Wow, didn't know non-Australian residents could borrow from Aussie lenders. That would be very attractive to foreign investors
The issue isnt whether Australian banks lend to non residents. They do. Nothing wrong with that if it's done in line with the spirit of FIRB requirements that non residents must buy new stock only. The issue is whether the banks or FIRB do anything at all to police the rules around what non residents can buy; and the answer is a resounding NO.
The FIRB dont do anything whatsoever. They are essentially a completely useless organisation. Really... no hyperbole - and not trying to bash them. They are literally useless by any definition because of two things; they have almost no power to enforce, and they have embarrassingly limited resourcing. Would it surprise you to learn that including their management team, they have less than 10 staff in total? Would it drop your jaw to learn that they have not prosecuted ( or even attempted to prosecute) a single breach of FIRB regulations since 2006? Yes, you read that right... 2006! And just to make it all come together nicely, would it astound you to learn that even if they did prosecute successfully, all they are allowed to do is sell the asset and , wait for it ... 100% of any profits are returned to the non resident anyway!!!!
Basically, the way it works right now is that unless the non resident actually goes to FIRB and gives themselves up, the FIRB has no data matching whatsover - not from banks, not from Land Titles Offices, not from anywhere - to know whether or not its a new property/legal transaction. This means that they don't know how many properties are being purchased by non residents, any more than you or I or Jim the grocer knows. No one does.
There is quite a simple fix to this . Simply require banks to mandate that all non residents /non citizens produce an FIRB approval letter as a condition for loan approval. Except for cash buyers, this issue would be largely resolved. The other thing the Feds should do is give FIRB some teeth - give them some staff, and give them some power to seize assets that are illegally purchased and then allow them to retain all profits.
Right now FIRB/lending practices are not even a joke...it's beyond that. It's a claytons policy with zero enforcement.
