New Foreign Home Buyers Rules

[glen]

Hi guys,



I guess many of you will have heard that there are new rules regarding foreign investment in housing in Australia.



Here are a few snippets from the key reports:

New curbs on foreign home buyers

* April 24, 2010 12:00AM



COMPLAINTS about foreigners driving up Australian house prices have forced the Rudd government to reinstate a rule it scrapped in 2008 requiring temporary residents to sell their houses when they leave the country.



The government will also match travel details with ownership data to ensure people who violate the laws are caught, and will create new penalties under civil law that will also apply to real estate agents. The new regime will include provisions allowing the government to force those leaving Australia to sell their properties and to claw back any capital gains made by foreign investors who breach the arrangements.



There have been several complaints in recent months about foreign investment in the residential sector, mainly focused on Asian investors outbidding locals at auctions to buy homes for their children studying in Australia.

[url="http://www.theaustralian.com.au/business/property/new-curbs-on-foreign-home-buyers/story-e6frg9gx-1225857656381"]http://www.theaustralian.com.au/business/p...x-1225857656381[/url]

Foreign home buyers backflip

April 24, 2010



THE Federal government will scrap its controversial new rules on foreign investment in real estate, and instead tighten both the rules and their enforcement to head off a damaging political storm.



In a stunning about-face, Assistant Treasurer Nick Sherry has announced that temporary residents will now have to seek approval from the Foreign Investment Review Board (FIRB) to buy any real estate in Australia.



Temporary residents will also be required to sell their Australian property when they leave Australia. And for the first time, the FIRB will be given the means to ensure that the laws are enforced.

[url="http://www.smh.com.au/national/foreign-home-buyers-backflip-20100423-tjb3.html"]http://www.smh.com.au/national/foreign-hom...00423-tjb3.html[/url]



Here are some more articles on the subject:



[url="http://www.abc.net.au/news/stories/2010/04/24/2881985.htm"]http://www.abc.net.au/news/stories/2010/04/24/2881985.htm[/url]

[url="http://www.heraldsun.com.au/money/australian-federal-government-gets-tough-on-foreign-ownership-rules/story-e6frfh5f-1225857643432"]http://www.heraldsun.com.au/money/australi...f-1225857643432[/url]

[url="http://www.news.com.au/breaking-news/crackdown-to-help-first-home-buyers/story-e6frfku0-1225857780309"]http://www.news.com.au/breaking-news/crack...0-1225857780309[/url]

[url="http://news.smh.com.au/breaking-news-national/clampdown-on-foreigners-buying-property-20100424-tjky.html"]http://news.smh.com.au/breaking-news-natio...00424-tjky.html[/url]



The question I have is whether the prices will actually fall or just level off.



I am guessing the prices may fall maybe 5-10% and then level off. Any other predictions?



Cheers, Glen

[POWERZONE]

No changes predicted - house prices were blown out in the early 2000's - long before this rule was changed and changed back.



House prices are mostly determined by the supply/demand ratio - lesser so by interest rates, foreign ownership, government grants etc.

[glen]

I think the foreign investment free for all was only there for about 2 years!!

[POWERZONE]

Yep, and if I remember correctly it was part of the economic stimulus...



...still not all bad - I'm not totally adverse to a 5 figure sum of money collected in stamp duty from O/S investors <img src='http://www.melbournechat.org/public/style_emoticons/<#EMO_DIR#>/smile.gif' class='bbc_emoticon' alt='B)' />

[daniel.noble]

Understanding that the new measures are to target residence leaving our shores on TR visas I question how this will work with registered companies onshore or offshore as an investment?



That said what stops parents overseas purchasing investment properties here under the guise of an investment property through a business and housing their children in the abode then renting it out after they return home or selling the asset after a two year period to only pay the capital gains on the profit?



Can someone enlighten me?

[glen]

That is a good point. I don't know if they have a company here whether they need to sell the company when they leave! <img src='http://www.melbournechat.org/public/style_emoticons/<#EMO_DIR#>/smile.gif' class='bbc_emoticon' alt='' /> I presume they don't have to. This could be a big loop hole.

[glen]

Mortgage applications plunge

April 28, 2010 - 3:07PM



Residential mortgage applications plunged in the March quarter after the government’s first home owner’s grant was wound back to pre-financial crisis levels, a survey found.



Total mortgage applications fell 15 per cent in March quarter compared with the corresponding period a year earlier, the quarterly consumer credit demand index by consumer credit check company Veda Advantage showed.



The fall represented the first quarterly decline in consumer mortgage demand since the December 2008 quarter.



Total mortgage applications to March 31 dropped by 8 per cent on the December 2009 quarter, Veda said in a statement today....

[url="http://www.theage.com.au/business/mortgage-applications-plunge-20100428-trqs.html"]http://www.theage.com.au/business/mortgage...00428-trqs.html[/url]



I liked this one!!! Hooray! I hope house prices will also do some plunging!

[Kaylene1]

[left]While most HAFA rules affect only the home sellers and their lender, a few of the streamlined rules impact buyers. They include:[/left]

• Buyers must present documentation of funds or a preapproval letter from a lender with their offer for a short sale; sellers need to present this to their lender within three days of receiving the offer.
  
  

• Lenders must approve or deny the offer for the home within 10 business days of receiving the offer.
  
  

• Settlement must take place within a reasonable period of time after the offer is made, but the lender cannot require a closing earlier than 45 days from the date of the sales contract unless the home seller agrees.
  
  

• Buyers cannot sell the property again for 90 days. This is meant to prevent investors from "flipping" homes by purchasing at a low price and selling at a quickly inflated price.
  
  

• Short sale transactions through HAFA must take place at "arm's length," meaning the home sellers cannot sell the property to a relative or anyone else with whom they have a closer personal or business relationship.
  
  

Matykiewicz anticipates fewer foreclosures in 2010 and more short sales due to the streamlined short sales rules