The House Economics Committee is calling for stronger enforcement of foreign property investment rules.

After a long-running review, including six public hearings and 92 submissions, the committee found that while the rules themselves were solid, the Foreign Investment Review Board's (FIRB) enforcement of them was almost non-existent.

In fact, there has been no court action taken over breaches of the rules since 2006.

The committee's chair, Liberal MP Kelly O'Dwyer, said it “defies belief” that there could have been no breaches over that period.

“There has been a significant failure of leadership at FIRB, which was unable to provide basic compliance information to the committee about its investigations and its enforcement activity,” she told Parliament when tabling the report this week.

Recent FIRB figures show foreign residential property investment in the first nine months of 2013-14 was worth $24.8 billion, an increase of 44 per cent on the amount approved for the whole of 2012-13.

But even the 2012-13 figures put real estate as the prime sector for foreign investment in Australia, worth a total of $51.9 billion across residential and commercial.

China has been the biggest source of investment, with Canada and the USA close behind.

The report details four big weaknesses in the foreign real estate investment regime: slow data; inadequate investigation and enforcement; weak penalties; and a lack of staff and resources at the FIRB.

Current rules limit overseas resident non-citizens to only buying new - rather than established - properties.

The report says that this is one of the least enforced stipulations, along with another rule that should require investor to sell their houses shortly after leaving the country.

The review committee made the following recommendations:

  • Imposing a new fee on foreign property investors that would pay for FIRB's investigation and enforcement operations - Parliamentary Budget Office figures say a $1,500 charge would raise $158.7 million over four years;
  • Real civil penalties for breaches of the rules, and actual prosecutions undertaken. The penalties would be linked to the value of the property, instead of the current $85,000 maximum penalty;
  • Fines for any third party (lawyers, conveyancers, developers, real estate agents or family) who assists a foreign buyer to breach the rules;
  • Government collection of any capital gains made by foreign investors who illegally purchased established properties;
  • A national land title register that could record and report the citizenship and residency status of real estate buyers;
  • Data sharing between the Immigration Department and FIRB