New legislation has been presented before parliament, which Treasurer Joe Hockey believes will reduce the impact of foreign investors on the national property market. The Foreign Acquisitions and Takeovers Legislation Amendment Bill 2015 is due to come into force on December 1 2015 and will penalise anyone who falls foul of stricter standards.
The government is urging anyone who has breached foreign investment laws to self-report to the authorities before November 30. They will face a reduced penalty for their non-compliance, after which they will be subject to harsher fines.
A total of $47.5 million has been provided by the Australian Tax Office, which authorities will use towards making sure rules are enforced. Criminal penalties will be increased from $90,000 to $135,000 and are to be supported by infringement notices for less serious crimes.
Affordability may not improve
Although these regulations may make some unscrupulous investors think twice about their actions, the Property Council of Australia argues that they won't positively impact affordability.
Chief Executive Ken Morrison explained that a raft of taxation reforms and changes to planning policies are likely to have the greatest impact on the market. He noted that abolishing stamp duty and ensuring construction levels can be sustained are going to have a more positive impression on Australian property.
However, the group wasn't entirely critical of the measures, suggesting that the fact they have been developed alongside industry experts will help ensure their success.
Keeping pace with change
Mr Hockey revealed that the last time foreign investment regulations as severe as this were introduced was back in 1975. Since then, there have been significant changes in overseas investment and buying real estate in Australia as a whole.
The potential for international investment has grown, particularly as net overseas migration has gone from strength to strength over recent years. This is something that's expected to continue for some time yet, as predicted by the Department of Immigration and Border Protection.
Forecasts suggest that total arrivals into the country as a result of net overseas migration will reach 527,000 by the year ending June 30 2018. Although there is expected to be a rapid increase in the number of student visa grants issued, there is also likely to be an influx of people interested in securing an investment property mortgage.
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