The head of an award-winning real estate group has called for a fairer foreign investment policy that offers both overseas and Australian investors equal opportunities.
Starr Partners CEO Douglas Driscoll said the need for an even playing field has become more urgent as foreign investment’s impact on the local market has become more severe for Australians.
Mr Driscoll believes there are five improvements that could solve the problem and provide equal opportunities for both types of investor.
The first, he said, would be to introduce a levy.
“Last year, the government introduced a tax for overseas investors, but in my opinion, this should be increased,” he said.
“Australian residents are forced to pay for extras such as stamp duty when they buy property and I believe overseas investors should have to pay even more levies than local buyers.”
He said more needs to be done to regulate the number of properties on Australian soil that are sold to overseas investors, adding that a cap should be introduced to achieve this.
“It’s a bit of a mockery if Chinese investors can only buy two properties in some of their own provinces, but they can come to Australia and can buy 10,” he said.
Mr Driscoll added that there were a handful of high-profile and high-net worth cases last year that were intentionally made public to oust some illegal transactions; however, he believes that many more may have gone unnoticed.
“We know that illegal transactions are taking place because of these cases, and that these acquisitions by foreign investors breach regulations,” he said.
“We need to take a harder look into where the money is coming from, as there has been some suggestion that it’s not always clean. The UK government, for example, has implemented money laundering checks and Australia should be doing the same.”
More equitable financing rules around the acquisition process, should also be introduced, he said.
“As it currently stands, financing is not fair for the local investor,” Mr Driscoll noted. “We know that a Chinese financial institution based in Australia offers zero deposit home loans for Chinese investors purchasing Australian property.
“Here, under new macroprudential guidelines, we have Australian residents now required to pay a 20 per cent deposit on an investment property whilst international buyers can completely circumnavigate the system.
“It’s ludicrous," he said. "All buyers should be on a level playing field in the process and financial aspect.”
Finally, Mr Driscoll believes a percentage of developments should have to be sold to Australian residents.
“Up until 2008, developers had to sell a portion of properties to Australian residents. This [requirement was] lifted in the GFC, but it’s my view that we should re-establish it and place a limit on how many investments they can buy,” he said.
“It’s increasingly common for foreign investors to buy and develop or redevelop, then sell property on Australian soil offshore or to international investors with Australian residents sometimes not even getting a look in.
“We need to look at the vulnerability of our market – does selling too much to overseas investors make us become vulnerable to factors outside of our control?” Mr Driscoll asked.
“Don’t get me wrong: we should still openly invite foreign investment. I just believe it should come with more restriction and regulation.”