The Australian Government has announced a relaxation in its policy affecting the purchase of real estate by temporary residents living in Australia.
Currently, all temporary residents and non-residents (including businesses) must notify the Australian Government through the Foreign Investment Review Board of their intention to acquire residential real estate, and must comply with post-purchase conditions on its use, development and resale.
The Australian Government considers that:
“The current arrangements have not been updated since 1989 and are consequently poorly targeted. They restrict housing market flexibility and impose unnecessary costs and delay on around 7,500 foreign residents and businesses receiving approval each year. Residential real estate comprises more than 92 per cent of applications received each year by the Foreign Investment Review Board.
The changes will streamline notification arrangements, reducing post purchase conditions on the development of single blocks of vacant land, and aligning the definition of temporary residents with contemporary visa categories.
Restrictions aimed at encouraging the supply of new dwellings and preventing excess demand in the housing market will be retained, for example, the rule requiring nonâ€‘residents to purchases new rather than buying existing dwellings.”
From the 18th of December, 2008:
Temporary residents purchasing second hand dwellings
The definition of â€˜temporary resident’ includes all foreign persons living in Australia on a valid visa, irrespective of the expiry date of that visa. This includes people on bridging visas pending the outcome of a substantive visa application (eg if they have applied for permanent residency) but, for example, does not include short-term visitors such as tourists, business people and those here for a medical procedure.
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).
The conditions previously applied to acquisitions by temporary residents of single blocks of vacant residential land no longer apply (such acquisitions will be exempt after the Regulations are amended in early 2009).
â€˜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 existing requirement that only 50 per cent of new dwellings can be sold to foreign persons on an â€˜off the plan’ basis has been 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 â€˜new dwelling’ is currently defined as having never been occupied or sold; this now includes dwellings that have not been sold but that have been rented out 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), and development expenditure must be at least 50 per cent of the purchase price of the property.
From February 2009 – Subject to Approval of Amendments to the Applicable Regulations
Temporary residents’ exemption
Temporary residents will not be required to notify proposed acquisitions of:
* an established dwelling for their own 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 will include acquisitions of property by temporary residents via their wholly owned trust or Australian incorporated company.
The existing notification requirements will continue to apply to non-residents, who must notify all proposed acquisitions of residential real estate.
Accommodation facilities such as resorts and hotels will be 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 ($5 million for heritage listed property, $50 million for non-heritage listed property or $953 million for US investors) will be exempt from the FATA and will not require notification and approval.
Streamlined administrative procedures
Streamlined administrative procedures will be established for foreign-owned companies, trust estates and non-resident foreign persons to notify and receive approval for proposed acquisitions of vacant residential land and newly constructed dwellings. New application forms and statutory notices will be introduced to facilitate the streamlined procedures.
Developers will no longer be issued advance approval for sales of new dwellings to foreign persons – all non-resident foreign purchasers must submit individual applications (although developers may submit these on behalf of the purchaser/s). Temporary residents will be exempt and not required to notify.
News Source : http://www.gomatilda.com.au