SYDNEY: Foreign investors will have to pay new fees to buy Australian real estate, Prime Minister Tony Abbott said on Wednesday, under a proposal which includes a crackdown on illegal purchases.
Cashed-up foreigners, many from China, have been blamed for driving up prices in Australian property markets, particularly Sydney and Melbourne, and placing home ownership out of reach of many locals.
“Part of the Australian dream is owning your own home and we certainly want the dream to continue,” Abbott told a press conference in Sydney.
He said the current rules, under which foreigners are only allowed to buy new dwellings and are barred from purchasing existing residential property, had not been enforced in recent years.
“Under the former [Labor] government, for six years there was not a single legal case against a foreigner buying a home,” he said.
“So what we’re on about is ensuring that the long-standing rules are enforced,” he added.
“Yes, foreign investment has been very, very good for Australia but it’s got to be the right foreign investment, and it can’t disadvantage Australian home buyers,” Abbott further said.
The government is proposing charging an application fee on all foreign investments, similar to a scheme already operating in New Zealand. The charges are likely to be more modest than those in places such as Hong Kong and Singapore, Abbott said.
Under the plan, any foreign investor who wants to buy a residential property worth less than Aus$1.0 million ($784,500) will have to pay a Aus$5,000 application fee.
This would rise by Aus$10,000 for every extra million dollars in the purchase price.
If an investor broke the law by purchasing existing property, Treasurer Joe Hockey said they could then be fined up to 25 percent of the value of the property and be forced to sell it.
“These integrity measures are absolutely essential for reassuring Australians that when they go to an auction they are on a level playing field, that they are not being taken advantage of,” Hockey said.
The treasurer added that the government intended to establish a small, specialized unit to ensure compliance and identify breaches and would also set-up a register of foreign ownership of residential and agricultural property.
He said the fees were expected to raise more than $200 million a year.
Earlier this month, the government said it would tighten scrutiny on overseas investment in farmland, following concerns about valuable agricultural and mineral assets passing into foreign hands.
It announced on Wednesday a new Aus$55 million screening threshold for foreign investment in Australian agribusiness.