Foreign investors under scrutiny to help first home buyers April 24, 2010
The federal government has admitted its new crackdown on foreign investors is an acknowledgment that Australian first-home buyers are being priced out of the market.
The tightening of foreign investment rules require temporary residents to be screened and get permission from the Foreign Investment Review Board to buy a property, sell their property when they leave Australia and build on vacant land within 24 months or sell.
There have been anecdotal claims of foreign investors – especially wealthy Chinese families – ‘stockpiling’ Australian houses and leaving them idle, and of outbidding young people at auctions.
Advertisement: Story continues belowChinese buyers have been involved in near-record high purchases including an apartment in East Melbourne and a house in Sydney.
Treasury is investigating 50 suspicious cases in Melbourne with those caught facing fines and jail.
The laws will be backed by new punitive measures including: making it easier to fine vendors and real estate and confiscate capital gains, expanded data-matching to improve monitoring and increased enforcement, and a dob-in-style 1800 free hotline for people with suspicions.
The move, announced on Friday, is a reversal of the relaxation of foreign ownership rules 18 months ago.
Prime Minister Kevin Rudd said the changes would make it easier for Australians to get into the real estate market.
“We want to make sure that Australian working families are not being priced out of their own family homes,’’ he told reporters in Canberra on Saturday.
“We want to make sure that foreign investors are not going to force up prices for Australians seeking to buy their own home, buy their first home, and we think that’s the right course of action.”
Federal Assistant Treasurer Nick Sherry said that while he was concerned about ‘stockpiling’, he did not believe it had had a major impact on house prices.
He said the tougher rules were brought in because the compliance regime was too weak and Australia had a strong economy that was attractive to foreign investors.
“I don’t accept that overseas purchases has, in itself, been a major factor. It may have been a contributing factor,” he told reporters in Melbourne on Saturday.
“There is a considerable range of other factors that impact on housing prices – land shortages and the underlying strength of the Australian economy.”
Shadow treasurer Joe Hockey said the government was copying Howard government policy by requiring temporary residents to sell their houses when they leave the country.
“In part, the government is just returning to the old rule set up under the Howard government,” he said.
Prime Minister Kevin Rudd says changes to foreign investment laws will make it easier for Australians to get into the real estate market.
The federal government on Friday announced a tightening of foreign investment rules in an attempt to reduce pressure on housing availability.
It means temporary residents wanting to buy in Australia will need to be screened and approved beforehand.
Today, Mr Rudd backed the moves as an important step in protecting local investors.
“We want to make that Australian working families are not being priced out of their own family homes,” he told reporters in Canberra.
“We want to make sure that foreign investors are not going to force up prices for Australians seeking to buy their own home, and we think that’s the right course of action.”
He said the new penalties system, the first of its kind, will ensure anyone trying to rort the system will be pulled up.
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Tags: east melbourne, First home buyers, foreign investment review board, home, house, investment, kevin rudd, land, nick sherry, property
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