Australian legal reforms unlikely to deter investors

Sydney Harbour Photo: Wikimedia Commons

Australia introduced a wave of new laws on 1st December 2015 in response to growing concerns surrounding illegal overseas investment in the country's real estate. The Foreign Investment Review Board now charges application fees to foreign buyers and has introduced penalties for those who do not invest legally in real estate. A land register has also been launched.

Investors in residential property will have to pay a fee of AUS$5,000 for a property worth up to $1 million and AUS$10,000 for a property worth over that threshold, with additional fees of AUS$10,000 for every increment of $1 million. Those who do not abide by the regulations, meanwhile, could face up to three years behind Bars or a fine of up to AUS$135,000, with agents involved in their illegal transactions also subject to similar penalties.

However, investors appear not to be put off, says Catherine Wheeler, Partner at the Perth office of top Australian law firm HopgoodGanim.

"It is hard to say how much overseas property demand is likely to be affected by the recent FIRB changes – only time will tell, but in the past, these kinds of changes ultimately have a limited effect on demand," she tells OPP.Today.

"Australia is still an attractive property market for overseas investors, so the changes (and the additional costs) would seem unlikely to deter serious investors/buyers."