Foreign citizens who buy property in Australia and are not entitled to do so will have them forcibly sold, the Government has confirmed.

Indeed, Treasurer Scott Morrison has confirmed that he has ordered the divestment of a further 16 Australian residential properties that have been held by foreign nationals in breach of the foreign investment framework.

australiahouse200The properties were bought by people from a range of countries including the UK, Malaysia, China and Canada in Victoria, New South Wales, Queensland and Western Australia ranging in price from $200,000 to $2 million and totalling $14 million.

The Australian Government has been clamping down on foreign investors buying property and since new rules were introduces over $92 million of property has been sold. The Government is concerned that foreigners are pushing up prices for local people.

'The divestments of these 16 properties, which have a combined purchase price of over $14 million, are further evidence of the Turnbull Government's commitment to enforcing our rules so that foreign nationals illegally holding Australian property are identified and their illegal holdings relinquished,' Morrison said.

'Foreign investment provides significant benefits for Australia but we must also ensure that such investment benefits all Australians, is in line with our rules and is not contrary to our national interest,' pointed out.

'The foreign investors either purchased established residential property without Foreign Investment Review Board approval, or had approval but their circumstances changed meaning they were breaking the rules,' he added.

Since taking office in 2013, the government has forced foreign nationals to divest a total of 46 properties. Under the previous Government, no foreign nationals were forced to divest illegally held Australian property.

Increased compliance measures included transferring responsibility for residential real estate enforcement to the Australian Taxation Office (ATO) to help ensure foreign investment rules are being enforced.

Morrison said that since the transfer of responsibility to the ATO for compliance in May 2015 over 2,200 matters have been referred for investigation. Through information provided by the public, together with the ATO's own enquiries, approximately 400 cases remain under active investigation.

A new penalty regime was introduced in December last year and since then 179 penalty notices have been issued totalling over $900,000. Penalty notices have been issued to people who have failed to obtain FIRB approval before buying property as well as for breaching a condition of previously approved applications.

Illegal real estate purchases by foreign citizens attract criminal penalties of up to $135,000 or three years' imprisonment, or both for individuals and up to $675,000 for companies. The new rules also allow capital gains made on illegal investments to be forfeited.

'In addition to divestments, a number of people came forward during the reduced penalty period who were not in breach and some who voluntarily sold their properties while the ATO was examining their case,' Morrison explained.

There are at least 25 examples of foreign investors self-divesting in this way showing a change in behaviour towards more compliance with the rules and a strengthening of the program overall. While Australia welcomes foreign investment, foreign investors must comply with our laws,' he added.