Australia set to tighten rules for foreign property buyers

An Australian parliamentary committee yesterday recommended strengthening rules on foreign investment in the country's booming housing market, calling enforcement of the current framework "severely lacking".

The committee's review, chaired by ruling Liberal Party lawmaker Kelly O'Dwyer, was commissioned this year amid concerns that local buyers were being squeezed out of the residential property market by foreign investors, particularly cashed-up Chinese.

"We have found that the framework itself is appropriate and strikes the right balance in terms of encouraging beneficial foreign investment in the housing market; however its application is severely lacking," O'Dwyer said.

"I regard the current internal processes at the Treasury and FIRB [Foreign Investment Review Board] as a systems failure."

The inquiry found that current rules on foreign purchases were not being enforced and made 12 recommendations for change, including civil penalties for any breaches.

Penalties would also apply to all third parties who knowingly assist a foreign investor to breach the framework. Any capital gains from the sale of an illegally held property would be seized by the government.

The committee also recommended establishing a national register of land title transfers that would record the citizenship and residency status of all home buyers.