Are you a property developer mid-way through your apartment build?
Have you decided not to apply for an exemption to the new OIO requirements (and save the $25,500 fee)?
You might want to consider encouraging your buyers to nominate this month. This is because of the changes to the Overseas Investment Act. They come into effect on 22 October 2018.
If you don’t intend to apply for an exemption to the requirements, any overseas person, or associate of an overseas person who acquires an interest in your residential development after that date, will require the consent of the Overseas Investment Office.
Any acquisition pursuant to a current agreement will not be subject to the new law, but consider the position of a nominee. That’s not yet clear.
The legislation becomes relevant when a party “acquires an interest” in residential property.
In relation to the brightline test, similar language has been interpreted as meaning that, where the agreement entered into is a pre-sale contract, a nominee “acquires an interest” in property at the date of the nomination. You will need to form a view on whether that will be the case in relation to the Overseas Investment Amendment Act 2018.”
The OIO office said in a presentation to lawyers that they will treat nominations to related parties and nominations to third parties differently. In any event, a practical approach might be to encourage buyers to complete any nomination prior to 22 October 2018.
By Debra Dorrington