The federal government has announced changes to the foreign investment framework that will allow foreign buyers to purchase an off-the plan dwelling when another foreign buyer has not been able to settle on it.
The move comes amid concerns that rising numbers of failed settlements of off-the-plan apartments, which would no longer be considered 'new' and therefore not available to foreign buyers, could result in a glut of apartments with fewer buyers, and have severely negative consequences for the sector.
A statement from the government said, "This action will ensure that markets will not be impacted negatively by an increased amount of off-the-plan sales, particularly from foreign purchasers, not being completed."
The apartments in question would still be considered new, and so available to foreign purchasers, according to the new rules.
"It is common sense that an apartment or house that has just been built, or is still under construction and for which the title has never changed hands, is not considered an established dwelling," said the government statement.
The change is effective immediately.
“This is most welcome news and will minimise the negative impact of off-the-plan sales to foreign purchasers not being completed", said Neville Sanders, President of the Real Estate Institute of Australia.
Sanders said the REIA approached the government on the issue in the middle of October, and applauded the government for achieving an outcome in such a short time.
“The Government needs to be commended in the promptness with which it responded to industry approaches on this matter," he said.
"The Government has addressed an anomaly in the FIRB rules in a pragmatic way," said Sanders. "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.”
The change was also welcomed by the Real Estate Institute of Western Australia.
REIWA CEO Neville Pozzi said Australia’s national real estate body, the Real Estate Institute of Australia, was instrumental in getting the changes made, and that the changes were particularly significant in Perth.
“Off-the-plan developments are very prominent in Perth, so these changes will have a big impact on our local real estate industry" said Pozzi.
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