New reforms have been introduced to the Australian parliament last week, aiming to change the rules regulating foreign investors. Malcolm Gunning, President of NSW Real Estate Institute said that the amendments included in the current reform represent the first important change to foreign investment rules in 40 years, with an increase in fines meant to discourage wrongdoers. There has been a significant increase on penalties for breaches of real estate laws from $90,000 to $135,000. Foreign investors are not the only ones targeted by the new reform; migration agents, selling agents and lawyers helping foreign investors to break the law will also be drastically penalized.
Some of the key proposals of the foreign investment reform package include a $5000 application fee to be paid by foreigners interested in purchasing agricultural and residential properties valued under $1 million; an increase in criminal penalties to $135,000 or three years imprisonment, and companies facing penalties of up to $675,000.
While few foreign investors buy property in Australia with the intention of breaking the law, the federal government should promote the new legislation through foreign language newspapers in order to inform foreign real estate investors of the latest penalties, Mr Gunning added.
Australia is one of the few countries in the world to prohibit foreign investment in established homes, according to The Australian. The purchasing process, being highly regulated, prevents foreigners from buying property, unless they are studying in Australia, or planning to demolish the purchased property in order to build at least two units. Many breach the law by sending their offspring to study in Australia to obtain approval for purchasing property. Chinese are especially interested in purchasing property in Australia given the education opportunities and lifestyle.