The government has announced changes which will allow foreign investors to purchase off the plan properties if another foreign buyer is unable to settle.
The Real Estate Institute of Australia (REIA) believes these changes will benefit other investors in off the plan property and welcomes this change.
Previously, foreign buyers were unable to purchase an off the plan property in this scenario, due to the property being considered an established dwelling. Under the current regulations, foreign buyers can only buy brand new dwellings such as off the plan apartments.
The new changes now means that in the event of a foreign buyer unable to complete settlement, this dwelling will revert to its previous status – that being, a new dwelling.
This new policy will reduce the number of issues that foreign investors face when buying off the plan as well as allow the developer to resell properties that were originally bought by foreign investors.
The changes were first brought to the government’s attention in October 2016 by the REIA and the changes have been quickly brought into action. For individual applications made by potential purchasers, this policy change will be implemented immediately. Further regulation changes will soon be made which will allow developers to acquire New Dwelling Exemption Certificates for the foreign investors of these recycled off the plan properties.
The Commissioner of Taxation has advised that no compliance action will be taken against person who, if not for a failed settlement preceding their purchase, would otherwise have been covered by an existing New Swelling Exemption Certificate until the regulations come into force.
According to Neville Sanders, president of the REIA, “This is most welcome news and will minimise the negative impact of off-the-plan sales to foreign purchasers not being completed.”
“By eliminating an element of risk, this change will encourage developers to continue to add to the supply of housing which is much needed and the intent of the FIRB arrangements,” said Mr Sanders.
"The government has addressed an anomaly in the FIRB rules in a pragmatic way. It is a common sense approach to not treat a dwelling that has just been built and for which the title has not changed as an established dwelling,” he said.
Foreign investors play an integral role for the building of new developments in Australia and without foreign investment, many new projects simply would not proceed as it would not be financially viable for local developers.
So what does foreign investment do?
- Helps increase the supply of new housing
- Improves our economy by boosting infrastructure, productivity and employment opportunities
- Increases the number of rentals available
- Supports the local community
- Makes housing more affordable for more Australians
To learn more about buying property as a foreign investor, and how these new changes could affect you, why not speak to one of our expert Property Consultants at iBuyNew. Give us a call today on 1300 123 463
to find out more.
Published on 1st of December 2016 by Marty Stanowich