Strengthening the compliance framework for foreign investment in residential to underpin record building approvals is emerging as a priority for the Abbott Government in 2015 with an announcement of rule changes expected shortly.
Prime Minister Tony Abbott and Treasurer Joe Hockey have both flagged this issue in key media appearances over the last week, first in an address to the press club and again at a media event over the weekend.
The Property Council expects the Government to release its response to the Review of Foreign Investment in Residential Real Estate within the next fortnight as the Government looks to talk up the economic prospects of residential development.
The Property Council’s Residential Development Council (RDC) was deeply engaged in the House economics committee process at the end of last year, which culminated in the release of the above-mentioned report on 27 November 2014.
RDC has lobbied hard for no extra stamp charges or extra costs. Additional stamp duty costs have since been publicly ruled out.
However, RDC understands that the Government is set to adopt a recommendation for an administration charge to be collected on purchase for $500-1500. RDC executive director Nicholas Proud argues that as this is a low cost administrative function any fee should be minimal, and, if collected, should go into collating national residential supply and demand activity reporting.
“There is a desperate need to carry out broader research on housing supply, housing affordability and land accessibility than just the foreign investment patterns has potentially a sensible position for industry to consider,” Proud says.
“This information would fill the glaring hole for those in government, industry and for others such as APRA that are tasked with understanding and balancing record housing activity with any perceived risks or public mistruths on housing supply.
“We support the existing rules to be enforced as a robust and well-enforced compliance framework that continues to encourage foreign investment.
“The last thing we want to see as an industry is misinformed foreign investment or non-compliance by a handful of foreign developers jeopardising continued strong foreign investment by the majority, or sparking a regulatory backlash.
“It is critical that we sustain strong levels of building activity in the property sector if we are to have any hope of meeting increasing demand, ensuring affordability and reaping the economic, social and employment benefits this sector provides for the nation.
“Foreign investment is an essential ingredient for boosting new supply in the domestic residential market. It complements local investment and helps provide the critical mass major new developments need to get off the ground.
“Any additional fees should be minimal, well-justified and targeted to the improved data collection. Overly high fees would be unnecessary and potentially damaging, with harmful flow through consequences on Australian home buyers, prices, supply and jobs.”