By David Crombie
The Federal Government has released a consultation paper called Strengthening Australia’s Foreign Investment Framework and is seeking views on proposed reforms to our foreign investment framework in relation to residential property and agriculture.
The proposed reforms include the introduction of an application fee where foreign persons will require prior approval to purchase residential real estate. The Government believe that the introduction of the policy will increase the amount of available housing stock. Given recent information in the media I am not sure that there are any real concrete figures on the amount of foreign investment in residential property in Australia.
While most people would think of foreign investors as people who live overseas the paper covers foreign persons who may be temporary residents or non residents.
Foreign persons can apply to purchase vacant residential land for development and newly constructed dwellings in Australia.
Non resident foreign persons are generally prohibited from purchasing established dwellings in Australia. However, reflecting the fact that foreign persons who are temporary residents need a place to live during their time in Australia, temporary residents can apply to purchase one established dwelling to use as a residence while they live in Australia. The purchase of an established dwelling is conditional on the foreign person selling the property when they leave Australia. Temporary residents cannot acquire established dwellings for investment (rental) or holiday purposes.
The proposed fees for foreign investors for residential property are:
- $5,000 for properties valued under $1 million;
- $10,000 for properties equal to or greater than $1 million
- Beyond this the fee would then increase in increments of up to $10,000 for each additional $1 million in property value.
Compliance and enforcement would be managed by the creation of a new area within the Australian Taxation Office and the paper outlines a raft of civil and criminal penalties for both individuals and companies who those breach, or are found to have assisted (read real estate agents) in the breach the foreign investment rules.
The paper will be be reviewed in greater depth by the Practice Support team at Estate Agents Co-operative and a submission made if deemed necessary.
At only 33 pages the paper is an easy read and be viewed at the Australian Government Treasury website.