Joe Hockey may be sweating about his job prospects in the coming days, but on Wednesday the Treasurer announced further progress in the Foreign Investment Review Board investigation into foreign investment that will have some owners sweating.
195 properties were being investigated as announced by Hockey in June. Since then, the number of active investigations has climbed quickly.
“As of today, there is now over 500 investigations into over $1billion of residential real estate that may be held unlawfully by foreign nationals in Australia” the Treasurer said.
The investigation is a long overdue probe into foreign residential property investment. Foreign investors are legally allowed to buy new or off the plan property, but it is illegal for foreign investors to buy established property.
National Property Buyer’s Robert Di Vita says the investigation is greatly needed and the apparent success so far in uncovering potentially illegal purchases is promising.
“I think there has been a failure in FIRB’s ability to police and prosecute foreign investors that flaunt Australian investment rules. FIRB hasn’t prosecuted since 2006 and it’s good to see substantive action finally being taken.”
However, time is running out for buyers to meet the November 30th deadline to come forth and declare illegal purchases without being referred for criminal prosecution. Illegally purchased property will still have to be sold within 12 months.
The majority of declared investigations seem to be the result of “dob-ins” rather than buyers coming forward, according to Tax Commissioner Chris Jordan, also present at the Wednesday announcement.
That trend appears to have been a common theme throughout the investigation – when the Treasurer announced an update in the investigation in June, 40 out of the 195 current cases were due to referrals from neighbours, while only 24 were a result of buyers approaching FIRB.
Prior to Wednesday’s announcement, there have been seven divestments of property. The sale of five more properties in Adross (WA), Stretton (QLD), Labrador (Gold Coast, QLD), Elizabeth Bay (NSW), and Underdale (SA) were announced, owned by nationals from Singapore, Indonesia, UK, and China.
The purchase prices of these properties ranged from $265,000 to $8.1 million and were made either without the approval of the Foreign Investment Review Board approval, or were granted approval by the FIRB but subsequently broke the laws due to a change of circumstances.
It remains to be seen how many unlawful purchases the FIRB will uncover and how much in dollar value has changed hands.
According to a press release from the Treasurer’s office, the transfer of compliance functions to the ATO has played a significant part in the crack down.
The statement said over “3,000 pieces of information relating to suspected breaches have come to light via data matching with third party sources including the Foreign Investment Review Board, Immigration, AUSTRAC and state and territory land title offices.”
“I know everyone wants investment in the property market, and foreign investors are absolutely encouraged and welcomed to put their money in Australia. However, we must all respect and obey the laws that govern foreign investment purchases” said Di Vita.