Real estate agents back crackdown on illegal foreign home buyers
THE AUSTRALIAN NOVEMBER 28, 2014 12:00AM
Rick Wallace
Journalist
Melbourne
Stefanie Balogh
Canberra
Move to stop illegal home buys
Real estate agents have backed a crackdown on illegal purchases by foreigners. Picture: Brendan Radke. Source: News Corp Australia
REAL estate agents have backed a proposed crackdown on illegal foreign buying of established homes while praising a committee for not imposing extra rules on new housing purchases and development.
The Real Estate Institute has urged Joe Hockey — who said he would consider “fixing” the Foreign Investment Review Board — to implement the parliamentary committee’s recommendations in full.
Property developers have also praised the report for leaving the current regime — which allows foreign investment in new housing to boost jobs and supply — in place and focuses on stopping exploitation of the ban on offshore buying of established housing.
But several prominent buyer advocates — including Sydney’s Patrick Bright and Melbourne’s David Morrell — have said the changes don’t go far enough.
As revealed in The Australian, the committee has recommended tough new fines for illegal buyers, a data-matching program between immigration and investment authorities and application fees of up to $1500 for foreign investors to fund enforcement.
The committee report, tabled by chairwoman Kelly O’Dwyer, shows these fines would also be applied to real estate agents, accountants, lawyers and conveyancers that knowingly assist in illegal purchases, exposing them to hefty penalties in the event of getting caught. And any capital gains from properties that are found to be illegally bought and undergo a compulsory sale would be retained by the government, under the recommendations.
The Treasurer said he was open to boosting the enforcement efforts of the FIRB but did not comment on other recommendations. “If FIRB needs to be fixed, we will fix it,” Mr Hockey said.
Ms O’Dwyer said in her foreword to the inquiry report that there was a “systems failure” within the FIRB, which has failed to penalise or prosecute a single foreign investor since 2008.
“There has been a significant failure of leadership at the FIRB, which was unable to provide basic compliance information to the committee about its investigations and enforcement activity,’’ she said. “It defies belief that there has been universal compliance with the foreign investment framework. The systems failure at the FIRB needs to be repaired and new resources injected into FIRB to ensure better audit, compliance and enforcement outcomes.”
Real Estate Institute chief Amanda Lynch, said: “The system, particularly for established housing, needs to be transparent and instil confidence in the … community. These recommendations, when implemented, will go a long way to providing this confidence.”
Additional reporting: Kylar Loussikian
"The committee report, tabled by chairwoman Kelly O’Dwyer, shows these fines would also be applied to real estate agents, accountants, lawyers and conveyancers that knowingly assist in illegal purchases, exposing them to hefty penalties in the event of getting caught. And any capital gains from properties that are found to be illegally bought and undergo a compulsory sale would be retained by the government, under the recommendations."
Looks like this will be the trigger for aus prop to start going down. Don't think any foreign buyer home purchases can be done, now that local professionals will be involved as well, they would require all overseas buyers to get FIRB approval first. And FIRB with an influx of applications will take a long time to approve.
aussie gov is all talk most of the time, until they run out of money then they will start policies to "extract" money from the system. Capital gains retained by government should be helpful with the billion dollar hole in the budget which the treasurer is now trying to plug.
Now let's see what treasurer Joe Hockey will do.
(28-11-2014, 12:44 AM)BlueKelah Wrote: [ -> ]"The committee report, tabled by chairwoman Kelly O’Dwyer, shows these fines would also be applied to real estate agents, accountants, lawyers and conveyancers that knowingly assist in illegal purchases, exposing them to hefty penalties in the event of getting caught. And any capital gains from properties that are found to be illegally bought and undergo a compulsory sale would be retained by the government, under the recommendations."
Looks like this will be the trigger for aus prop to start going down. Don't think any foreign buyer home purchases can be done, now that local professionals will be involved as well, they would require all overseas buyers to get FIRB approval first. And FIRB with an influx of applications will take a long time to approve.
aussie gov is all talk most of the time, until they run out of money then they will start policies to "extract" money from the system. Capital gains retained by government should be helpful with the billion dollar hole in the budget which the treasurer is now trying to plug.
Now let's see what treasurer Joe Hockey will do.
Don't understand what you meant. Local parties are engaged by foreign purchasers. Firb approval is always a condition prior to settlement of contract. Don't see an impact or whatsoever. . Though there always will be the very minority that try to game or fraud the system but these people are surely not just foreigners
(28-11-2014, 09:29 AM)newbie11 Wrote: [ -> ]Don't understand what you meant. Local parties are engaged by foreign purchasers. Firb approval is always a condition prior to settlement of contract. Don't see an impact or whatsoever. . Though there always will be the very minority that try to game or fraud the system but these people are surely not just foreigners
Read this maybe will help
Cashed-up foreign real estate investors view $85k fines as cost of doing business
Not sure how the Chinamen do it buying existing dwellings and settling successfully but its happening and don't think its minority, could be significant scale. And since all contracts are settled via solicitors or conveyancers (allowed in some state like NSW where Sydney is) those professionals are implicit though wont get fines under current rules.
Shall be clearer picture in the coming months when aus gov decide to do some enforcement or change of rules.
It's just capitalism.. who said before they pay little taxes? Packer or murdoch?
My conclusion after following my mates' experience Down Under...
i) Too big a country;
ii) Too many consultants that are expert in locating legal loopholes primarily due to high taxes, transparent yet complicated rules;
iii) lastly stickiness in passing and administering rules due to ever changing governments and differing state regulations as oppose to National wide rules...
Like they say stop worrying and No Worries Mate...
(28-11-2014, 01:14 PM)BlueKelah Wrote: [ -> ] (28-11-2014, 09:29 AM)newbie11 Wrote: [ -> ]Don't understand what you meant. Local parties are engaged by foreign purchasers. Firb approval is always a condition prior to settlement of contract. Don't see an impact or whatsoever. . Though there always will be the very minority that try to game or fraud the system but these people are surely not just foreigners
Read this maybe will help
Cashed-up foreign real estate investors view $85k fines as cost of doing business
Not sure how they do it buying existing dwellings but its happening and don't think its minority gaming the system.
Shall be clearer picture in the coming months if aus gov decide to do some enforcement or change of rules.
New house sales build to a record
THE AUSTRALIAN NOVEMBER 28, 2014 12:00AM
Kylar Loussikian
Journalist
Sydney
Private new dwelling sales
Private new dwelling sales Source: TheAustralian
DEVELOPERS are poised for a strong 12 months, with new home sales on track to break a record this year, according to Housing Industry Association figures.
Home sales grew 3 per cent in October, after a subdued September, led by a 6 per cent rise in detached house sales. Apartment sales dropped back 10.5 per cent following a strong performance in previous months.
Both detached homes and apartments have recovered since midyear slumps, although sales remain off their cyclic peak reached in April this year.
HIA chief economist Harley Dale said while monthly sales were off the April peak, they were still high, putting Australia “on track” for a record number of home starts this year.
“Lending for new housing is still trending higher and doesn’t appear to have peaked yet,” he said. “That augurs well for healthy new home construction activity persisting into 2015.”
The HIA figures showed a surprising jump in detached home sales in Western Australia, up 24.8 per cent, although there were falls of 7.8 per cent and 3 per cent in NSW and Queensland respectively.
Brendan Gore, Perth-based Peet Limited’s chief executive, said the fundamentals in the state remained supportive of prices and volumes.
“Despite an easing in the resource sector, a long period of low interest rates and population growth in Western Australia continue to underpin demand in that state,” he said.
Peet develops a large number of house and land packages in the west. “Peet moved into (the financial year) with good momentum,” Mr Gore said.
“The quality and diversity of our land bank means we are well positioned to benefit from improving residential property markets and we remain confident in the years ahead.”
HIA analysts put the WA figure down to healthier sales for a number of developers as new stock comes on to the market.
Approvals for new homes in WA, a leading indicator of sales, recorded a high in the June quarter this year.
Melbourne leads house prices lower
AAP NOVEMBER 28, 2014 2:18PM
HOUSING prices have fallen, thanks largely to a softening Melbourne market, new data shows.
Preliminary results from CoreLogic RP Data show average prices in the mainland state capitals were down by 0.4 per cent in the first 26 days of November, compared with the October average.
“The soft result can mostly be attributed to a more substantial decline in Melbourne where dwelling values are down 2.1 per cent,” CoreLogic RP Data research director Tim Lawless said today.
“The weak Melbourne result has been offset by continued strength in the Sydney market where our index has moved 0.8 per cent higher.”
Annual growth in housing capital gains peaked in April and has been trending lower ever since, he said.
The home value index results for all of November and covering the whole of Australia will be published on Monday.
Meanwhile, credit outstanding to the private sector rose by 0.6 per cent in October, seasonally adjusted figures from the Reserve Bank of Australia (RBA) today showed.
That followed a gain of 0.5 per cent in September and lifted annual growth in credit from 5.4 per cent to 5.7 per cent.
That was the fastest through-the-year pace since January 2009, when credit growth was grinding to a halt as the global financial crisis was choking the flow of money into and out of the financial sector.
But, it’s only half the average of more than 12 per cent for the decade before the crisis blew up in October 2008, though double the 3 per cent pace of the five years immediately following it. All major categories of credit have grown faster over the past year than in the 12 months before, with lending to housing investors leading the way.
Always plenty of hot air but little actions... No Worries Mate
Risky lending: regulator holds his fire
Bank credit Jacob Greber and Rebecca Thistleton
640 words
29 Nov 2014
The Australian Financial Review
AFNR
English
Copyright 2014. Fairfax Media Management Pty Limited.
A threatened regulatory crackdown on risky property lending looks set to be delayed, with Australian Prudential Regulation Authority (APRA) chairman Wayne Byres saying he did not want to rush into making a rash decision that might need to be reversed.
In remarks that indicate banks might already be starting to tighten standards in response to prominent warnings about the potential use of so-called "macroprudential tools", Dr Byres said there was no deadline on when the curbs would be announced.
"I'd much rather make the right decision. I don't think the issue is so time-critical that it's urgent we announce something in the next month," he said.
Previously, Dr Byres and fellow regulators, including Reserve Bank of Australia governor Glenn Stevens, have said they planned to make an announcement on the potential measures before the end of the year.
Potentially unsustainable gains in property prices across Sydney and Melbourne and an unsettling rise in interest-only loans – which Dr Byres warned on Friday could be a sign of people "over-extending themselves" – has increased vigilance among regulators on the need for banks to hold extra capital as a buffer against a price crash.
Preliminary figures for November show the housing market has moderated, although leading economists agreed there was enough heat in the market to lift prices in 2015.
Sydney values were on track for a 0.8 per cent rise for November, according to the latest figures from CoreLogic RP Data. Melbourne values were down 2.1 per cent for the month. November was set to end with another bumper weekend after almost 4000 auctions were scheduled for the week.'Difficult juggling act'
While Dr Byres and Mr Stevens have repeatedly expressed a lack of enthusiasm for direct regulatory intervention, they have been forced to consider its use because the RBA's ability to cool property price gains using higher interest rates is limited. Hiking borrowing costs too soon would be likely to put renewed upward pressure on the currency and jeopardise the fragile transition from resources-driven growth to other sources, including construction.
Dr Byres's remarks coincided with fresh signs the RBA's official 2.5 per cent interest rate – set to be left on hold next week for a 15th straight board meeting – is stoking the fastest credit growth since the global credit crunch.
Annual growth in lending rose to 5.7 per cent last month, the strongest gain since early 2009, helped by increased credit for housing and investor loans, which were up 9.9 per cent, the most since March 2008, RBA figures showed on Friday.
Dr Byres indicated one reason for delaying intervention was because banks might already be curbing their lending to riskier customers. "We're also trying to observe the market," he told the committee in response to Labor MP Ed Husic. "This is quite a difficult juggling act to try to work out; have we passed the point at which we think additional action is needed?"
Dr Byres acknowledged a delay in any announcement created problems for banks, which have been pushing APRA to remove the uncertainty, but said getting the call right was more important. He said APRA was worried about the big rise in interest-only loans to owner-occupiers but admitted his officials were still trying to fully understand why this was happening.
"It's a signal that borrowers who are unable to afford a traditional amortising loan are having to resort to an interest-only loan and [by] borrowing to their absolute capacity might be over-extending themselves," he said.
Key points APRA chairman Wayne Byres says he doesn't want to be rushed into making the wrong decision. However, his remarks still imply a move toward curbs.
Fairfax Media Management Pty Limited
Document AFNR000020141128eabt0001d