Updated FIRB Guidance on Foreign Investment
The Foreign Investment Review Board (FIRB) have released guidance on the changes to FIRB approvals that were flagged by the Federal Treasurer in response to COVID-19.
Since the changes were announced, the Property Council has been committed to engaging Treasury on the impact the changes will have on the property industry and the economy.
Under the temporary changes, all real estate investments by foreign persons will require a FIRB approval. This is down from the previous approval threshold of $275 million or $60 million for sensitive land. Real Estate investments requiring approval include all property transactions as well as most leases undertaken after 10.30pm 29 March 2020.
All foreign persons proposing to acquire an interest in an aged care facility, a retirement village and certain student accommodation must also notify the Government to get prior approval, unless the proposal falls within certain exemptions.
To process the anticipated increase in applications, FIRB has extended the approval timeframes from 30 days until 6 months. FIRB has also installed administrative measures to expediate the processing of applications, with priority being given to applications for investments that protect and support Australian businesses and jobs.
A FIRB approval is not required when a lease is being extended or renegotiated to lower or defer rental payments, particularly when adjustments are temporary and have been made in response to COVID-19.
The Property Council welcomes the additional clarity provided in the guidance note, particularly the clear message that Australia is open for investment and the proactive resourcing steps being undertaken by FIRB to enable them to meet commercial deadlines.
However, there are several issues that should be clarified further – particularly in relation to the treatment of leases and commercial real estate investments. We also remain acutely sensitive to the uncertainty that these announcements place on commercial transactions, at a time of already heightened risk.
To view further information on the FIRB changes to the foreign investment framework, please click here.