The Foreign Investment Review Board (FIRB) says uncovering and prosecuting illegal residential property buying by foreigners is very difficult and a certain amount slipping through the cracks is inevitable.
Foreigners are barred from buying established residential property in Australia unless they are temporary residents and they must sell the property when they leave the country.
Brian Wilson is the chairman at the FIRB and wants to see a national register set up for property transactions to help track buying from foreigners.
“There are about 11 million residential dwellings in Australia, and about 600,000 property transfers every year,” he told the Australian Financial Review.
“It is inevitable some of those properties will be exchanged contrary to the law, but our ability to first discover and then prosecute these cases is sorely limited.”
Mr Wilson said the FIRB proposes civil and criminal penalties and application fees as well as the proposed national register to make it easier to catch foreigners buying property illegally.
“At the moment the FIRB and Treasury can only investigate the cases that come before us. What is needed is central depository of automated data to aid detection,” he said.
Mr Wilson said the responsibility for managing the register could be transferred to the Australian Taxation Office (ATO).
“The ATO is a better set up for coordinating a big data approach than Treasury, which is a policy body,” he said.
No one has ever been jailed in Australia from an illegal foreign property purchase, and the low conviction rate might be tempting foreign buyers to take the risk.
“At the moment we have the threat of forced divestment and criminal prosecution possibly resulting in jail time but the hurdle of proof for a criminal prosecution is very high, and this process takes a lot of time and money,” said Mr Wilson.
“What we have proposed is a graduated scheme of civil penalties that would make enforcement easier.”