Foreigner investors buying properties in Australia will have to pay new fees, under a proposal which includes a crackdown on illegal purchases, announced Tony Abbott, Prime Minister of Australia.
Cash rich foreigners, particularly the Chinese, have been blamed for driving up property prices, especially in Melbourne and Sydney, making home ownership unattainable for many Australians.
Abbott said in a Sydney press conference:
"Part of the Australian dream is owning your own home and we certainly want the dream to continue."
‘Under current rules - unenforced in recent times - foreigners are only allowed to buy new dwellings and are barred from purchasing existing residential property.’
"Under the former (Labor) government, for six years there was not a single legal case against a foreigner buying a home. So what we're on about is ensuring that the long-standing rules are enforced.”
"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".
‘Similar to a scheme already operating in New Zealand, the Australian government proposes to charge a modest application fee on all foreign investments.’
Under the plan, any foreign investor who wants to buy a residential property worth less than Aus$1.0 million will have to pay a Aus$5,000 application fee.
For every additional million dollars in the purchase price, the fee would rise by Aus$10,000.
According to the Treasurer, Joe Hockey:
‘If an investor broke the law by purchasing existing property, a fine up to 25% of the value of the property will be imposed. The purchaser will also 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."
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.
The government announced earlier this month that it would tighten scrutiny on overseas investment in farmland, following concerns about valuable agricultural and mineral assets passing into foreign hands and a new Aus$55 million screening threshold for foreign investment in Australian agribusiness.
The fees were expected to raise more than US$200 million a year.