Home Property Australia Another sensible change to the foreign investment framework

Another sensible change to the foreign investment framework

  • November 30, 2016

Another sensible change to the foreign investment framework 

The Government has announced common sense changes to the foreign investment framework to treat dwellings sold off-the-plan to a foreign purchaser but that fail to settle as new dwellings for the purposes of finding another buyer.

Following advocacy from industry, including the Property Council, the changes announced on the weekend will mean that developers are not limited in their ability sell a dwelling purchased off-the-plan by a foreign buyer that fails to reach settlement.

Previously, the ‘resale’ of a dwelling off-the-plan meant it was considered an established dwelling, potentially limiting a developer’s ability to sell as foreign purchasers are restricted to purchasing new stock only.

The changes will apply immediately to individual applications by potential foreign purchasers. Applicants wishing to purchase a dwelling that is considered established due to a previous failed settlement will now be assessed as if the application were to purchase a new dwelling. All other requirements remain unchanged.

The current New Dwelling Exemption Certificates used by many developers as a ‘pre-approval mechanism’ for particular developments will also be affected, although this will require a regulation change. Once enacted, the change will enable developers to acquire a certificate that covers persons purchasing a dwelling that is considered established only because of a previous failed settlement.

The Property Council has welcomed these changes as practical solutions that will help minimise risks to the supply of new housing in Australia. The policy changes will help limit the negative impacts of any increase in off-the-plan sales not being completed, particularly by foreign purchasers.

We also commend the Government, the Treasury and the ATO for their continuing engagement with industry and responsiveness to resolving the unintended consequences of the new foreign investment framework. Information on the changes can also be found on the Foreign Investment Review Board website.