I have to say that the compliance regime and penalty regime going back over the last 10 to 15 years has been inadequate," Sherry says.
"And that's why we're announcing significant, major and much tougher compliance and checking and new penalty regimes." The compliance regime will also include a new 1-800 community hotline for people to report possible breaches of the regime, Sherry notes. "A tough new civil penalty regime… will make it easier to secure sanctions and should make anyone thinking of acting inappropriately think twice," he says. The civil penalty regime will include sanctions for buyers, sellers and agents involved in transactions that breach the new rules.
The property industry has welcomed the changes to the foreign investment guidelines and the stricter compliance regime, with the Real Estate Institute of Australia (REIA) saying a number of its members had expressed concerns about the number of foreign entrants into the marketplace and whether they were strictly adhering to the guidelines.
However, REIA president David Airey says real estate agents shouldn't have to run checks on their buyers to make sure they're not breaching the foreign investment rules.
"(The) REIA doesn't feel that the real estate profession should be placed in a tenuous situation requiring the profession to police the foreign investment guidelines relating to real estate," he says.
Urban Taskforce Australia chief executive Aaron Gadiel has also raised concerns over the civil penalties regime, saying clarification is needed about its plan to penalise the sellers of property if the purchaser has breached foreign ownership rules.
"If you're selling your home to someone, you shouldn't be subject to prosecution just because the purchaser has misled you or failed to comply with foreign investment rules," Gadiel says.
Sherry says the changes won't be made retrospectively, meaning foreign buyers and temporary residents who've purchased under the previous rules won't be affected.
Shadow Treasurer Joe Hockey says the government's original decision to relax the foreign ownership rules pushed prices higher and put pressure on the property market.
"Kevin Rudd promised the Australian people he would make it easier to buy houses, not harder," Hockey says.
"When he changed the foreign investment rules he made it harder for Australians and now we've seen yet another Rudd Government backflip."
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