The Australian Government has announced plans to impose fees on foreign nationals applying to buy homes, commercial properties, businesses and farms, and fines on those who break the rules.
The announcement coincidentally came yesterday, the same day KPMG released a report revealing bank bosses in New Zealand are joining Winston Peters and the troop of New Zealanders concerned foreign investors are inflating asset prices here.
The Australian Government has put an Opinion Paper out for consultation, that details its proposed reforms.
Prime Minster Tony Abbott said, “The Government is consulting on the introduction of an application fee on all foreign investment proposals.
“The application fees will fund increased enforcement activity and ensure that the cost of administering the foreign investment framework is not borne by the Australian taxpayer.”
It’s proposing to charge those applying to buy houses up to A$5,000 for properties valued under A$1 million, A$10,000 for those over a A$1 million, A$20,000 for those over A$2 million, and A$30,000 for those over A$3 million and so on.
Business, commercial real estate and agribusiness investments would be subject to fees between A$10,000 and A$100,000 depending on the size and sector.
The Australian Government’s also proposing to implement new ways to crack down on foreign investors breaking the rules.
Abbott said, “The Government intends to establish a small, specialised compliance and enforcement area within the Australian Taxation Office to identify and investigate breaches.”
Two weeks ago, Abbott announced that from March 1, foreign investors will have to get approval to acquire an interest in rural land where the cumulative value of the land, including the proposed purchase, is A$15 million or more.
From July 1, a foreign ownership register will also start collecting information on foreigners with interests in agricultural land.
Hint hint, nudge nudge, John Key
New Zealand’s Labour Party housing spokesperson Phil Twyford said Prime Minister John Key might want to have a “quiet word” with Abbott about his announcement when he visits New Zealand this week.
"Contrast that with John Key's government, which denies offshore speculators are a problem, despite KPMG warning today that bankers believe foreign buyers are inflating property prices and putting the economy at risk.
"The bankers think they are a problem. The Australian Government clearly thinks they are a problem. The National Government is increasingly isolated on this issue,” said Twyford.
According to the Sydney Morning Herald, Chinese investors are forecast to spend A$20 billion on offshore property this year, up 21% on 2014.
KPMG reported bank executives it surveyed in its annual Financial Institutions Performance Survey are “seeing significant deals done at ridiculous prices across all asset classes”.
Bank executives expressed concerns about what would happen if overseas investors suddenly withdraw all the funds they’d invested in New Zealand.