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Treasurer punishes foreign buyers, warns more to come

by Nick Bendel5 minute read

Commentators have been cautioned not to stereotype non-Anglo auction buyers after more foreign investors were ordered to sell “unlawfully held” properties.

Treasurer Joe Hockey has ordered the sale of six established homes that he said were “unlawfully held” by five different overseas investors.

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Three properties are from Sydney, two from Perth and one from Brisbane. Their purchase prices range from $152,000 to $1.86 million.

“Some of the five investors have purchased property with Foreign Investment Review Board approval, but their circumstances have changed and they have failed to comply with the divestment requirements,” Mr Hockey said.

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“Some have simply broken the rules by purchasing a property without approval and done so against the law.”

Authorities have gathered more than 2,000 pieces of information relating to suspected residential real estate compliance breaches since May, when oversight was transferred to the Australian Taxation Office, according to Mr Hockey.

“Through the information provided by the public, together with our own enquiries, we now have 462 cases under active investigation,” he said.

“I expect more divestment orders will be announced in the not-too-distant future.”

The government has taken several measures this year to make life harder for foreign investment, including a tighter regulatory regime and a high-profile forced sale.

Overseas investors are generally limited to buying off-the-plan properties under Australia’s foreign investment rules.

Mr Hockey said it would be good if all states and territories had a provision in property contracts that asked buyers to confirm they were abiding by these rules.

“When I meet with the state treasurers in the next fortnight, I will be raising this issue and asking them to change the pro-forma for a residential real estate contract, purchase contract, to ensure that there is a provision there for declarations in relation to foreign investment,” he said.

Benson Auctions director Stuart Benson said it is unclear to what extent foreign investors are rorting the system.

Mr Benson told The Adviser's sister publication, Real Estate Business, that people can sometimes jump to false conclusions when they see non-Anglo people bidding on established properties, as often those buyers are Australian.

“What we do see at auction on a Saturday is people from all walks of life and they’re bidding on the authority of somebody who’s not there,” he said.

“So a lot of the time we do see, for instance, a Chinese buyer with a letter of authority and they’re purchasing on someone else’s behalf.”

Mr Benson said agents and auctioneers have to assume that bidders are acting honestly and that any fraudulent activity will be detected by the authorities.

[Related: Govt continues foreign real estate crackdown]

Treasurer punishes foreign buyers, warns more to come
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