Australia to crack down on Chinese investors buying up property… as it’s revealed Chinese owner has found a buyer after being forced to sell one of Australia’s most expensive mansions

 

• PM Tony Abbott announces tough new laws on foreign property investors
• The laws are prompted by concerns that Australians are being priced-out 
• ‘It’s about giving locals a fair go,' Mr Abbott says
• The changes will include a $5000 fee for foreign buyers to enter the market
• They come a day after the forced re-sale of one of Sydney's most prestigious waterfront properties, Port Piper's Villa del Mar 
• Foreign investment in Australian property tripled in 2013-14
• $35-billion poured into market from overseas in last in financial year
• Treasurer Hockey says illegal buyers have until Nov 30 to come forward

By MAY SLATER and LIAM QUINN FOR DAILY MAIL AUSTRALIA and AAP REPORTER

PUBLISHED:May 2015 

Prime Minister Tony Abbott has announced tough new laws for foreign property investors in an effort to 'level the playing field' for Australian buyers.

 

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Prime Minister Tony Abbott (centre) and treasurer Joe Hockey (right  )announced the changes to Australia's foreign investment framework at a press conference at a building site in Sydney today

Prior to today's announcement, the Prime Minister told reporters foreign investment has been good for Australia but that it had to be 'properly policed' and can't disadvantage Australian home buyers.

'I’m determined to crack down on any illegal activity that could be putting upward pressure on property prices,' Mr Abbott told Fairfax media. 

  

The new rules are expected to come into effect from December 1.

In addition to the $5000 entry fee for foreign buyers, treasurer Joe Hockey says criminal penalties for those involved in illegal foreign sales and purchases will be increased to $127,500 or three years’ jail for individuals, and up to $637,500 for companies.  

Third parties who assist foreign investors to make illegal purchases - like real estate agents, lawyers and accountants - will for the first time face hefty fines of up to $42,500 for individuals and $212,500 for companies. 

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The $39 million purchase of this mansion, Villa del Mare, in Sydney's exclusive Point Piper last year was found to have been illegal. The buyer, Hong Kong businessman  Xu Jianyin, was immediately forced to resell the property to an Australian buyer

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Foreign investment in Australia's property market tripled last year, as prices continued to skyrocket, new figures show

In addition to the $5000 entry fee for foreign buyers, treasurer Joe Hockey says criminal penalties for those involved in illegal foreign sales and purchases will be increased to $127,500 or three years’ jail for individuals, and up to $637,500 for companies.  

Third parties who assist foreign investors to make illegal purchases - like real estate agents, lawyers and accountants - will for the first time face hefty fines of up to $42,500 for individuals and $212,500 for companies. 

Foreign buyers intending to purchase properties worth more that $1 million would be charged a $10,000 fee to apply. 

'Stronger' policing of the new laws will also become the responsibility of the Australian Taxation office because the Foreign Investment Review Board has failed to properly impose the laws, the government says. 

'The ATO will use its data-matching systems to identify possible breaches and the Commonwealth will pursue those foreign investors who break the rules,' the government said in a statement.  

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Hong Kong-based real estate group, Evergrande, illegally sold Sydney mansion Villa del Mar (pictured) to China's 15th richest man, Xu Jiayin, through an Australian shelf company

The treasurer today warned illegal buyers they have until November 30 this year to identify themselves if they want to avoid criminal charges.

If they don’t come forward, Hockey said: ‘We will come find you. We will prosecute you.’

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Chinese real estate mogul Xu Jianyin, who is believed to be worth around $7billion, was forced by Australia to immediately resell the Villa del Mare mansion be paid $39 million for 

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Villa del Mare was brought without approval of Australia's Foreign Investment Review Board, Treasurer Joe Hockey 

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Treasurer Joe Hockey ordered the property, which features stunning Sydney harbour views, to be resold after deciding the purchase contravened foreign investment rules

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Inside the Villa del Mare mansion which was resold to an Australian buyer on Friday for a reported $40 million

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Villa del Mar in Point Piper (pictured) was one of 100 property sales under investigation by the Australian government in a crackdown on illegal foreign property investment

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112 Wolseley Road, Point Piper, in Sydney's eastern suburbs, sold for $37 million last year

The impact of foreign investment in Australia explained

Mount Eliza's Palladian palace, Palazzina, was one of the high-priced homes recently snapped up by Chinese buyers. 

The landmark mansion was last sold $3.75 million in 2007 by the German businessman Joachim Mueller to former cosmetics company boss Rudi Miklosvary and his wife, Ilona.

The design of the 2001-built property was inspired by the Palladian style of architecture of 17th century Italy.

Set on 0.8 hectares of landscaped gardens, Palazzina has 12 main rooms including a library, study and conference or sports room.

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Mount Eliza's Palladian palace, Palazzina, sold to a Chinese buyer for $4.5 million

Last month, a Chinese businessman bought Australia's most luxurious penthouse in the yet-to-be-built 108 Australia building that will be the tallest apartment building in the southern hemisphere.

At a lofty $25 million, the Melbourne apartment, which is spread across the entire 100th floor of a super skyscraper and boasts 360 degree views over the city, is the most expensive single apartment to be sold in the country.

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A Melbourne penthouse apartment in the Australia 108 complex that boasts 360 degree views of the city has been sold for $25 million to a Chinese businessman

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Current rules for foreign buyers state they are permitted to buy new homes, provided their bid is back by the Foreign Investment Review Board

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Current rules allow temporary residents to buy one established home to live in, under the condition they sell it when it no longer is their residence

Buyers are paying a premium when they decide to purchase property in Sydney, one of Australia's priciest markets.

Data from realestate.com.au shows that the most expensive houses sold were all in the exclusive suburbs of the New South Wales capital, including Point Piper, Bellevue Hill, Mosman and Vaucluse.

 The three most expensive homes, which sold for between $30 and $39 million, are all on the same waterfront street in Point Piper in Sydney's east. 

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The Australia 108 apartment block has three infinity pools set against floor-to-ceiling glass to give swimmers a view of either the glittering city skyline or shimmering bay

China's total investment last financial year was $27.7 billion, while the US accounted for $17.4 billion. 

Canada is Australia's third largest foreign investor ($15.4 billion) followed by Malaysia ($7.2 billion).

 

The changes will see foreign buyers charged a $5000 fee to enter the Australian market, as well as increased fines and possible jail terms for investors who breach foreign ownership laws  - and the agents who help them do so.

 

The stricter laws follow an investigation by the Foreign Investment Review Board into housing affordability in Australia, which partly blamed foreign buyers for inflated domestic prices.

 

'The new regime will maximise opportunities for Australians, give Australian home owners confidence and a level playing field,' Mr Abbott told reporters at a press conference in Sydney on Saturday.

 

‘It’s about giving locals a fair go.’

The threat comes a day after the forced resale of one of Sydney's most prestigious waterfront properties, Point Piper's Villa del Mar.

 

Mr Hockey ordered the Chinese-based Evergrande Real Estate Group to divest the property in March after finding it's sale of the mansion to Chinese businessman Xu Jianyin breached foreign ownership rules.

 

Under the regulations, it's illegal for non-residents to buy established dwellings as homes or investments.

 

The luxury mansion was reportedly picked up by an Australian buyer on Friday for more than $40 million. 

It is one of 100 cases being investigated by the treasurer following an inquiry into housing affordability which found foreign property investment in Australia had tripled in the last year.

 

The report by the Foreign Investment Review Board found that the overseas spend on existing homes in Australia leapt from $2 billion to $7.17 billion in the last financial year, suggesting some purchases may have breached foreign ownership rules.

 

'In some cases people are disclosing their own failure to comply with the law,' Mr Hockey told Reuters. 

 

Finance Minister Mathias Cormann told Sky News this week that Australia was still very much open for business.

 

'We also understand that it is very important that the public can have confidence that the foreign investment coming into Australia is not contrary to our national interest, which is why we do have to have a framework in place that applies proper scrutiny,' he said. 

The Foreign Investment Review Board Report found more than $35 billion was poured into the market from overseas, prompting concerns that local home buyers are being priced out. 

 

Chinese buyers splurged more than $12 billion in 2013-14, a massive increase from the comparatively paltry $5.9 billion it coughed up the year before, Fairfax reported.

 

The money was predominantly spent on new homes, with $16.4 billion spent on off-the-plan properties, compared to $5.73 billion the year before. 

 

Chinese buyers truly dominated the market, spending more than twice as much as the second-place country, the United States, and third-place, Singapore.

 

Michael Yang, CEO of Gifang.com, a Chinese property website, said Australia's economy and top schools attracted foreign buyers. Australia, he said, is seen as 'a safe place to invest' by overseas buyers.