Foreign Acquisitions and Takeovers Regulations 2010 (No. 2): Reintroduction of notification requirement for temporary residents purchasing residential real estate – Post-implementation Review – Treasury

27 February 2013

Australia’s foreign investment laws generally require foreign persons to notify the Government in advance of acquiring interests in Australian land, including residential real estate. In 2008, amendments were made to the foreign investment review regime which exempted temporary residents from notifying certain acquisitions of residential real estate. In broad terms, acquisitions by temporary residents did not require notification provided they were acquiring land on which to build a single dwelling, purchasing a new house, or an established house in which to live. In April 2010, the then Assistant Treasurer, the Hon Senator Nick Sherry MP, announced the reintroduction of the notification requirement for temporary residents seeking to acquire residential real estate in Australia. A Regulation Impact Statement was not prepared by Treasury for that decision. Consequently, a Post-implementation Review (PIR) was required to be undertaken in line with the Government’s best practice regulation process. Under the notification regime, the conditions that apply to acquisitions of residential real estate broadly correspond with the criteria that underpinned the previous exemption. However, where temporary residents acquired vacant land, the notification regime now requires them to commence continuous construction within two years. Where temporary residents acquire established houses, they are required to sell them if the house ceases to be their primary place of residence. The notification regime facilitates more robust monitoring of compliance by temporary residents of the relevant eligibility requirements when buying residential real estate. It also facilitates transparency by enabling collection and publication of data on real estate acquisitions by temporary residents. Since the implementation of the reforms, consultation has indicated that compliance costs for individuals have been modest. The PIR was prepared by the Treasury and assessed as adequate by the Office of Best Practice Regulation.