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For foreign investors
The Foreign Investment Review Board (FIRB) have prepared a summary of
Australia's Foreign Investment Policy as it relates to acquisitions of
residential real estate in Australia by foreign interests. The policy
covers developed residential real estate, residential real estate for
development and off-the-plan purchases.
Foreign Investment Policy - Summary for residential real estate
- Previous Changes
The Federal Government implemented changes to the Foreign Investment
Review Board regulations for foreign investment in Australian real
estate, on 10 September 1999. The following is a summary.
> Increase the notification threshold for foreign investment in
existing businesses from $5 million ($3 million for rural businesses)
to $50 million;
> Remove foreign investment approval requirements for individuals, who
hold or are entitled to hold a special category visa and invest in
Australian residential real estate through Australian companies and
trusts;and
> Increase the limit for which applications for investment in
businesses are registered but are generally not fully examined from
$50 million to $100 million.
Real Estate for Redevelopment
Applications to acquire existing residences for redevelopment are
considered on a case-by-case basis. Proposals approved under this
category must provide for an increase in the housing stock, that is,
an increase in the number of dwellings.
An amount equivalent to a minimum of 50 per cent of the acquisition
cost or current market value (which ever is the greater) must be spent
on the redevelopment of the site.
> The existing residence can not be occupied prior to
demolition and redevelopment.
> Where the property is at the end of its economic life (ie,
derelict, uninhabitable) a proposal may be approved for the
construction of one dwelling.
> To demonstrate that the property is uninhabitable and must be
demolished, a valuation of the existing structures by a licensed
valuer may be required. Photographs and other forms of evidence may
also be required.
> Once construction is completed, parties notify the completion
date and actual development expenditure.
Once these conditions have been fulfilled, properties acquired under
this category may be rented out, sold to Australian interests or other
eligible purchasers, or retained for the foreign investor's own use.
Vacant land and house packages
Acquisitions of residential real estate (including vacant building
allotments and house and land packages where construction has not
commenced) for development by foreign interests are normally approved
subject to a specific condition requiring continuous construction to
commence within 12 months; once construction is completed, parties are
required to provide the completion date and actual development
expenditure. To be eligible for approval under this category it is
expected that a minimum of fifty per cent of the acquisition cost or
current market value (whichever is higher) be spent on development.
Non-residential commercial properties
Where properties are not subject to heritage listing, the notification
threshold applying to the acquisition of developed non-residential (ie,
it is not an accommodation facility) commercial properties will be
raised from $5 million to $50 million.
In addition, acquisitions of developed non-residential commercial
properties, valued between the notification threshold and $100
million, will no longer be subject to detailed examination, unless the
facts of the proposal raise issues pertaining to the national
interest.
Integrated Tourism Resorts
The policy of designating Integrated Tourism Resorts (ITRs), within
which foreign persons are permitted to acquire residential property
without restriction, will only apply to developed residential property
leased back to the resort operator to be available for tourist
accommodation when not occupied by the owner. Owners of residential
property in existing ITRs will retain their current entitlements.
Strata titled hotel accommodation
Sales will be permitted to foreign interests of strata-titled hotel
rooms in designated hotels where each room is subject to a long-term
(10 years or more) hotel management agreement. The hotel management
agreement must limit the owners' rights to an income stream, not
occupancy. The management must retain ownership of the common
property. In addition, owners will not have the right to opt out of
the management agreement. The hotel must provide a full range of
facilities consistent with industry accepted hotel features.
Australian citizens and foreign spouses
Australian citizens and their foreign spouses purchasing as joint
tenants will no longer be required to seek approval for purchases of
residential property in Australia.
Foreign trustees acquisition of interests in urban land
Exemption will be given for the acquisition of interests in Australian
urban land by foreign-owned responsible entities acting on behalf of
managed unit trusts and other managed public investment schemes
registered under Chapter 5C of the Corporations Law, where they are
investing for the benefit of fund investors or unit holders ordinarily
resident in Australia. This is consistent with the rules applying to
foreign-owned life insurers and superannuation funds.
If you would like to
receive more details regarding Australia's Foreign Investment
regulations... simply click on the link
below to access our request form and tell us what sort of properties
you are interested in.
> Request form <
...or send us an email by clicking on our email address
below
>
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