Speaking at the NAB and Advantedge ‘Knowledge is Everything’ event in Sydney last week, NAB Broker general manager Steve Kane said “massive changes” in the Australian mortgage market mean brokers need to take special care with the loans they write for foreign property investors.
While the event focussed on the regulatory changes around investor caps, bank capital and risk weights, Mr Kane was clear that foreign investment is also a critical issue for brokers.
“It very important that you understand, particularly in the Sydney market where you’ve got rapidly increasing investment lending and rapidly increasing property prices, that if you’re dealing in those markets, particularly around foreign investment, that you understand the rules and regulations,” he said.
“It is important because as the person involved in the transaction, it just doesn’t go to the bank or to the customer, it will come to you as well if you haven’t adhered to the rules and regulations that have already been in place, particularly around foreign investment and investing by foreign nationals.”
Mr Kane’s comments follow the federal government’s response earlier this month to a parliamentary report into foreign investment in residential real estate.
Under the new regime, mortgage brokers and real estate agents who help overseas buyers flout foreign investment rules will face severe penalties under a tougher compliance regime.
The government has proposed to introduce civil penalties for mortgage brokers, property buyers, real estate agents and other third parties who “knowingly assist foreign investors to breach foreign investment rules”.
“Provisions currently exist under the Criminal Code for knowingly assisting another person to commit a criminal offence,” the government said.