Mortgage brokers could be penalised if they profit from breaking the rules around foreign property investment in changes outlined in last night’s Federal Budget.
The Federal Government says it welcomes foreign investment but at the same time there needs to be strong rules surrounding it.
To implement this, the Government has increased the maximum criminal penalty to three year’s jail or a $135,000 fine if an intermediary such as a broker profits from breaking the rules.
For civil violations, the penalty has been increased to either the capital gain or 25 per cent of the property, depending on which is greater.
If the offender is a company the penalties can be as much as five times higher.
As expected, the Federal Government also unveiled a new fee structure last night for foreign property investment, which will apply to all proposed purchases or residential real estate by foreign investors.
These investors will pay a $5,000 application fee for properties under $1 million, and those over $1 million will attract a fee of $10,000, with an additional $10,000 for each additional $1 million.
The Government also laid out its plan to create a comprehensive land register to provide greater scrutiny and transparency around the level of foreign ownership in Australian agricultural land and real estate.
The Government said in its Budget that the foreign investment system has failed to keep pace with changing demands and community expectations thanks to a lack of reform over the past 40 years.
“There has been growing community concern around transparency and enforcement of the rules over recent years,” they said.
“The introduction of application fees on all foreign investment applications from 1 December 2015 will provide improved service delivery for investors and ensure Australian taxpayers are no longer funding the administration of the system.”