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Foreign investment in real estate gets tougher
The Assistant Treasurer, Senator Nick Sherry, this week announced a major tightening of the foreign investment rules as they relate to residential real estate and a package of tough new civil penalty, compliance, monitoring and enforcement measures.
The new rules will mean that foreign non-residents can only invest in Australian real estate if that investment adds to the housing stock, and that investments by temporary residents in established properties are only for their use whilst they live in Australia.
The Assistant Treasurer, Senator Nick Sherry, this week announced a major tightening of the foreign investment rules as they relate to residential real estate and a package of tough new civil penalty, compliance, monitoring and enforcement measures.
The new rules will mean that foreign non-residents can only invest in Australian real estate if that investment adds to the housing stock, and that investments by temporary residents in established properties are only for their use whilst they live in Australia.
"The new provisions ... will mean that anyone trying to flout Australia's strict foreign investment rules will face tough new penalties that will be fully enforced", Senator Sherry said.
All temporary residents seeking to purchase an existing property in Australia will now be brought within the Foreign Investment Review Board (FIRB) notification, screening and approval process.
These changes ensure that temporary residents are subject to the same process required of foreign non-residents.
In addition, temporary residents who are approved will now have to:
* Compulsorily sell the established property they have bought when they depart Australia; and
* be required, where undeveloped land has been purchased, to commence construction on that land within 24-months or have the land compulsorily sold.
"International investment that boosts the numbers of houses available for people to rent is a good thing and temporary residents living here should, within very strict rules, have the opportunity to buy a home - that's how it's always been under Governments of both persuasions", Senator Sherry said.
"But the rules have to be tough enough to make sure the system works in that way, and that's what we're delivering."
It is expected that the reimposition of compulsory notification, screening and approval at the front end, and the forced sale of properties when temporary residents leave Australia, will ensure that investment is in Australia's interests, and in line with community expectations.
"These changes will also be strictly applied to temporary residents who are here on foreign student visas", Senator Sherry noted.
Australia's foreign investment regime relies on a combination of legislation, primarily the Foreign Acquisitions and Takeovers Act 1975(FATA), its related regulations, the Foreign Acquisitions and Takeovers Regulations 1989 (Regulations) and an accompanying Government Policy (Policy). Each of these is administered by the Foreign Investment Review Board (FIRB).
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