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The Foreign Ownership Laws have undergone some drastic changes in the last few years with the aim of increasing foreign investment to support property prices.
What Are Australia’s Foreign Ownership Laws?
The laws require buyers who are classified as foreigners to seek government approval via the Foreign Investment Review Board before buying property in the country. The board examines applications and then makes relevant recommendations to the government under the country’s foreign investment policy.
The whole idea is to encourage increase in the supply of housing through foreign investment without increasing house prices. The increased demand for established housing stock usually drives up housing prices for Australians, locking some residents completely out of the housing market.
The overall aim is to protect national interest so that foreign investments may be screened and those found not to be in national interest can be blocked by the Australian government.
Who does the law apply to?
A foreign person must first seek consent from the board before buying a property. Typically, a foreign person is defined as someone who is not ordinarily a resident in the country, such as student visa holders and overseas investors.
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If you’re an Australian citizen living overseas, or you hold permanent visas, you are exempt from approval requirements.
What’s new with the laws?
In 2008, the Federal Government announced administrative and policy changes to the screening arrangements for foreign investors, making it easier for overseas buyers to purchase property in Australia. The aim is to simplify the process, streamlining it and reduce costs for both foreign businesses and foreign residents.
Here’s what some of the laws entail:
- New dwellings – provided developers market locally and overseas, new dwellings may be sold to foreign persons off plan.
- Second-hand dwellings – student visa holders in the country no longer have to incur a $300,000 limit in the value of a dwelling purchased as their place of residence. What’s more, foreign-owned companies are allowed to buy established dwellings for the use of their staff based in the country provided they sell or rent the property should it remain vacant for more than 6 months.
- Vacant residential land – trust estates, foreign-owned companies and non-resident foreign persons who buy single blocks of vacant land are required to build a dwelling within 24 months.
Why were changes made to the laws?
According to the Australian government, it doesn’t expect the changes to have any effect on housing prices. But, these changes are expected to assist in the sale of new unit developments by reducing compliance burdens on developers who seek pre-approval and also lifting restrictions on the sale of new units to non-Australian residents.
Foreign investors are encouraged to seek the help of property lawyers River City Conveyancing if they wish to buy property in the country.
What’s the effect on the property market?
The changes to the country’s Foreign Ownership Laws do indeed allow for an increase in the number of foreign property owners in Australia.
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