The Australian Government has announced extensive proposed changes to the laws around foreign investment which will take place from 1 December 2015, subject to the passage of the Foreign Acquisitions and Takeovers Legislation Amendment Bill 2015.
This Bill recommends extensive changes to the current foreign investment laws, which we expect will result in both positive and negative consequences for foreign investors. The changes will also affect real estate agents in their capacity when they act for foreign investors.
The changes are aimed in part at strengthening the powers of the Government in the enforcement of foreign investment laws. The changes will impose greater scrutiny measures which will mean an increase in compliance procedures to be followed by foreign investors.
What are the Changes?
As a general overview the proposed changes:
Generally, agents are not in a position to explore the personal details of potential buyers of property, such as whether the buyer is a foreign investor. As an example where a buyer signs a contract at auction it may be difficult for agents to develop an agency relationship before the purchase, yet alone delve into the personal background of a purchaser. Lawyers and accountants are generally better positioned to assess a client’s background in this respect.
While the threshold does require ‘‘knowledge’’ that a foreign investor is not qualified to purchase property, what constitutes ‘‘knowledge’’ is not clear. Accordingly, real estate agents in particular need to be careful and take some responsibility in ensuring buyers are qualified to purchase property under the new laws, or they may risk opening themselves up to criminal and civil penalties.
Introduction of fees
Currently there are no costs involved if a foreign investor applies to the Foreign Investment Review Board (FIRB) for approval to purchase property in Australia. From 1 December, fees will be applicable to all foreign investment applications. The following link to the FIRB frequently asked questions section of their website contains a list of the applicable fees under Item 13 "Foreign Investment Framework – Reform Package" (May 2015) - http://www.firb.gov.au/content/faq.asp
If you are a foreign investor looking at purchasing Tasmanian Property and need assistance, or would like more information, please call us on (03) 6332 9353 or complete our simple form that can be found at http://www.cormistonlegal.com.au/contact
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