Fresh light has been shed on the failure of the Foreign Investment Review Board’s regulation of foreign property purchases, with immigration officials admitting they don’t tell FIRB when temporary residents who have bought homes leave the country, or when their visas expire.
The revelation confirms suspicions that authorities are blind to the activities of most foreign investors and have no idea when they break the law by continuing to hold properties after leaving Australia.
The admission that the two agencies do not share such data will fan resentment from Australians angry about being priced out of the property market amid a wave of Chinese-led buying. It will also embolden investors looking to break the law by buying and retaining established housing in Australia, knowing that the chances of being detected are slim.
The details about the data-sharing failure came in a response from the Department of Immigration to an inquiry examining foreign investment in Australian real estate. “The department does not provide information to FIRB about clients who leave the country after the expiry of their visa,’’ departmental officials conceded in a written response to committee chairwoman, Liberal MP Kelly O’Dwyer.
The department said it was prevented from supplying the information because FIRB was not authorised under the Migration Act to receive it.
Australia permits investment in off-the-plan housing to boost supply, but it is illegal for foreigners to buy established homes in all but a few circumstances. One of those loopholes allows temporary residents to buy a home for the duration of their stay in Australia, on the proviso that it is sold within three months of their departure.
But as The Australian revealed yesterday, FIRB has issued just 17 divestment orders over the past 11 years, during which time foreigners have bought almost 30,000 established homes worth more than $23 billion in total.
Industry experts say the temporary resident clause is a loophole that is relentlessly exploited by foreign buyers.
Pat Conroy, a Labor MP on the committee, said he was shocked that FIRB did not have access to the data and that it had made its enforcement task far harder. “I am very surprised that Immigration doesn’t share information when visas expire with FIRB,’’ he said. “With modern databases this information could very easily be shared between departments.”
Mr Conroy said it was “incredibly laborious” for the FIRB to have to go to Immigration every time it decided to do a random check on a particular property and the system should be set up to alert FIRB when a visa-holder’s residency expired.
The Australian has previously revealed that the FIRB has failed to prosecute a single foreign investor for illegally acquiring an established home in Australia since 2006.
The committee, which reports on November 28, is expected to recommend a new application fee for foreign investors in real estate, the proceeds of which would be used to establish an effective enforcement unit within the FIRB. The report is also likely to call for better data collection and sharing, and for a new civil penalty regime.
Ms O’Dwyer has also mooted bringing lawyers, accountants and real estate agents who facilitate illegal property purchases into the new compliance dragnet.
This article first appeared in The Australian Business Review.