On Sunday 10 December 2023, the Treasurer announced changes to foreign investment fees in order to strengthen Australia’s foreign investment framework and to further encourage foreign nationals to buy new property instead and help to ensure that those who do get approval follow the rules.
The changes are discussed briefly in this blog, as the Bill proposing to amend the current foreign investment framework was only introduced on 7 February 2024, therefore further information and updates are yet to come and this is bill is meant to commence the later of 1 April 2024 or the day after the Bill receives a Royal Assent.
Purchase of Established Dwellings
One of the changes is for the FIRB application fees to increase for the purchase of established dwellings and the increase will be roughly three (3) times higher than the current amount.
For more information on obtaining FIRB approval on established dwellings, you can click on this link to be directed to our previous blog.
Vacancy Fees for dwellings purchased since 9 May 2017
Foreign owners of residential dwellings are required to lodge a yearly vacancy fee return within 30 days of the end of each vacancy year if a foreigner owner made an FIRB application for residential property after 7:30 pm AEST on 9 May 2017 when:
- their dwelling is not occupied; or
- their dwelling is not genuinely available to rent out for a continuous period of 30 days or more
for a period of at least 183 days within a 12-month timeframe.
The vacancy fee may also apply where a foreign person failed to submit a foreign investment application but purchased a residential property before 9 May 2017.
The increased vacancy fees will encourage foreign investors to make their unused properties available to renters.
Enhancement of the ATO’s compliance regime
Another change will be the enhancement of the ATO’s compliance regime to ensure foreign investors comply with the rules, including selling their residence when required.
More information on when selling an existing dwelling is required can be found in our previous blog.
Build to Rent Projects
The government will also make a change by applying the commercial fee schedule for foreign investment in eligible Build to Rent projects, instead of the residential fee schedule. This will make sure foreign investment application fees for Build to Rent projects are at ‘the lowest commercial level – no matter the kind of land involved’.
The Build to Rent investors currently may pay different and higher fees depending on the projects on different types of land, but the new regime with lower the fees for these types of investments to help ensure that the foreign investment framework is consistent in order to encourage more development of this sort to assist with future rentals for Australians.
The application of commercial foreign investment fees to all future Build to Rent projects will apply after 14 December 2023.
How do you know if these changes apply to you?
The Government intends to introduce legislation this year to implement the new fees.
FIRB rules and legislation are very complex, so it is important that you contact us for advice before submitting an offer on a property to ensure that you’re aware of the costs and conditions involved with each purchase.
Contact our office today for further assistance with FIRB or other property enquiries.
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