Huge crackdown on empty houses
WOULD you dob in your neighbour for leaving their home unoccupied?
That's the hope of federal and state governments as they prepare for a major crackdown on houses and apartments sitting empty around the country.
In November, federal Parliament passed legislation giving the Australian Taxation Office power to fine foreign investors up to $5500 a year if they leave their properties empty, plus up to $52,500 for failing to lodge their forms.
Meanwhile, the Victorian state government's vacant residential land tax kicks in from January 1, with owners in 16 council areas facing potential fines equal to 1 per cent of the property's value.
In 2016, 11.2 per cent of private dwellings were unoccupied on Census night, compared with 10.7 per cent five years earlier, totalling 1,089,165 dwellings. In Melbourne and Sydney, the number of empty properties increased by 19 per cent and 15 per cent respectively.
But according to UNSW professor Hal Pawson, those figures "substantially overstate" the true number because they include temporarily empty dwellings.
"Lack of reliable data on empty homes is a major problem in Australia," Prof Pawson wrote in The Conversation. In 2014, an analysis of water usage data by Prosper Australia estimated that about 82,000 homes in Melbourne were vacant - about half the Census figure.
"Applying a similar 'conversion factor' to Sydney's Census numbers would indicate around 68,000 speculative vacancies," Prof Pawson wrote.
"Considering that thousands of people sleep rough - almost 7000 on Census night in 2011, more than 400 per night in Sydney in 2017 - and that hundreds of thousands face overcrowded homes or unaffordable rents, these seem like cruel and immoral revelations.
"Public awareness of unused homes has been growing in Australia and globally. In London, Vancouver and elsewhere - just as in Sydney and Melbourne - the night-time spectacle of dark spaces in newly built 'luxury towers' has triggered outrage.
"This has struck a chord with the public not only because of its connotations of obscene wealth inequality and waste, but also because of the contended link to foreign ownership."
A spokeswoman for the ATO said foreign investors with Foreign Investment Review Board approval would be required to lodge an annual "vacancy fee return", currently being designed, which will consist of an online declaration and payment system.
"If the fees and charges accumulate and remain unpaid, a hold can be placed over the property so that unpaid amounts are recouped when the property is sold," she said.
"The Treasurer can also have a property sold to recoup unpaid fees if required. The ATO expects that the severity of the penalties for non-lodgement will encourage foreign investors to lodge the vacancy fee return."
Shukri Barbara, principal adviser at the Property Tax Specialists, said it was unclear exactly how the policy would be enforced but that "the artificial intelligence capability of the ATO in data matching is absolutely sensational".
"They're able to match every field of tax return information with outside data, particularly as it relates to local government," he said, adding international data sharing agreements between OECD countries would also play a role.
"In my experience, in our practice, it's had an impact. The market has slowed down as far as prices are concerned."
Mr Barbara added that, anecdotally, Chinese buyers - who would until recently have bought properties without even seeing them - had dried up. "That's all gone now," he said.
The spokeswoman said the ATO would establish the identity of foreign investors "through the FIRB application approval process, land titles information, community referrals, information from various state and federal agencies, and our existing data matching processes, which have a high detection rate".
"A comprehensive communications strategy is in place to raise awareness and to assist foreign investors and their intermediaries understand the requirements of the vacancy fee including a suite of online products and web content," she said.
"The ATO is also reminding foreign investors of their reporting requirements and the penalties for non-lodgement of the vacancy fee return through the FIRB application approval process, email notifications and a targeted communication campaign.
"Through our existing data matching capabilities together with increased community awareness the ATO is confident that the risk of non-identification of foreign investors subject to the vacancy fee is low."
She added that if there were doubts about the validity of the vacancy fee return, the ATO would check the claim through "tax return data, immigration data and information from electricity and other utility providers".
"If the foreign investor claims that they have rented the dwelling or made it available for rent then the ATO can check against the data detailed above as well as lease and real estate agent agreements, internet searches and records of rental tenancies authorities," she said.
"If the foreign investor claims the dwelling is rented, but this is through short-term leases of less than 30 days, even if this totals over six months ... the foreign owner will still need to pay the vacancy fee as the law requires leases to be of a residential nature of at least 30 days duration.
"Criminal sanctions are available for false and misleading statements."
The Victorian State Revenue Office simply said it "undertakes monitoring and compliance activities to ensure that vacant residences are being declared". "Our compliance program includes comparing our data with that of other state and federal agencies, and conducting investigations," the SRO said.
The issue of vacant houses with missing foreign owners has cropped up twice in recent months. In November, a top-floor unit in inner-city Darlinghurst was put up for sale after a protracted legal battle, and earlier this month a notorious squatter's house in Redfern also went under the hammer.
Faiyaaz Shafiq, a strata law expert from JS Mueller & Co Lawyers, said at the time the problem would only get worse. "A lot of people are buying properties from overseas and leaving them," he said. "So many owners are out there with units locked up, empty, and no one can find them."