Post to Facebook on 23/6/2018 at 4:05 PM
Commenting on “Australian Tax Office’s foreign property buyer crackdown only ‘partially effective’, audit reveals”
https://www.domain.com.au/news/australian-tax-offices-foreign-property-buyer-crackdown-only-partially-effective-audit-reveals-20180620-h11mfj-440823/
In 2014, Chair of House Economic Committee Victorian Liberal MP Kelly O’Dwyer, gave a presentation at a REIV forum speaking on proposed policy changes on foreign investment in real estate. I looked around the room, I could hardly recognise anyone, except a former student and friend who was then a licensed estate agent.
It is sad that many real estate agents and representatives of Chinese / Asian ethnicity who dealt with the Chinese nationals more than others, were not present. In fact, many that I knew of from Glen Waverley and Wheelers Hill were missing at the forum. It is a must that real estate professionals to understand and keep up-to-date with the laws. Not only not to break the laws, but also ensure no clients knowingly do the same.
The question on how to stop the foreigners from buying existing properties was raised. Buyers were supposed to get prior approval of Foreign Investment Review Board FIRB to buy properties in Australia. One attendee said that it was not the role of an agent to police it.
A buyer who signs the sale contract may not be the final owner, because the buyer can put their name and include the clause “and / or nominees”, meaning during settlement, the property can be owned by someone else.
The attendee had a point, because the initial “buyer” could have obtained approval from FIRB, but the final owner on settlement is someone who did not have it.
I rose up and gave an option on how to overcome the problem. There were numerous clauses in the sales contract regarding cooling off period, penalty, etc., and it should not be that difficult to include an additional clause to stipulate that “all buyers and nominees who are foreigners must have the obtained approval of FIRB upon the signing the Contract.”
Why is it “upon signing the Contract” not ‘at settlement”? Some people could be banking on getting their application approved by the date of settlement. What if it is not approved and the transfer goes through? The argument then continues to point fingers at the conveyancer or lawyer.
Property can be sold to other people, including friends and relatives, without going through an agent. This can also mean selling to someone without getting prior approval of the FIRB, innocently or intentionally.
FIRB was a toothless tiger, but it seems the new revamped FIRB has many holes too, letting the foreigners sneak through to buy established homes, demolish them and build some big eye-sore mausoleums.
If you hear of any foreigners bragging about how smart they are, get away from FIRB and the slip through the loophole, inform FIRB.
What should the Consumer Affairs Victoria, the real estate authority, do to to these agents if they are found to be the accessory to the breach?
Well, their licence should be suspended for 2 years, OIEC or Director put in jail for no less than 3 months, plus paying a fine of $250,000 on top of the forfeiture of the commission made from the sale.
Similarly, buyer’s advocates should not be allowed to pledge innocence if they assist foreign clients to buy establish homes without the sighting documentation of FIRB’s approval. Failing to fulfill that duty-of-care should land them in $50,000 fine and 2 years suspension to practise in the real estate industry.
Thank you for reading.
Commenting on “Australian Tax Office’s foreign property buyer crackdown only ‘partially effective’, audit reveals”
https://www.domain.com.au/news/australian-tax-offices-foreign-property-buyer-crackdown-only-partially-effective-audit-reveals-20180620-h11mfj-440823/
In 2014, Chair of House Economic Committee Victorian Liberal MP Kelly O’Dwyer, gave a presentation at a REIV forum speaking on proposed policy changes on foreign investment in real estate. I looked around the room, I could hardly recognise anyone, except a former student and friend who was then a licensed estate agent.
It is sad that many real estate agents and representatives of Chinese / Asian ethnicity who dealt with the Chinese nationals more than others, were not present. In fact, many that I knew of from Glen Waverley and Wheelers Hill were missing at the forum. It is a must that real estate professionals to understand and keep up-to-date with the laws. Not only not to break the laws, but also ensure no clients knowingly do the same.
The question on how to stop the foreigners from buying existing properties was raised. Buyers were supposed to get prior approval of Foreign Investment Review Board FIRB to buy properties in Australia. One attendee said that it was not the role of an agent to police it.
A buyer who signs the sale contract may not be the final owner, because the buyer can put their name and include the clause “and / or nominees”, meaning during settlement, the property can be owned by someone else.
The attendee had a point, because the initial “buyer” could have obtained approval from FIRB, but the final owner on settlement is someone who did not have it.
I rose up and gave an option on how to overcome the problem. There were numerous clauses in the sales contract regarding cooling off period, penalty, etc., and it should not be that difficult to include an additional clause to stipulate that “all buyers and nominees who are foreigners must have the obtained approval of FIRB upon the signing the Contract.”
Why is it “upon signing the Contract” not ‘at settlement”? Some people could be banking on getting their application approved by the date of settlement. What if it is not approved and the transfer goes through? The argument then continues to point fingers at the conveyancer or lawyer.
Property can be sold to other people, including friends and relatives, without going through an agent. This can also mean selling to someone without getting prior approval of the FIRB, innocently or intentionally.
FIRB was a toothless tiger, but it seems the new revamped FIRB has many holes too, letting the foreigners sneak through to buy established homes, demolish them and build some big eye-sore mausoleums.
If you hear of any foreigners bragging about how smart they are, get away from FIRB and the slip through the loophole, inform FIRB.
What should the Consumer Affairs Victoria, the real estate authority, do to to these agents if they are found to be the accessory to the breach?
Well, their licence should be suspended for 2 years, OIEC or Director put in jail for no less than 3 months, plus paying a fine of $250,000 on top of the forfeiture of the commission made from the sale.
Similarly, buyer’s advocates should not be allowed to pledge innocence if they assist foreign clients to buy establish homes without the sighting documentation of FIRB’s approval. Failing to fulfill that duty-of-care should land them in $50,000 fine and 2 years suspension to practise in the real estate industry.
Thank you for reading.
