Foreign investment red tape “making it harder”

Photograph by Justin Currie-Smith
The Foreign Investment Review Board (FRIB) faces criticism for complicating the buying process for legitimate residential purchases while doing little to prevent illegal purchases. Justin Currie-Smith reports.

Despite Federal Government Reforms, the Foreign Investment Review Board (FRIB) faces criticism for complicating the buying process for legitimate residential purchases while doing little to prevent illegal purchases.

Balwyn business owner Alan Zhang said he and his wife, Patricia, had issues dealing with the board while buying a home to raise their two young children, Sunny and Harper.

Mr Zhang, a Chinese national with Australian residency, said he had difficulty satisfying the review board that the home was to be their primacy residence in Australia, as he regularly returns to China for business.

“If people are able to (illegally) buy homes and knock them down then the laws need to be changed to prevent that because the current laws are just making it harder for legitimate buyers.”

Boroondara Residents Action Group President Jack Roach believes that although non-resident foreign nationals cannot legally purchase established dwellings in Australia, FRIB has not been adequately policing its own regulations for the past 10 to 15 years.

“As a result, foreign nationals have been buying up old dwellings, knocking them over and building something new, illegally.”

Mr Zhang, a freight broker, regularly returns to Nanjing for business reasons and believes it is these trips which may have caused the problem.

Although he has been in Australia for over 10 years, first entering the country to study at Monash University, and both his children were born here, Mr Zhang believes FRIB is indiscriminately targeting all foreign nationals.

“Maybe If I were [an Australian] citizen it wouldn’t have happened, but I don’t even have a house in China anymore.”

In December last year, new penalties were introduced for breaches of foreign investment laws regarding residential real estate, including penalties of up to $135,000 and up to three years’ jail.

Since 2013, 27 residential property purchases have been identified as identified as illegal under foreign investment laws and the owners forced to sell, according to statement from Federal Treasurer Scott Morrison, released in January.

Mr Roach believes that many homes purchased are being torn down and replaced with “vertical bank accounts”.

“I’ve got one opposite me,” he said. “It’s the equivalent of three storeys, it’s been empty for four years.”

“The issue has grown contentious in the leafy inner city suburbs, where residents claim older traditional homes are being illegally purchased and replaced with the French or Georgian style mansions.

In a statement to residents, Boroondara Mayor Jim Parke said that the deregulation of building permits by the State Government in 1994 led to most permits for single dwellings being issued by private building surveyors.

“New buildings simply need to comply with Victorian Government building regulations which specify such things as standards for building heights, setbacks, site coverage, hard surface areas as well as overlooking and overshadowing of neighbouring properties.”

Mr Roach, however, believes that the private building surveyors rely on new housing developments for their income, and so “fudge” the issue.

A March meeting of the Urban Special Planning Committee (USPC) of the Boroondara Council voted unanimously to adopt changes to the Neighbourhood Character Statement for precinct 74, a small section of Balwyn by the intersection of Whitehorse and Balwyn Road.

The changes clarify that three story development is discouraged there and give a clearer picture of neighbourhood character, said USPC Chair Cr Philip Mallis.

Cr Coral Ross said during the meeting, “While I understand this probably isn’t what everyone might have hoped for, I think we need to look at what’s now possible.”

Balwyn resident Neil Packham said at the meeting he was concerned about new developments ruining the unique environment in his street.

The house next door to him was two storeys but 10 metres at the rear, equivalent to three storeys, he said.

“[The houses] are a bit pretentious, not very well built, and have no gardens.

“I might have to learn Cantonese,” he said. “A lot of [purchases] slipped under the radar in the past few years.”

Although FRIB works with the ATO to identify breaches of investment rules, it relies heavily on self-reporting from buyers or investment agents, according to its website.

Although he said many of the illegal purchases are from buyers of Chinese origins, Mr Roach insists “it’s about numbers, not racism”.