Foreign investors will have to be registered and pay special fees if they want to buy a house in Australia.
Prime Minister Tony Abbott and Treasurer Joe Hockey today announced the proposed changes to rules for foreign investors.
The influence of foreign home buyers, particularly wealthy Chinese investors, in the Australian property market has been a cause of some political concern. One agent recently claimed Chinese buyers were buying high-end homes in Sydney at huge premiums.
Earlier this month Abbott revealed he had asked Treasury to identify and force sales of property held illegally by overseas buyers, claiming no action had been taken on such cases for six years.
Today’s announcement means details of residential and agricultural property bought by foreign investors will be kept in a register. There’ll be an application fee of $5,000 to buy a home under $1 million and after that it will be $10,000 for every extra $1 million in the price.
With average house prices in Sydney around the $1 million mark, a $5000 fee is a negligible amount and unlikely to act as any form of investment deterrent, although it should stop any overseas investor thinking of buying houses illegally.
Breaking the new rules could mean penalties of up to 25% of the purchase price and a forced sale of the property.
Abbott said: “We need to make sure that all foreign investors are following the rules, and that those foreign investors who break the rules are not able to profit from breaking the law.”
Hockey said: “There will be a new register set up so that we know how many foreign residential and agricultural property owners are in Australia, who they are, which is a very important form of reassurance to the Australian people.”
Earlier this month the government reduced the Foreign Investment Review board threshold to $15 million from $252 million for foreign purchases of agricultural land.
During that announcement, Abbott and Hockey foreshadowed better enforcement of the rules for foreign purchases.