Australia plans fees for foreign property investors

SINGAPORE — Foreign investors may soon need to cough up an application fee of at least A$5,000 (S$5,350) when buying an Australian home, while those who illegally buy residential properties will face higher fines and be forced to sell the property under rules proposed by Prime Minister Tony Abbott’s government yesterday.

Foreign home-buyers will be charged A$5,000 for properties valued under A$1 million and another A$10,000 for every additional A$1 million, Treasurer Joe Hockey said.

The charges will raise A$200 million a year, he added.

The government will also set up a register of foreign nationals buying real estate and impose a civil penalty of as much as 25 per cent of the value of the property on those who break the law and force them to sell, Mr Hockey said.

While he did not specify any nationality being targeted, the new rules come as Australia experiences a rapid influx of Chinese money — both legitimate and illegitimate — into its property market.

Australia’s foreign investment review board says China was the top source of foreign capital investment in real estate in 2013. It approved nearly A$6 billion of investment from China, up 41 per cent from a year ago.

Singapore was the fourth-biggest source of foreign funds invested in Australian real estate, with about A$2 billion spent.

Industry observers here said they do not expect the changes to have too much of an impact on buying sentiment from Singapore investors, as the tighter rules will still be less onerous than the Additional Buyer’s Stamp Duty in Singapore.

“The impact will be marginal on Singapore investors because the sum is not prohibitive … The investors are likely to take it in their stride, as just another investment cost,” said Mr Nicholas Mak, executive director of SLP International Property Consultants.

Mr Ku Swee Yong, chief executive of property agency Century 21, added: “From a Singapore investor point of view, it is no big deal. It is small compared to what we have; most of us are used to the very high Additional Buyer’s Stamp Duty. I don’t think it will deter the serious investors.”

The measures come after a parliamentary committee in November urged the Australian government to crack down on overseas investors flouting the rules, amid concern that foreign buyers are pricing locals out of the housing market.

Home prices in Sydney jumped 13 per cent over the year through January, leading average gains of 8 per cent across all major cities.

“We need to make sure that all foreign investors are following the rules, and that those foreign investors who break the rules are not able to profit from breaking the law,” Mr Abbott told reporters. With Agencies