Foreign buyer crackdown just ‘tip of the iceberg’

Joe Hockey is so determined to crack down on illegal overseas investment in real estate that he reported one of his neighbours to authorities.

The federal treasurer, who lives in Sydney, told 3AW that he suspected a nearby temporary resident of violating the law by purchasing an established rather than a new home.

However, Mr Hockey said an investigation ruled that the property had been acquired legally, albeit on “spurious grounds”.

“It was a kilometre down the road and they bought a property on the basis that … they were going to add to the housing stock by building a granny flat out the back or something, and I thought that’s ridiculous,” he said.

Mr Hockey also revealed in a press conference that he expected the authorities would force more foreign investors to sell illegally acquired properties by 1 December, which is expected to be the starting date for new laws that would criminalise this behaviour.

The Foreign Investment Review Board (FIRB) is now emptying its case file after recently surrendering its investigatory role to the Australian Taxation Office (ATO), Mr Hockey said.

“FIRB is dealing with some legacy investigations of some substantial properties,” he said.

“Then the recommendations go through FIRB and then come to me and I form a view, and if necessary we will force a divestment … and I understand there may be a number of cases coming up.”

The government claimed a big scalp in March, when it ordered a foreign investor to offload a $39 million Sydney mansion that was illegally purchased in 2014.

There are currently another 195 cases under investigation, although this is just “the tip of the iceberg”, according to Mr Hockey.

Mr Hockey said some foreign investors have been using trusts to conceal their ownership of established properties.

“The bigger the property value, the more sophisticated the arrangements seem to be in relation to hiding the true nationality of the individual that owns the property,” he said.

The ATO, which is able to cross-reference its own data with third-party sources, is finding a link between unlawful real estate purchases and tax fraud, according to Mr Hockey.

[Related: Agents threatened in foreign investment crackdown]

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