Foreign buyers forced to sell illegally acquired properties

A total of 27 properties valued at $76.4 million have been sold, or are in the process of being sold

The government has forced foreign buyers to sell off their illegally acquired properties following a crackdown on foreign investment from the Australian Tax Office (ATO).

A total of 27 properties valued at $76.4 million have been sold or are in the process of being sold, according to a report by the Daily Telegraph.

It is illegal for foreign buyers to purchase an established dwelling in Australia without approval from the Foreign Investment Review Board. Foreign investors can purchase new properties but not homes that have already been established.

Illegal buyers hailed from China, Malaysia, Taiwan, Canada, India, the US and Europe, according to reports.

The latest order of sales range in price from $200,000 through to $5 million and are predominantly in Victoria and Queensland. These figures indicate that the scale of illegal home buying is not limited to the top end of the market, as had previously been believed.

The forced sales are occurring following the ATO’s recent investigation into illegal property investment after the lapsing of the government's amnesty towards foreign investors who had unlawfully purchased property.

Under the amnesty arrangement, foreign buyers were given until December 1 to voluntarily come forward and disclose unlawful ownership. They would then be protected from criminal prosecution if they sold the property within 12 months.

Illegal purchases can ­attract criminal penalties of $135,000 or three years' imprisonment, or both for individuals; and up to $675,000 for companies. Capital gains made on illegal investments are also to be forfeited.

More than 1500 matters have been referred for investigation since May, with more than 800 cases still under investigation.

Treasurer Scott Morrison said though the government welcomed foreign investment, it did not want foreign investment that rendered Australians redundant from the market.

“We recognise that foreign investment provides significant benefits for Australia, but we must also ensure that such investment benefits all Australians, conforms to our rules and is not contrary to our national interest,’’ he said.

“The foreign investors either purchased established residential property without Foreign Investment Review Board approval, or had approval but their circumstances changed meaning they were breaking the rules.”