The House of Representatives Standing Committee on Economics
(Committee) released its report on Foreign Investment in
Residential Real Estate on 27 November 2014 (Report).
As a response to concerns continually raised regarding the
impact of foreign investment on the Australian housing market, the
the economic benefits of foreign investment in residential
whether such foreign investment is directly increasing the
supply of new housing and bringing benefits to the local building
industry and its suppliers
how Australia's foreign investment framework compares with
whether the administration of Australia's foreign
investment policy can be enhanced.
Following six public hearings and the review of 92 submissions,
the Committee found that the current Australian framework for
foreign investment in residential real estate is appropriate and
strikes a balance between the need for valuable foreign investment
and ensuring that the stock of housing available to Australian
citizens and residents is not diminished.
However, the Committee was critical of the administration of the
Foreign Investment Review Board (FIRB) and the foreign investment
framework and made the following four key findings.
There is a distinct lack of accurate or timely data which
tracks foreign investment in residential real estate.
FIRB's administration and resourcing is inadequate.
FIRB's inability or reluctance to enforce the foreign
investment framework provides little incentive for compliance.
There is an underinvestment in FIRB's audit, compliance and
enforcement activities, which is arguably derived from the funding
of FIRB by Australian taxpayers rather than foreign investors.
The Committee made 12 key recommendations to improve the
enforcement of the existing framework for foreign investment in the
Australian housing market. These recommendations are:
The current framework should be retained to encourage foreign
investment in new housing and increase the supply of housing.
Appropriate processes for the purpose of audit, compliance and
enforcement of the foreign investment framework should be
implemented by FIRB and the Foreign Investment and Trade Policy
Division of Treasury.
The introduction of a modest administrative fee to the current
screening of foreign purchases of residential real estate by both
foreign investors and temporary residents to assist to better
The introduction of a civil penalty regime for breaches of the
foreign investment framework (calculated on the basis of a
percentage of property value), applicable to both foreign investors
and any third party who knowingly assists a foreign investor to
breach the framework.
Amendment of the Foreign Acquisitions and Takeovers Act
1975 (Cth) to provide that the existing criminal penalties for
a breach of the foreign investment framework also apply to any
third party who knowingly assists a foreign investor to breach the
The introduction of a requirement that any capital gain from
the sale of an illegally held established property be forfeited to
the Federal Government.
The amendment of Australia's Foreign Investment Policy to
require a temporary resident to sell any property which ceases to
be a primary residence within three months.
The establishment of a national register of land transfers that
records the citizenship and residency status of all
Amendment of the Migration Act 1958 (Cth) to require
the Department of Immigration to inform FIRB when a temporary
resident departs Australia on expiration of their visa.
The introduction of a requirement that all properties which
have approval for off-the-plan sales to overseas investors also be
marketed in Australia for the same period of time.
That the Government consider the purchase of residential
property by foreign investors as an area of investigation when
considering amendments to the Anti-Money Laundering and
Counter-Terrorism Financing Act 2006 (Cth).
The Treasury's Foreign Investment and Trade Policy Division
should make greater use of relevant Federal and State Government
databases to assist with facilitation of FIRB's
As the Report simply presents the recommendations of the
Committee, no action is required. However, the Report provides
useful information concerning foreign investment and may form the
basis of future legislative and regulatory amendments. We will
continue to monitor any implementation of the Committee's
The Council announced planning policies to encourage more inner suburban retirement village and aged care development.
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