The Foreign Investment Review Board (FIRB) has promised to concentrate on nabbing any estate agent, lawyer or accountant that flaunts the law surrounding investment onshore from foreign nationals following damning criticism made about its work, or lack of, so far.
During a heated exchange with the Federal Inquiry into Housing Affordability and Foreign Ownership, representatives from the FIRB said it had only eight staff dedicated to reviewing thousands of foreign purchases of residential real estate and said that they think everyone is complying a "little bit better".
Chair of the FIRB, Kelly O’Dwyer, told a Bloomberg summit this week that such a claim "defies credibility" and in order to give confidence to people you have to have a regime that will be properly enforced.
“Some foreign buyers viewed the potential of the current fine, $85,000, as potentially merely the "cost of doing business", Ms O’Dwyer said
“If foreign buyers feel there is no penalty for non-compliance then they are going to take the risk because the upside is so large … they can keep the windfall gain they might make.
“Why should someone who has done the wrong thing benefit financially,” she said, adding that the FIRB has not been properly doing the job it was supposed to do in terms of the compliance and enforcement regime.
Speaking later on radio, Ms O’Dwyer said the committee was looking at introducing fines on a sliding scale based on the property price.
The FIRB stated in its 2012/2013 annual report that 94 per cent of foreign investment approval was for a total value of $51.9 billion out of total foreign investment of $135.7 billion.
The foreign investment debate was a key talking point in the Real Estate Institute of Australia’s recent newsletter, with the REIA affirming its position that current investment regulations don’t need to be strengthened but better enforced.
The REIA’s latest submission to the inquiry on foreign investment highlighted the importance the government had in better monitoring and regulating foreign investment in Australian real estate. The REIA estimates 85 per cent of all property transactions over the next two years will be completed electronically and states its e-Conveyancing system can improve compliance and monitoring.
It believes enforcing penalties for breaches is a key driver in its development of the e-Conveyancing platform.
Industry experts have previously flagged that wealthy foreign investors are buying homes and letting them sit vacant in order to avoid detection by the Foreign Investment Review Board.