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Adelaide investors to face stricter rules

By Brett Pilgrim

The Adelaide property investment landscape is about to change, as a number of new measures are introduced to keep illegal activity at bay.

Treasurer Joe Hockey announced details of the Foreign Acquisitions and Takeovers Legislation Amendment Bill 2015 in parliament on 20 August. The rules are designed to prevent people from undertaking illegal property acquisitions and is "more modern, simple and effective" than in the past.

"Importantly, it will add integrity to the system, so that everybody plays by the rules. With integrity comes compliance," Mr Hockey noted.

The changes are due to come into effect on 1 December 2015 and will see higher penalties imposed on anyone undertaking unscrupulous transactions. For lesser crimes, compliance notices will be issued and civil pecuniary penalties are coming into play.

This follows on from the Australian Prudential Regulation Authority's (APRA) decision to clamp down on investment lending. The group raised concerns in December last year that other buyers were being restricted, leading it to introduce stricter measures.

APRA noted that its supervisors would be focusing on portfolio growth above a ten per cent threshold, while affordability tests are being introduced for new borrowers. These will include a two per cent interest buffer, as well as a floor lending rate of at least seven per cent.

This, coupled with the new Bill announced by Mr Hockey, could spell a number of changes for the real estate investment market.

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