The Parliamentary Inquiry into Foreign Investment in Residential Real Estate report, commissioned by National Treasurer Joe Hockey in March 2014, reiterated the importance of encouraging foreign investment in the Australian market.
The report, which delved into foreign investors and ownership in the Australian property market, was released by the House of Representatives Economic committee on Thursday, 27 November 2014 and REINSW President Malcolm Gunning said the outcomes are not surprising.
“REINSW is pleased that the Parliamentary Inquiry has not hindered the aid that foreign investors provide for our economy. Foreign buyers are certainly underpinning Sydney’s growth,” Mr Gunning said.
“In the past, the sensationalised media accusing foreign buyers of playing a negative role was misguided and the Inquiry has certainly overruled that thinking.”
Liberal MP and Chairwoman of the Parliamentary Inquiry Kelly O’Dwyer found that the status quo on existing framework encouraging the construction of new dwellings and increasing the supply of housing should be retained.
Ms O’Dwyer told the Sydney Morning Herald that in order to ensure compliance between property ownership and residency status, the committee has recommended the introduction of a national register of land title transfers that records citizenship and residency status.
"As a relatively small nation, Australia will continue to rely on foreign capital to help grow our economy and provide jobs," Ms O'Dwyer said.
"However, Australians must have confidence that the rules, including those that apply to existing homes, are being enforced. Our Inquiry revealed that as it stands today they could not have that confidence.
Risk adverse investors
In order to restore confidence, the report recommended harsher penalties for those who break Australia’s investment rules and tighter requirements around the transaction process.
These include penalties for third parties such as mortgage brokers, lawyers and real estate agents who knowingly breach investment rules, forfeited capital gains from selling any illegal held property, the addition of a national register of land title transfers that records and monitors citizenship and residency of anyone who buys Australian property, and the inclusion of a new administration fee for approval of purchasers of residential property.
“REINSW supports the government’s initiative – it is along the lines of our initial recommendations. We welcome harsher penalties for third parties. REINSW is aware that others are providing incorrect advice and that needs to stop,” Mr Gunning said.
“Foreign investors do not deliberately want to break the laws and are mindful of regulations. The Chinese in particular are risk adverse.
“REINSW International Chapter Chair and Henson Properties Owner Ray Chan and I discussed the need to publicise the rules in all prominent multicultural papers. Mr Chan and I believe that this will discourage foreign buyers from unknowingly breaking any rules also.”
The report also recommended an application fee is to cover the costs of processing the paperwork for foreign buyers and to boost the Foreign Investment Review Board's capability to police foreign purchases.