We don't need stronger foreign buyer regulation, we need more stringent enforcement: REIA

We don't need stronger foreign buyer regulation, we need more stringent enforcement: REIA
We don't need stronger foreign buyer regulation, we need more stringent enforcement: REIA

Foreign ownership rules do not need strengthening but rather existing laws need to be properly enforced, according to the Real Estate Institute of Australia.

The organisation notes that an $85,000 fine already exists for breaching current regulations.

In the latest release of REIA News, Issue 38, chief executive officer Amanda Lynch notes that the fine has not been invoked, as the Foreign Investment Review Board has “apparently not prosecuted a single foreign buyer for breaching foreign ownership rules”.

Lynch points to e-Conveyancing as a method which would assist in more stringent enforcement of existing regulations.

This suggestion was recently put to the House of Representatives Standing Committee on Economics for the Inquiry into Foreign investment in Australian real estate by First National’s Ray Ellis, who is also an REIA board member.

Looking at the 2012-2013 Foreign Investment Review Board Annual Report, Lynch notes that 11.4% of foreign investment in real estate by value comes from China, while 9.5% comes from the USA and 9.5% comes from Canada.

“This is a particularly interest fact to note as media articles on foreign investment are frequently dominated by stories highlighting only one particular source country, China,” she says.

Property Observer has been vocal about the importance of discussing foreign investment without a xenophobic overtone, as well as the difficulties facing journalists reporting on the topic.

Lynch says that the REIA supports foreign investment due to its assistance with increasing supply.

The report shows that 2012-13 was the first year since 2009-2010 that the purchase number of sub-total of 5,101 ‘developed’ stock, or existing homes, exceeded the sub-total of 4,549 ‘new dwellings’.

The report paints an interesting picture of the growth of the developed stock sector.

It states that the purchase of developed stock is “primarily [by] temporary residents in Australia acquiring one existing residential property for use as their residence in Australia”. A footnote suggests it includes a small number of approvals relating to foreign companies acquiring residential property for company employees to reside in.

The sudden increases between the 2009-10 and 2010-11 reporting periods can be explained by a shift in government regulations during that period.

On 24 April 2010 temporary residents were no longer exempt from notifying the government of proposed acquisitions of established residential real estate for their own residence, nor new property or vacant land. This exemption was brought in for just one year, from 1 April 2009, where it was noted that temporary residents, in previous years, was said to have accounted for around two-thirds of real estate applications.

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Jennifer Duke

Jennifer Duke

Jennifer Duke was a property writer at Property Observer

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