FIRB Changes for real estate purchases in Australia
In the 2017-18 Budget, the Australian Government announced several changes regarding the foreign investment framework
50 per cent foreign ownership cap for New Dwelling Exemption Certificates
A 50 per cent cap on the total amount of dwellings a developer can sell to foreign persons under a New Dwelling Exemption Certificate has been introduced for applications made from 7:30pm (AEST) 9 May 2017. Applications submitted prior to 7.30pm (AEST) 9 May 2017 are not subject to the 50 per cent cap. For more information, see Guidance Note 8.
Annual vacancy charge
The Government will introduce an annual vacancy charge on new foreign owners of residential property where the property is not occupied or genuinely available on the rental market for at least six months each year. The charge will be equivalent to the relevant foreign investment application fee imposed on the property at the time it was acquired by the foreign investor. It will be implemented on foreign persons who make a foreign investment application for residential property from 7:30pm (AEST) on 9 May 2017.
Foreign persons who are purchasing in a development which has a New Dwelling Exemption Certificate will be subject to the charge where the acquisition was made after 7.30pm (AEST) on 9 May 2017. Investments approved prior to this time will not be subject to the charge.
Ten per cent increase to residential application fees
Application fees for foreign purchases of residential properties valued at less than $10 million will increase by 10 per cent on the current fees, effective 1 July 2017. This increase will fund the establishment of the Critical Infrastructure Centre within the Attorney-General’s Department (announced 23 January 2017) and strengthen the review process for foreign investment within the Treasury.
Streamlining Australia’s foreign investment framework
The Government will introduce a range of amendments that will reduce the requirement for investors to seek multiple approvals for similar low risk transactions, amend the commercial fee framework to improve transparency and consistency, and improve the treatment of low risk commercial transactions to enable the system to operate more efficiently and reduce regulatory burden.
The amendments will take effect from 1 July 2017, and were developed with stakeholders and following public consultation on options to improve the foreign investment framework.