Crooked intermediaries have been called out for initiating breaches of rules regarding foreign investment in Australian real estate.
Real Estate Institute of NSW (REINSW) president Malcolm Gunning said local intermediaries are often involved in violations because foreign investors usually intend to do the right thing when they visit Australia.
“They tend to seek advice from someone who they have been referred to who speaks their native tongue, and this is where the problem lies because they are often taken advantage of and given incorrect advice,” he said.
“The REINSW International Chapter has been alerted that many are being told to buy a property first and then make an application to the Foreign Investment Review Board second.”
The federal government proposed last week to introduce tougher penalties for agents and other third parties who “knowingly assist foreign investors to breach foreign investment rules”.
Mr Gunning said a tougher regime would provide a welcome disincentive, although he didn't claim that any agents were involved in helping foreign investors break the rules.
The institute suggested that the federal government promote the new compliance regime through local foreign language newspapers and major overseas newspapers.
However, Mr Gunning also said it is important not to scare off foreign investors as they are bolstering Australia’s construction industry.
[LinkedIn: Are foreign buyers impacting your local market?]