Australia toughens property ownership laws for foreigners

SYDNEY, May 2, (Agencies): Foreigners who break rules on buying Australian real estate will face up to three years in jail or fines of AUS$127,500 ($100,050) for individuals and AUS$637,500 for companies under tougher rules unveiled Saturday.

In announcing the changes, conservative Prime Minister Tony Abbott said his government was in favour of foreign investment.

“But it does have to be the right foreign investment, in the right things, and we do need to have a foreign investment review system which encourages public confidence that the foreign investment we need really is in Australia’s national interest,” Abbott said.

Foreigners are only allowed to buy new dwellings and are barred from purchasing existing residential property in Australia, but the government argues there has been little enforcement of the rules.

Cashed-up foreigners, many from China, have been blamed for driving up prices in Australian property markets, particularly in Sydney and Melbourne, and placing home ownership out of reach of many locals.

Abbott said that under the changes enforcement would be beefed up, while third parties such as real estate agents who knowingly assisted a foreigner to breach the rules would be fined up to $42,500 for individuals and $212,500 for companies.

The changes come after the govern- ment earlier this year announced it would introduce fees on all foreign investment applications, starting at $5,000 for residential properties valued at $1 million or less.

Treasurer Joe Hockey said the government was already investigating some 100 cases of illegal purchases, and one divestment order had already been issued on a property that was now in the process of being sold to an Australian.

Hockey said foreign investors who have purchased illegally had a moratorium until November 30 to come forward.

“They will be forced to sell their properties but they will not be subject to criminal prosecution by the Commonwealth government,” Hockey told a press conference with Abbott in Sydney.

“If you do not come to us we will come to you.”

Abbott said the changes were not designed to discourage foreign investment or to depress the property market, but to give people confidence that “locals are getting a fair go” in buying their own homes.

“If you play by the rules, there is no more welcoming place than Australia,” he added.

A$30 million mansion overlooking Sydney’s harbour that was illegally bought by a Chinese-controlled company has been sold to an Australian citizen, Australian Treasurer Joe Hockey said.

The sale of Villa del Mare, a six- bedroom Mediterranean-style home in the city’s affluent Point Piper suburb, was ordered by Hockey earlier this year as part of a crackdown on illegal buying by foreigners blamed for helping fuel a surge in house prices.

The property was found to have been bought illegally for A$39 million ($31 million) last November by Golden Fast Foods Pty, a firm owned by Hong Kong-listed Evergrande Real Estate Group through a string of shell companies in Australia, Hong Kong and British Virgin Islands.

“The property that has been reported has been re-sold to an Australian citizen, and we are investigating around 100 other cases,” Hockey told Reuters in an interview. “In some cases people are disclosing their own failure to comply with the law.”

Hockey declined to identify the new owner of Villa del Mare.

Ken Jacobs, a luxury real estate broker who helped sell Villa del Mare for Christie’s International Real Estate in November was not aware the property has been sold again.

“It has not been put on the market, nobody has been shown the property, as far as I know.”

Property prices, particularly in Sydney, Australia’s most populous city, have risen sharply, fuelled by record low interest rates, strong investor appetite and limited supply of housing stock after years of underinvestment.