Real estate agents are feeling the glare of the Federal Government’s spotlight at the moment as moves are afoot to clamp down on agents who knowingly or unknowingly assist foreign purchasers to buy Australian residential real estate without going through the proper approval process.
I have mentioned this issue before in Conveyancer says caution needed when non-citizens or non-residents of Australia buy property, but this latest development is worth a further mention.
This article has been prompted by a piece in the Herald Sun, Real estate agents face penalties for helping foreigners illegally buy homes.
I’ll tease out the issues from a South Australian perspective.
The laws governing foreign purchasing of Australian residential real estate
In Australia, foreign purchasers are only entitled to buy new homes or need to seek approval through the Foreign Investment Review Board (FIRB) for an exemption to buy existing properties. Please check the FIRB website for your specific circumstances.
In the latest flaring of this issue, Parliamentary Secretary to the federal Treasurer, Kelly O’Dwyer, said some agents had shown ‘wilful blindness’ in helping people buy property when they shouldn’t have.
From her perspective, agents have a responsibility to check for eligibility or face personal fines and company fines if they get caught.
She also argues that in some areas of the community the presence of foreign buyers can artificially inflate home prices, making it harder for local first home buyers.
What this means for South Australian real estate agents
In my experience as a conveyancer, high quality agents in South Australia normally ask the question if the Purchaser is a foreign buyer and if they require FIRB approval.
What I am not so sure about is whether it’s realistic to expect real estate agents to ‘research’ a prospective Purchaser to ensure that someone entering into a Contract has the right to legally purchase the property.
At Eckermann Conveyancers, we always ask our Purchasers as part of our written instructions if they are an Australian Citizen or Permanent Resident to make sure they don’t require FIRB approval.
The dilemma if such approval is needed is that it can add up to three months delay to the settlement process, which can be costly at best or a deal breaker at worst.
This latest issue not only shines a spotlight on this area of the law but it, once again, shines the spotlight on the importance of having high quality conveyancers involved in any purchases or transactions.