On 24 April 2010 the Assistant Treasurer announced a tightening
of the foreign investment rules for residential property. The
changes include a package of penalties to ensure compliance.
The new Federal Government Policy reverses the relaxation last
year of foreign investment rules. Those changes made it easier for
foreign nationals to buy residential property in Australia because
acquisitions of new dwellings by temporary residents like students
and workers temporarily employed in Australia, did not require
The current changes apply from 24 April 2010 and require that
all temporary residents seek approval to purchase vacant land on
which to build, new dwellings or established (second hand)
dwellings to be used as their principal place of residence.
Generally, if approval to buy an established dwelling is granted
to a temporary resident, it will be subject to a condition that the
temporary resident sells the property when it ceases to be their
principal place of residence. Applications to buy established
dwellings for investment purposes will not be approved. If vacant
land is purchased construction must commence within 24 months of
the acquisition or the land will be compulsorily sold.
The press release states that the new rules are designed to
ensure that housing stock in Australia is available for residents
and is not owned by former residents of Australia.
The Federal Government has also announced a full civil penalties
regime for breaches of foreign investment rules. This will include
sanctions for all purchasers, vendors and agents involved in
transactions which breach the rules, a compulsory divestment of
property if it is purchased in breach of the rules and a monetary
penalty to capture any capital gain made through an illegal
purchase and sale of a property.
A new national data matching compliance monitoring program will
be introduced to improve compliance by real estate agents. The
monitoring will provide data matching using FIRB data, State and
Territory lands and property office transactional data and
Commonwealth Department of Immigration and Citizenship visa status
data. Treasury indicated that trials were already underway in
Sydney and Melbourne. There will also be a free 1800 line so
members of the public can call directly with any information about
We will issue a further E-Alert when details have been finalised
the changes to the rules;
how the penalty regime will operate;
the effect of monitoring; and
how the memorandum of understanding between the FIRB and each
State regulator has been settled.
These changes have particular impact on real estate agents and
any temporary residents who are considering purchasing a property
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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