Changes to FIRB Exemptions for Sales of Residential Property
By Daniel Goldberg, Special Counsel
23 July 2010
Summary
Recent changes to the Foreign Acquisitions and Takeovers Regulations (1989) (Cth) remove an exemption that applied to temporary residents buying residential land in Australia.
Unless such a buyer qualifies for another exemption, they are now required to notify the Treasurer (through the Foreign Investment Review Board (FIRB)) of the acquisition, and the usual time frames for FIRB approval apply.
Exemptions from compulsory notification of acquisitions of Australian urban land
- Under the Foreign Acquisitions and Takeovers Act (1975) (Cth), a foreign person must notify the Treasurer (through FIRB) before it enters into a contract to acquire "Australian urban land", and must allow up to 40 days from notification before the purchase obligation in the contract becomes binding.
This obligation is commonly addressed by including in the sale contract a condition precedent allowing for FIRB approval. - The Foreign Acquisitions and Takeovers Regulations (1989) (Cth) exempt certain acquisitions of Australian urban land from the compulsory notification regime.
- Previously, an acquisition of residential zoned land by a temporary resident (or a company or trust in which they have a direct interest) was exempt from notification where the acquisition was of:
- a single residential block or vacant land zoned for no more than one dwelling, and where the foreign person doesn't have an interest in an adjoining block of vacant land; or
- an existing single residential dwelling that is to be used as the person's principal place of residence; or
- a new residential dwelling.
That exemption has now been removed. So unless another exemption applies, a temporary resident (or company or trust in which they have a direct interest) buying residential land must notify FIRB before it becomes bound to purchase.
- The remaining exemptions relating to acquisition of residential land by a foreign person are as follows:
- land on which a dwelling is under construction (or will be constructed) where FIRB has certified that the particular developer can sell the land to foreign persons (ie where the developer has pre-approval from FIRB);
- an existing residential dwelling (other than part of a hotel) where FIRB has certified that the land can be sold to foreign persons;
- land purchased by an Australian citizen not ordinarily resident in Australia; or
- land zoned residential where the foreign person holds a permanent visa or special category visa (but not a temporary visa).
- The changes took effect on 26 May 2010, and apply to any sale contract entered into on or after that date.