Foreign investors illegally buying Australian properties to face new penalties of jail terms, fines

Updated

Foreign investors who have illegally bought Australian properties have been told to declare themselves by December or risk facing tough new penalties including three years' jail and fines of up to $637,500.

The Federal Government unveiled the new measures today, arguing authorities had failed to properly police laws making it illegal for foreigners to buy established homes in Australia.

Under the changes, foreign buyers who breach the rules will face three years in jail and fines of $127,500 for individuals and $637,500 for companies.

Third parties, including real estate agents and developers, who knowingly help those buyers will also be penalised with fines of up to $42,500 for individuals and $212,500 for companies.

The Government has also announced foreign buyers who are forced to sell a property will be prevented from profiting from the sale.

But Treasurer Joe Hockey said investors can avoid prosecution if they come forward by November 30.

"I say to foreign investors, you have until the end of the year to declare yourselves," he said.

"If you do not come to us, we will come to you because eventually we will find those people that have engaged in unlawful acquisition of Australian real estate and we will prosecute you and we will be very hard about it."

Prime Minister Tony Abbott said he believed there was broad community support for the new measures, arguing "there was no doubt" that foreign investors who illegally bought existing homes were "driving up" house prices.

"If all foreigners are doing is adding to the housing stock, that tends to reduce prices but once foreigners come into existing housing stock, that tends to increase prices," he said.

"So what we want to do is ensure that illegal foreign investment is not unnecessarily driving up prices."

Mr Hockey said since issuing a "divestment order" on a Sydney property that had been illegally purchased, a number of other buyers had come forward.

"We are investigating a further 100 cases at the moment. For example, one case in WA involving a property of around $800,000, the foreign investor has come forward, self-identified," he said.

"They will be forced to sell their properties but they will not be subject to criminal prosecution by the Commonwealth Government but they will need to sell their properties."

The Treasurer said the foreign investment rules would now be enforced by the Australian Tax Office rather than the Foreign Investment Review Board because the ATO had access to state and federal data, including immigration records.

The Government has also confirmed it will push ahead with plans to impose a $5,000 fee on all foreign investment applications for residential properties valued up to $1 million.

Higher fees will apply to more expensive properties as well as business, agriculture and commercial real estate applications.

Topics: business-economics-and-finance, federal-government, government-and-politics, australia

First posted