MAJOR FIRB CHANGES BEGINNING 2021!SUPPORTING FOREIGN INVESTMENTS INTO AUSTRALIA

 

In response to the Covid-19 Pandemic, the Australian Government has imposed increased requirements on Foreign investments into Australia on 21 or 29 March 2020.  However, new unexpected changes to the Foreign Investments Review Board were implemented beginning 1 January 2021 which lifted the previous restrictions, reverting to pre-covid situations and more.

 

These changes will make it easier for foreign investors to invest in Australia, and we have summarised the important aspects of the changes below:

 

In 2020, the Australian government temporarily reduced notification thresholds for commercial acquisitions to $0 due to Covid-19. All foreign investments and purchases will be required to obtain FIRB approval, creating lengthy delays with approval timeframes extended up to 6 months. In the unstable economy, the government intended to provide appropriate oversight over all proposed foreign investments to protect and support Australian businesses and Australian jobs.

Starting 1 January 2021, the notification thresholds for commercial acquisitions prior to the Covid-19 amendments have been reinstated and investors NO LONGER need to obtain approvals for commercial acquisitions below the notification threshold. This benefits foreign small business owners and commercial property investors, who will not need to obtain FIRB approval prior to their investments which, saving valuable time and costs. 

This shows that the Government wants to increase the amount of foreign investments into Australia and are optimistic that Australia is still an attractive investment destination. Having more investments into Australia will help boost the economy after the pandemic and create more jobs for the local community while injecting more money back into the economy.

Under the new changes, the FIRB also has increased powers regarding National Interests. A mandatory FIRB approval will be needed if the acquisition involves a notifiable national security action, and the FIRB are also able to impose new conditions or vary present conditions even after FIRB approval in certain situations.

 

Conclusion

With the announcement of Covid vaccinations being available to Australians soon, the country is on its way to recovery from the pandemic. Through the recent changes to the FIRB approvals, the Government is encouraging more foreign investments to kick-start the economy’s growth.

This is a good time for Foreign Investors to take advantage of the reinstated thresholds to invest in Australian land and businesses efficiently and effectively. However, Investors will also need to be aware if their acquisitions are related to national security, as these investments may be imposed with further requirements. Despite the current unpredictable pandemic situation, Foreign Investors can remain positive that the Australian Government will continue to welcome foreign investments and may even introduce further measures to stimulate further investment activities.


 If you have any queries regarding FIRB approvals, please do not hesitate to contact us at any time at 02 9267 4988 or Vincent.hui@sunlaws.com.

 

DETAILS OF VICTORIA’S NEW LAND TRANSFER DUTY WAIVER UP TO 50% RELEASED! Foreign Purchasers? YES!

Details for the Land Transfer Duty (or Stamp Duty) waiver announced at the State Budget has been released, and the Victorian Government has given all purchasers an early Christmas present by providing a Stamp Duty waiver of up to 50% for ALL purchases in Victoria!

This means that there are no limits to where the property is situated, and any residential property valued up to $1 MILLION signed in the period of 25 November and 30 June 2021 can receive the following waivers:

  1. New residential properties – 50% waiver
  2. Existing residential properties and Vacant Residential Land – 25% waiver

Additional benefits

There are additional benefits that will sets this waiver apart from other concessions in Victoria:

  1. The waiver can be used in conjunction with all other concessions in Victoria, such as the first home buyer duty concession, principal place of residence concession, off-the-plan concession, and pensioner concession, which can all be combined with the waiver.
  2. Unlike other concessions such as the Homebuilder Grant or First Home Owner Grant, the waiver is not limited to one property and can be used for multiple purchases.
  3. The property does not need to be your principal place of residence and may be an investment property.
  4. Settlement does not need to be within the signing period, therefore off-the-plan apartments can also enjoy the Stamp Duty waiver. The eligibility is based on dutiable value and the property value can be much higher.

Foreign Purchasers? YES!

An additional good news is that the waiver is not limited to local purchasers and will also apply to foreign purchasers. In all the recent Covid-19 government support provided, this is the first scheme that benefits foreign purchasers, and more states may follow in their footsteps to open their benefits to foreign purchasers.

However, the waiver does not reduce the amount of surcharge duty required to be paid by foreign purchasers.

 

As a summary, we have created the following table for your ease of reference:

Type of property New Residence Existing Residence Vacant Land
Stamp Duty Waiver 50% 25% 25%
Property Threshold Below $1 Million in dutiable value
Contract Signing Period Between 25 November 2020 and 30 June 2021
Eligible purchasers Both Foreign and Local Purchasers

 

As the lockdown has not been lifted, many Victorians may spend the holiday period looking for new properties to make use of this rare opportunity to obtain savings on property purchases that will not be available at any other time. For more information on how to make use of the current concessions, or the application process, please do not hesitate to contact us at 02 9267 4988 or Vincent.hui@sunlaws.com at any time.

HOMEBUILDER SCHEME UPDATE – EXTENDED DATES AND INCREASED AVAILABILITY!

On the 29th of November 2020 the Australian Government announced an update to the Homebuilder Scheme in order to further stimulate the property market, aiming to create jobs and boost economic activity.

 

homebuilder

 

As a refresher, the Homebuilder Scheme provides a monetary grant to applicants who have carried out the eligible works of either renovating existing property or building new property.

The personal criteria for the applicant remain unchanged, and you must fulfil the following:

  1. Be an Australian Citizen aged 18 and above;
  2. If applying as an individual, annual income must not exceed $125,000; and
  3. If applying as a couple, combined annual income must not exceed $200,000.

However, the Government has introduced many changes benefiting Australians looking to take advantage of the Homebuilder scheme.

Grant Period Extension

Previously, contracts must be signed between 04 June and 31 December 2020 to qualify for the Homebuilder Scheme (the Initial Scheme). This deadline has been extended to include contracts signed between 1 January and 31 March 2021 (the Extended Scheme). While the grant amount for the Extended Scheme has been reduced to $15,000, it still provides a good opportunity for people looking to build or renovate to obtain the grant if they missed out on the initial deadline.

Application Deadline

The Application Deadline has also been extended from 31 December 2020 to 14 April 2021. Both applicants for the Initial Scheme and the Extended Scheme now have extra time to prepare their applications.

Increased Price cap

Under the Initial Scheme, the property value for new builds were capped at $750,000. This cap has been increased to $950,000 in NSW and $850,000 in Victoria for the extended Scheme. The higher cap works hand in hand with the increased threshold of the First Home Buyer Assistance Scheme to help first home buyers afford their first property. Secondly, the increased cap covers off the plan apartments as well as land and build contracts of better locations and bigger sizes, enticing more potential buyers to take advantage of the Scheme.

A detailed summary of both the Initial and Extended Scheme can be found in the table below provided by the Treasury.

 

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If you have any questions regarding your eligibility or the application process, please do not hesitate to contact us at Vincent.hui@sunlaws.com or 02 9267 4988.

Code of Conduct for Short-term Rental Accommodation – More regulations for Airbnbs?

NSW Fair Trading has introduced the Code of Conduct for Short-term Rental Accommodation to cover the commercial letting of residences up to 3 months at a time, mainly covering holiday letting and Airbnbs. The Code of Conduct will be in effect from 1 June 2021 onwards, affecting all parties involved in these short-term rental arrangements.

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Due to the Covid-19 pandemic lockdown, many Australians are choosing to travel domestically to scratch the itch to travel. This has brought an influx of visitors to rural destinations and boosting demands for short term letting. When the travel restrictions are removed, there will also be increased amounts of visitors from all over the world travelling to Australia for leisure.

The Code of Conduct to protects both Guests and Hosts in these short-term rental agreements. With the extra protection, Guests feel safer to travel to different places while Hosts will be more confident in hosting their properties, kickstarting economic activity within the tourism sector.

 

Airbnb-co-host

 

We have condensed the additional requirements for Hosts and Guests below:

Hosts

  1. Hosts must now register themselves and the premises on the premises register, and display the registration number on the booking platform.
  2. Premises must be consistent with the representations made on the advertisements.
  3. Hosts must have insurance to cover liability for third party injuries and death.
  4. Hosts or their representative must give clear contact details and be readily contactable.
  5. Hosts must give inform Strata or the Owners Corporation that they are engaging in short term letting and provide contact details.
  6. When contacted, the host must address any concerns raised in a timely manner.

Guests

  1. Must not engage criminal conduct, contravene by-laws, or the terms of the short-term rental accommodation.
  2. Must not create noise that would disrupt or interfere with the peace or comfort of neighbors and other occupants.
  3. Must not act in violent or threatening manner.
  4. Interfere with the use or enjoyment of common property by neighbors or other occupants.
  5. Must not intentionally, recklessly or negligently cause damage to private or public property.
  6. Must take reasonable care of the host’s premises and property.
  7. Must notify host or host’s representative of any disputes or complaints immediately.

 

Exclusion Register

The commissioner has the following powers when met with a complaint:

  1. Issue a warning notice.
  2. Issue a direction to impose conditions or restrictions on the property or the person.
  3. Record a strike against a host or guest; any guest or host that has received two strikes within 2 years will be added to the exclusion register.
  4. Record a host or guest on the exclusion register.

Any hosts or guests on the exclusion register will be unable to participate in short term letting for 5 years.

 

Conclusion

With the recent pandemic, many Australians have been trapped at home for months and the gradual release of restrictions will increase the level of domestic tourism. If you are thinking of becoming a host, or planning to travel as a guest, you will need to be aware of the new Code of Conduct. If you encounter any disputes under the Code of Conduct, or would like to enquire more about short-term letting, please contact us at vincent.hui@sunlaws.com or 02 9267 4988 at any time.

 

Homebuilder Grant: A Quick Guide to Building Contracts and frequently asked questions

The Federal Government recently announced the Homebuilder scheme, offering $25k cash grant to all eligible Australians who wish to build new homes. While the chance to design and build your own house is attractive, the thought of building a home from scratch may seem like a daunting task to most people.

Design-and-Build-Contract

There are three main ways homeowners may choose to build their own property:

  1. Purchasing a House and Land Package;
  2. Demolishing an existing house and building a new property; and
  3. Building on vacant land.

A land and build package will allow you to purchase a plot of land from a vendor who will also manage the future construction of your house. This package offers you the peace of mind as the vendor will manage and ensure that your home is built on time, with no additional cost.  Land and build packages have the advantage of additional stamp duty savings, while also allowing you the flexibility to choose your property design.

Alternatively, if you wish to design a house from scratch, you can engage a builder to assist you after you have purchased a plot of land.

 


 

We have compiled some Frequently Asked Questions for your consideration.

 

  1. What happens if the builder fails to complete on the date of completion?

Builders are liable to pay liquidated damages for each day after the intended date of completion. However, Builders usually account for any possible delays in constructions and provide a buffer between their estimated completion date and the date of completion.

 

  1. Can the builder use different materials without telling me?

No, the builder must give you a written notice asking for a variation of materials, your written and signed consent is needed. You may reject the variation but must not unreasonably withhold consent especially if the variation request is made in accordance with legislative building requirements.

 

  1. What happens if I find out that the property is inhabitable after moving in?

There are various statutory warranties that are implied into the building contract, warranting that the property is fit for occupation at completion. You may seek an order to rectify any defects in your property for no cost if the defect occurs within the warranty period. For NSW, the warranty period is 6 years after the date of completion.

 

  1. Do I have to pay the full price of the building contract upfront before construction commences?

No, you are not required to pay the full amount upfront. Builders are only permitted to request for progress payments, which are partial payments made at different stages of the construction process, reflecting the work completed up until the point of invoicing.

 

  1. What if the building is different from the plans provided?

If the building on completion is different from the plans initially agreed on, you can lodge a complaint with the respective state tribunals. Each complaint will be assessed on its own merit and evidence provided. If successful, the court may order the builder to pay compensation or rectifications at no cost.

 

If you have any questions regarding a build contract or property, do not hesitate to contact us at any time at 02 9267 4988 or Vincent.hui@sunlaws.com