FIRB illegals moratorium until 30 November: Joe Hockey

The Abbott government gave the details of its crackdown on foreign investor property compliance on Saturday.

It is aimed at those who have illegally bought Australian real estate.

Investors will have until 30 November to come clean and sell their properties or face potential prosecution under the moratorium.

For those who have broken the rules, penalties will be tougher under the crackdown, including possible jail terms.

Under legislation to be introduced this year, penalties will be increased to $127,500 or three years' jail for individuals, and $637,500 for companies.

The government hopes the new Foreign Investment Review Board (FIRB) regime will be in place by 1 December.

Treasurer Joe Hockey announced a moratorium to encourage people who have made unlawful purchases.

"Those foreign investors have until 30 November to come forward and self identify," he said on Saturday. "They will be forced to sell their properties, but they will not be subject to criminal prosecution."

People who don't come forward would face the full force of the law.

The government has only ever found one case of unlawful purchase over the past decade, with the high profile purchase of Villa del Mare in Point Piper by a Chinese billionaire without the required paperwork.

Temporary residents can buy one dwelling to live in, on the condition they sell the property when it is no longer their residence.

Temporary and non-residents can buy an established property for redevelopment, if construction begins within two years with FIRB pemission.

Off the plan purchases are allowed.

As part of the crackdown, the federal government will transfer residential real estate functions to the Australian Taxation Office, which will use its data-matching systems to identify possible breaches.

Third parties – such as lawyers or real estate agents – who knowingly assist a foreign investor to breach the rules will also now be subject to penalties, including fines of $42,500 for individuals and $212,500 for companies.

A comprehensive land register is yet to emerge.

The Prime Minister insisted Australia was still "open for business" despite the crackdown.

"I really want to stress that this is a government which is pro-business and pro-investment," he said. "We are certainly pro-foreign investment, but it does have to be the right foreign investment."

He said he wants a real estate playing field that is "at least level" and if possible "slightly tilted towards the locals".