Investigations are underway into 195 cases where foreign investment rules on residential real estate may have been breached, the Federal Government says.
The widened probe into foreign real estate investment comes a month after the Federal Government announced plans to
crack down on rogue foreign investors amid concerns it was helping to fuel a dangerous property bubble in Sydney and
Listen to my report from this morning's edition of AM where I speak with parliamentary secretary to the Treasurer, Kelly O'Dwyer
While foreign investment laws prohibit foreign investors from purchasing existing residential real estate, they are
encouraged to boost the housing supply by investing in new housing developments.
According to a statement from the office of treasurer Joe Hockey, 24 of 195 cases are foreign investors who voluntarily
came forward to the Foreign Investment Review Board (FIRB) to say they may have breached investment rules.
The total value of the properties under investigation is not specified but the statement said it included the "prestige
market" as well as "real estate in the suburbs of our capital cities".
However, FIRB is currently negotiating a "voluntary divestment" with a British investor who came forward about a
$700,000 property purchased in Western Australia.
If that divestment succeeds, it would be the second such case since March.
The Government is also seeking to toughen penalties for investors who make a profit after divesting properties bought
illegally by introducing a civil penalty to "capture any capital gain made on divestment of a property".
"Third parties who knowingly assist a foreign investor to breach the rules will also be subject to civil and criminal
penalties, including fines of $45,000 for individuals and $225,000 for companies," the statement warned.
"Another 40 cases relate to referrals from the community where members of the public suspect foreign investors may
have broken the rules by using complex structures and illegal leasing arrangements to hide foreign ownership."
The Federal Government is warning other investors who may have bent the rules to come forward now while there is a
From December 1, individual foreign residents who unlawfully bought established residential property face tougher
criminal penalties up to $127,500 or three years imprisonment for individuals and up to $637,500 for companies.
"Foreign investors who think they may have broken the rules should come to us before we come to them," the statement
"They will still be forced to sell the properties, but will not be referred for criminal prosecution if they voluntarily come
forward before 30 November."
The crackdown on foreign investment has strengthened the powers of key bodies with all residential real estate functions
transferred from Treasury to the Australian Tax Office (ATO) which can cross reference its own data with FIRB,
immigration and Australian Transaction Reports and Analysis Centre (AUSTRAC).
The ATO's datamatching program is known to have identified one foreign investor who was allegedly linked to more than
ten properties that included a unit worth $300,000 and a $1.4 million house.
The Government's crusade against unlawful foreign investors has been led by parliamentary secretary to the Treasurer
Kelly O'Dwyer who has been a critic of the FIRB's surveillance.
Ms O'Dwyer recently warned foreign buyers using trust structures to get around foreign investment rules were also
breaking the law.
"The properties that range in value from the hundreds of thousands to the multimillions ... we've already seen the
Government take action with a $39 million property in Sydney that forced the divestment of that property," she told AM.
"But it's not just for prestige properties, it's also for properties in suburbs that people are living in, where people may have
made illegal purchases and where it may be having an impact in property prices."
With the additional funding and additional powers, the ATO has been able to put a tighter net around anyone who might
be potentially bending the rules.
"In fact we have already identified breaches where one individual is linked to 10 properties
ranging in value from the hundreds of thousands to over $1 million dollars," Ms O'Dwyer said.
"That individual is being properly investigated now by the Foreign Investment Review Board."
Ms O'Dwyer said anyone who voluntarily came forward would be given a longer period to sell.
"If they don't voluntarily come forward, of course the gloves are off," she said.
"Under the existing rules, people have been able to profit from the illegal purchase of property if the value of that property
has gone up.
"We have closed that loophole with the new laws that we are bringing into place.
"We're not going to allow people to profit, it creates the wrong incentive for people to do the wrong thing. And that's just