Make your own free website on

Case Studies

Tightens rules April 2010
Home | Years in Property | SOUL (BELIEVE IT OR NOT) | Writing | Roots of all EVIL | MC | Late Submission | Entertainment | FreeWorkshop | Loan Rejects | New Rules | Condo Defects | 33 Conditions of Sale 1999 | Area Shortage | Lawyers Cannots | Foreigners/PR Seekers | Illegal Addition/ Alteration | Caveat | Maintenace Fee | Flat-seller Died | Forged Signature | Market Prices Went Up! | Agents jailed | Agents Awarded Double | Cheque Bounced | Verify Ownership | Malaysia | Thailand | CheckList | EnBloc | Option To Purchase | Australian Properties

 Tightens rules April 2010


AFP - Saturday, April 24


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


On 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 2010.


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.




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).




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


single 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.


Accommodation facilities


Accommodation 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.


 Streamlined administrative procedures


Streamlined 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.


Viewing PDF files


To view a PDF file you may need to download a program like Adobe Reader Adobe Reader Download
If you are experiencing difficulty in downloading forms, please contact us

Enter supporting content here