Late last year we saw the release of the report from the Inquiry into Foreign Investment in Australian Residential Real Estate. Real estate agents across Australia welcomed the report which presented 12 workable recommendations in what is often a highly charged issue.
The key recommendations of the report include the establishment of a national database for property purchases, an alert system with the Department of Immigration, capital gains benefits forfeited to Government for breaches along with a beefed up Foreign Investment Review Board (FIRB) with a greater focus on audit and compliance.
The report was undertaken by the House of Representatives Standing Committee on Economics, which was chaired by Kelly O’Dwyer MP and both the chair and committee need to be congratulated for taking aboard the suggestions of business.
The 12 recommendations, if adopted by Government, will restore faith in the administration of foreign investment in Australian real estate and this is precisely what is needed right now by the broader community who have seen media report after media report claiming that Chinese foreign nationals are pricing first home buyers out of the market.
There were industry concerns that the inquiry might become blind-sided by these sensational claims and impose restrictions that would curtail foreign investment in Australia despite it being proved that foreign investment increases housing supply - and at a time when Australia is experiencing a chronic housing shortage.
During the inquiry’s public hearings, business repeatedly called for a greater enforcement of current regulations. It is also very pleasing to see that FIRB will be given more resources to pursue breaches, such as investors not selling houses when they return to their countries of origin, given that the last prosecution occurred in 2006. It is simply farcical to believe that in the last eight years 100 per cent of foreign investors have been doing the right thing 100 % of the time.
The committee further recommended that FIRB’s resources be boosted by a flat $1500 registration fee for foreign purchases. Harley Dale, the chief economist of the Housing Industry Association said, in a release issued on the day of the report, "The bottom line is a fee of up to $1500 to fund the better policing of the legislation won't discourage foreign investment and if you're intentionally doing the wrong thing then you should be in trouble.”
By listening to business and producing a series of common sense recommendations, the report will help ensure foreign investment delivers on its intent and is not flouted.
The system, particularly for established housing, needs to be transparent and instil confidence in the Australian community that it is fair and equitable. These report recommendations, when implemented will go a long way to providing this confidence.
It’s now up to the government to implement the report recommendations as a matter of priority.