On 27 November 2014, the House of Representatives Standing Committee on Economics tabled its report on foreign investment in residential real estate.
As stated in the media alert the report makes 12 recommendations, including the following:
- Retaining the current framework applying to foreign purchases of Australian housing to encourage foreign investment in new dwellings and increase housing supply
- Improving the internal processes at Treasury and the Foreign Investment Review Board (FIRB) and removing barriers to enable adequate audit, compliance, and enforcement of the foreign investment framework
- Applying a modest administrative fee to the current screening of foreign purchases of residential real estate to better resource FIRB
- Introduction of a civil penalty regime for breaches of the foreign investment framework
- Requiring that penalties now apply to all third parties who knowingly assist a foreign investor to breach the framework
- Requiring that any capital gains from the sale of an illegally held property be forfeited to the Government
- Requiring that properties that have a certificate that allows sales of off-the-plan overseas, must be marketed in Australia for the same period of time
- Amending the Migration Act so that the Department of Immigration must inform FIRB when a temporary resident departs Australia upon expiry of their visa and
- Establishing a national register of land title transfers that records the citizenship and residency status of all purchasers of residential real estate.
What the Government will do about implementing the recommendations in the report remains to be seen. The Government will no doubt be sensitive to how any tightening of requirements will be perceived overseas. It has been suggested that the release date of the report was deferred until after G20 meetings had concluded, which if correct, would be a sign of the degree of sensitivity on this issue.
On the home front, we query whether the recommendations of the report will go far enough to allay the concerns of the Australian public about the extent of foreign investment in domestic real estate and the difficulties that creates for citizens in being able to afford to buy a home.