Real Estate and Temporary Residents

It was announced today (click HERE for the Assistant Treasurer's full press release) that the government has done a back flip on the policy changes that it made last year in relation to the purchase of real estate by temporary residents.

Effective immediately, there will be a tightening of policy that will require all temporary residents to be screened and approved by the Foreign Investment Review Board (FIRB).

There have been concerns that investment by foreigners and temporary residents is pushing up property prices and effectively making housing unaffordable for residents and citizens.

Some of the key changes include:

1. there will be power to compel sale of the property after the temporary resident departs Australia
2. if vacant land has been purchased then if construction is not commenced within 24 months then there will also be power for the compulsory sale
3. there will also be expanded monitoring and also a new civil penalty regime (up until now there have only been criminal sanctions). Civil penalties will include the power of compulsory divestment of property acquired in breach of the new regulations.

It will be interesting to see if this makes any difference. Surely foreign investment is only one of a number of factors driving the housing market and not the controlling factor?

Creative commons attribution for the photograph:

http://www.flickr.com/photos/nakrnsm/ / CC BY 2.0