SYDNEY (AFP) - – Australia Saturday clamped down on foreigners buying property after complaints that a
rapid influx of Asian money had helped make its housing among the most expensive in the world.
The government reimposed tough rules relaxed in 2008 that say temporary residents need permission to buy homes
and must sell when they leave, while foreigners investing from abroad can only buy new properties.
The rules are backed by stiff new penalties including compulsory sell orders, as well as expanded monitoring
and a crackdown on real estate agents who help foreigners flout the rules.
They follow growing disquiet that ordinary Australians are being priced out of the market after a decade-long
property boom that has accelerated over the past year.
"We want to make sure that Australian working families are not being priced out of their own family homes. That
is why we have acted in the way in which we have done," said Prime Minister Kevin Rudd.
"We want to make sure that foreign speculators are not going to force up prices for Australians seeking to buy
their own home, buy their first home and we think this is the right course of action."
House prices have been red-hot in Australia's
major cities, especially Sydney and Melbourne and also Perth, centre of the country's booming minerals exports to Asia.
Victoria state, whose capital is Melbourne, smashed the billion-dollar (925 million US) weekly sales barrier
in March, while Rupert Murdoch's son Lachlan landed a record 23 million dollar property at a Sydney auction in November.
An international survey released in January found Australia's housing was the least affordable among six advanced
nations including the United States, Britain, Canada, New Zealand and Ireland.
Australia's opposition has said foreign investors are outbidding locals at house auctions, while media reports
refer to cashed-up Asian buyers snapping up homes for their children studying in the country.
However experts also blame a lack of housing supply and say government hand-outs, including grants for first-time
buyers, have inflated prices.
Amendments to the Foreign
Acquisitions and Takeovers Act 1975
On 12 February
2010, the Foreign Acquisitions and Takeovers Amendment
Act 2010 received Royal Assent. It clarifies the operation of the Foreign Acquisitions and Takeovers Act 1975 to
ensure that it applies equally to all foreign investments irrespective of the way they are structured. The amendments are
intended to capture complex investment structures which may provide avenues of control beyond that provided through traditional
shares or voting power. The amendments apply retrospectively, from the date of the Treasurer's announcement (12 February 2009).
The Government has also made Regulations to coincide with the amendments. The Regulations will ensure that Australian companies are not inadvertently
treated as foreign companies under the Act by virtue of the expanded definition of substantial interest.
Changes to Foreign Investment Policy - Monetary Thresholds
22 September 2009, the Government made changes to Australia's foreign investment screening framework.
It replaced the four lowest thresholds for private business investment ($100 million,
$110 million, $200 million and $219 million) with a single threshold of 15 per cent in a business worth
$219 million. The Government committed to index this threshold annually. As such, it was increased to $231 million on 1 January
The Government also abolished the requirement that private investors notify proposals to establish
a new business in Australia valued above $10 million.
Changes to Foreign Investment Policy – Residential Real Estate
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
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);
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.
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.
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.
companies purchasing second hand dwellings
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.
second hand dwellings
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).
FROM 31 MARCH 2009 THE REGULATIONS CHANGED AS FOLLOWS:
Temporary residents’ exemption
Temporary residents are no longer required to notify proposed acquisitions of:
an established dwelling to be used as their principal place of residence
(not for investment purposes);
any new dwellings; and
blocks of vacant residential land (other acquisitions of vacant land will require
notification and will normally be approved subject to development within 24 months).
The exemption applies to contracts entered on or after 18 December
2008 (the date that the Assistant Treasurer announced the policy changes) - that is, notification
is not required even if a temporary resident signed/exchanged contracts to purchase such property before the Regulations
were amended on 31 March.
The exemption includes acquisitions of
property by temporary residents via their trust or Australian incorporated company.
The existing notification requirements continue to apply to non-residents, who must
notify all proposed acquisitions of residential real estate.
facilities such as hotels, motels, hostels and guesthouses are treated as commercial real estate rather than residential real
estate. Acquisitions of such facilities – or individual units within them – valued below the relevant developed
commercial property threshold are exempt from the FATA and do not require notification and approval.
See Accommodation Facilities for further details.
administrative procedures have been established for non-resident foreign persons, foreign-owned companies and trust estates
to notify and receive approval for proposed acquisitions of residential real estate which meet the eligibility criteria. New
application forms and statutory notices have been introduced to facilitate the streamlined procedures. See How to apply for further details.
The Foreign Investment Online Application System (FIOLA) is no longer available.
Applicants must download and print the new application forms, then email or fax the completed and signed forms to FIRB - please
note that applications submitted on the old forms from 31 March 2009 will not be valid. In the coming months, we expect
to further streamline the process to allow for electronic lodgement of applications.
As the administrative procedures are streamlined, the current system
for developers seeking advance approval to sell new dwellings to foreign persons will be discontinued. Until further
notice, the pre-approval arrangements that have been operating for some time will continue to operate on a case-by-case
basis. Please contact FIRB for specific advice.
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