On 18 December 2008, Chris Bowen MP, the Assistant Treasurer,
announced changes to the Government's foreign investment
screening arrangements for acquisitions of residential real estate
by foreign persons. The purpose of the changes is described as
streamlining the current notification and administrative
A number of the changes related to foreign investment policy and
became effective on 18 December 2008. These include:
removing the $300,000 limit on acquisitions of property being
acquired by student visa holders as their principal place of
the removal of the requirement that no more than 50% of new
dwellings can be sold to foreign persons on an "off the
plan" basis (provided that the developer has marketed both
locally as well as overseas).
extending the definition of "new dwelling", which
previously had a requirement that the dwelling had never been
occupied or sold, to include dwellings that have not been sold but
that have been rented out for no more than 12 months.
permitting foreign-owned companies to purchase established
dwellings for use by their Australian based staff provided that
they sell or rent the dwelling if it is expected to remain vacant
for more than 6 months.
A number of other changes have been announced but will be
subject to amendment of the current Foreign Acquisitions and
Takeovers Regulations 1989 and include:
accommodation facilities such as resorts, hotels and serviced
apartments will be treated as commercial real estate rather than
residential real estate and therefore notification and approval
will only be required where the value of the property exceeds the
commercial property thresholds (currently $5 million for heritage
listed properties, $953 million for US investors or otherwise $50
million for non heritage listed properties).
exempting temporary residents from notification of proposed
acquisitions of established residential real estate for their own
residence, new dwellings and single blocks of vacant residential
The Regulations were expected to be amended before the end of
February 2009, but this is now not expected until March 2009.
Of particular note to developers is the abolition of the current
procedure of issuing advance approval for sales of new dwellings to
foreign persons (the previous "off-the-plan" approval).
It will now be necessary for all non-resident foreign purchasers to
submit individual applications for approval. A developer may submit
an application on behalf of a foreign purchaser. Therefore either a
developer will not be able to enter a contract with a foreign
person until approval is received or any contract will need to be
conditional on approval. While the abolition of the 50% limit of
sales to foreign persons is a welcomed change, the requirement for
individual applications will place an administrative burden and
uncertainty on sales.
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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