On 18 December 2008, the Assistant Treasurer released details of administrative changes to the Government’s foreign investment screening arrangements for acquisitions of residential real estate by foreign persons. They generally maintained the previous restrictions but provided for streamlined notification and administrative arrangements.
These changes were fully implemented on 31 March 2009, when the relevant amendments to the Foreign Acquisitions and Takeovers Regulations 1989 (the Regulations) came into effect.
There were no changes to the Foreign Acquisitions and Takeovers Act 1975 (the FATA).
A summary of the changes is provided below. The policy and related documents (above) have been updated to fully incorporate the changes.
FROM 18 DECEMBER 2008 THE POLICY CHANGED AS FOLLOWS:
Temporary residents purchasing second hand dwellings
The definition of ‘temporary resident’ includes all foreign persons living in Australia who:
- hold a valid temporary visa which permits them to stay in Australia for a continuous period of more than 12 months (irrespective of how much time is remaining until that visa expires); or
- have submitted an application for permanent residency (PR), and hold a bridging visa which permits them to stay in Australia until their PR application has been finalised
Short-term visitors such as tourists, business people and those here for a medical procedure are not temporary residents.
Foreign students resident in Australia are no longer subject to a $300,000 limit on the value of an established dwelling purchased as their principal place of residence.
Vacant residential land:
Acquisitions by foreign-owned companies, trust estates and non-resident foreign persons of single blocks of vacant residential land are required to build a dwelling within a period of 24 months (previously within 12 months and development expenditure of at least 50 per cent of land cost).
‘Single blocks’ of vacant land generally refers to a block of land on which only a single dwelling could be constructed. This does not include large tracts of land (eg for the purpose of subdivision) or multiple adjacent single blocks (eg to develop a multi-dwelling apartment complex) – additional development conditions may apply to such acquisitions.
New dwellings:
The previous requirement that only 50 per cent of new dwellings can be sold to foreign persons on an ‘off the plan’ basis was removed provided developers market locally as well as overseas. Vendors are no longer required to have concurrently developed a similar dwelling in order to be able to sell a new stand-alone dwelling to a foreign person. This will be reviewed after two years.
A ‘new dwelling’ was previously defined as having never been occupied or sold; this now includes dwellings that have not been sold but that may have been occupied for no more than 12 months.
Foreign companies purchasing second hand dwellings
Foreign-owned companies can now purchase established dwellings for the use of their Australian based staff provided that they sell or rent the dwelling if it is expected to remain vacant for more than 6 months. There is no limit to the number of established dwellings which can be purchased, where required for employee accommodation.
Redevelopment of second hand dwellings:
A proposed redevelopment must increase the number of dwellings and no rental income can be obtained from the existing dwelling prior to demolition. Such redevelopments are required to demolish the existing dwelling and commence construction of the new dwellings within 24 months in line with vacant land (previously 12 months).