The federal government has quietly suspended applications for the Significant Investor Visa more than two months ahead of a planned shake-up, sparking concerns some wealthy offshore investors will view the decision as part of a crackdown on foreign investment.
The SIV — which allows permanent residency for those who have invested $5 million in certain bonds or managed funds for at least four years — has been put on hold, with the government to bring in a revamped version in July.
It is expected visa-holders will be required to invest in areas such as venture capital and start-up companies rather than the more conservative government bonds.
While direct investment in housing has never been an eligible part of the scheme, real estate agents have said that, indirectly, new-home sales were boosted since it was introduced by the former Labor government in 2012, with some overseas investors planing to live in the home when they eventually gained residency.
Some funds have been used to invest in property development and commercial property.
At the end of March, 751 SIVs had been granted since the scheme’s inception, with more than 1600 applications lodged.
Macquarie Wealth said in a report yesterday that the move may have been an aimed at curbing investor enthusiasm in Sydney and Melbourne housing.
“This is just the latest measure … by the government to control the runaway domestic property market,” the report said.
The Minister for Trade and Investment, Andrew Robb, said the government was trying to shift investment away from low- risk assets such as bonds, arguing that the Labor government gave residency away too easily.
A spokesman for Assistant Minister for Immigration and Border Protection Michaelia Cash rejected the suggestion the scheme had been suspended as a means of cooling the housing market, saying such claims were “completely unfounded”.
Property Council of Australia chief executive Ken Morrison said he was surprised the government had suspended the scheme rather than letting it roll on to its changed rules in July.
Ray White chairman Brian White said new home sales in the past year had been boosted as a result of SIVs.
He said suspension of applications would lead to concerns Australia was becoming more closed to offshore investment.
This article first appeared in The Australian Business Review