$92 million of property has been forced to sale

23 September 2016
When it comes to buying Australian property, temporary residents can’t buy established dwellings for investment purposes. Non-residents can only invest in new dwellings, off-the-plan properties under construction, or vacant land with a view to development. The government is cracking down.

The Federal Government has announced that it has ordered the divestment of another 16 Australian residential properties, bringing the total number of properties forced to sale since 2013 to 46, with a value of approximately $92 million.

Of the 16 properties recently ordered for sale, the combined purchase price was over $14 million and they were in New South Wales, Victoria, Queensland and Western Australia, ranging in value from $200,000 up to $2 million. The nationalities that were involved were from a range including the United Kingdom, Malaysia, China and Canada.

“This shows once again the increased compliance measures that have been put in place under the Government transferring responsibility for following up compliance particularly to the ATO is working,” said Federal Treasurer, Scott Morrison.

“There have been some 2,200 matters that have been referred for investigation and there are some 400 cases remaining under active investigation. Since the new penalty regime was introduced some 179 penalties notices have been issued totalling some $900,000 in fines. So, it is important to have a foreign investment regime where the rules are set and the rules are enforced.”

What property can non-residents buy?

Foreign non-residents will normally be allowed to buy new houses or apartments in Australia without being subject to any conditions, as well as vacant land (although land that previously had a building on it will generally not be considered “vacant”). There is no limit on the number of new dwellings a foreign non-resident may purchase, but approval is generally needed before each acquisition.

Case study

Jon is a foreign non-resident and wants to purchase a recently built dwelling. The owner of the property had demolished an existing dwelling on the property and built a single dwelling in its place. The owner has not occupied the dwelling and the property has not been sold since the dwelling was rebuilt.

In this case, the dwelling does not represent a genuine increase in Australia’s housing supply. To ensure the sale of the property is consistent with the national interest, the dwelling will not be treated as a new dwelling, under Australia’s foreign investment framework. Jon, as a foreign non-resident, would generally not receive approval to purchase the property.

Source: Foreign Investment Review Board (FIRB)

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