Off-the-plan rule changes could help foreign buyers
New changes to foreign investment rules could help ease settlement risk for off-the-plan properties.
The government has made changes to Foreign Investment Review Board (FIRB) rules regarding off-the-plan apartment resales. As property commentators warn that off-the-plan buyers could find themselves unable to settle on their properties, particularly as rules on foreign investment are tightened, the government has changed regulations to allow foreign buyers to purchase an off-the-plan dwelling when another foreign buyer has failed to reach settlement on the property.
Under previous rules, resales of off-the-plan properties were considered secondhand sales. This restricted foreign investors from buying the properties, as FIRB rules dictate that foreign buyers can only purchase newly-built properties. Real Estate Institute of Australia (REIA) president Neville Sanders has welcomed the news.
"The Government needs to be commended in the promptness with which it responded to industry approaches on this matter. Following industry concerns the REIA first approached the Government on this issue in mid-October with a result in a little over a month," Sanders said.
The REIA said the changes will apply immediately, and will allow developers to acquire New Dwelling Exemption Certificates for foreign buyers of on-sold off-the-plan properties.
"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," Sanders said.
"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."