Australia is likely to impose a slew of penalties on foreigners who flout its property buying laws.
A parliamentary committee set up to investigate whether international buyers are pricing local middle-class families out of the housing market is likely recommend increased penalties in its report due next month, according to media reports.
The penalties are likely to be in proportion to the value of the property purchased. "The largest penalty fee that can be imposed is about $85,000," said Victorian MP Kelly O'Dwyer, who chairs the committee.
The committee is of the view that allowing allows foreign buyers who flout norms to keep profits is "clearly creating the wrong sort of incentive for bad behaviour". Foreigners forced to property for flouting Australia's rules will also lose the capital they have accumulated in the house between buying and selling.
The committee is also considering whether to impose fees of as much as $1500 per purchase made by an international buyer. Foreign buyers currently pay nothing for applications to the Foreign Investment Review Board (FIRB).
The growing number of foreign buyers has been in the public eye recently. It was recently revealed that since 2006 there have been no prosecutions by the FIRB of foreign property buyers, although many foreign nationals have been found to have broken the rules.
There are many restrictions on foreign buyers. All non-residents must obtain permission from the FIRB before buying residential property in Australia. They are not allowed to buy an established (previously occupied) house. They may buy an unoccupied new dwelling, but only if the FIRB feels that the purchase will not add to the shortage of properties available to native Australians. Temporarily establishing residence in Australia for the purpose of buying a house is not a viable alternative to obtaining FIRB permission, since temporary residents must sell their property if they leave Australia.
A recent survey conducted by the National Australia Bank suggest that foreign buyers are snapping up one out of every six new homes - and that number is set to get higher. Foreign demand for new homes surged in the September quarter and is set to rise further next year. Overseas buyers account for almost 17% of total demand for new properties, and for almost 25% of new properties in Victoria, or one in four new homes.