ByLawyers News and Updates

Foreign purchasers – FED

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Ban on foreign purchasers buying established dwellings

Between 1 April 2025 and 31 March 2027, foreign purchasers are precluded from buying an established residential dwelling in Australia, unless an exemption applies. This includes persons with temporary visas and foreign-owned companies.

A foreign person is defined in s 4 of the Foreign Acquisitions and Takeovers Act 1975. See Guidance Note 2 Key Concepts published by The Treasury for further information. A foreign person can include individuals, corporations, trusts, and other entities.

The ban does not apply to newly constructed or off-the-plan properties. However existing restrictions for foreign purchasers continue to apply.

The ban applies to individuals holding temporary visas, who were previously allowed to purchase existing dwellings if they studied or worked in Australia and were approved by the Foreign Investment Review Board (FIRB). Such applications to the FIRB will no longer be approved.

Where a foreign purchaser has a Foreign Investment Review Board approval or exemption certificate issued before 1 April 2025, they can rely on it.

Exemptions

Exemptions to the ban mean that purchases are permitted:

  • by permanent residents;
  • by New Zealand citizens;
  • by spouses, as joint tenants, if one of them is an Australian citizen, permanent resident, or New Zealand citizen;
  • for investments that significantly increase housing supply or support the availability of housing supply; and
  • for properties intended for accommodation under the Pacific Australia Labour Mobility (PALM) scheme.

Issues to consider

Legal representatives need to be satisfied that foreign purchasers are aware of the consequences of contracting to buy an established dwelling if an exemption does not apply. The ATO will enforce the ban through enhanced screening of foreign investment proposals for residential properties, and penalties apply to breaches. The Government will fund the ATO from 2025-26 financial year to enforce the ban.

Publication updates

By Lawyers Conveyancing publications in all states have been updated, including the commentaries in the Purchase of Real Property guides and 1001 Conveyancing Answers. They include in-depth information on determining who is a foreign person and whether exemptions from the ban apply.

Foreign resident capital gains withholding – FED

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The foreign resident capital gains withholding tax regime is changing.

With effect from 1 January 2025:

  • the withholding rate increases from 12.5% to 15%; and
  • the $750,000 threshold is removed.

The foreign resident capital gains withholding regime applies to sales of taxable Australian property, including vacant land, residential property, and commercial property.

Until 1 January 2025, the regime applied only to properties valued at $750,000 or more. From 1 January it applies to all properties.

Buyers must withhold a percentage of the purchase price and pay it to the Australian Taxation Office (ATO) instead of to the seller unless the seller is an Australian resident and provides evidence of that fact by way of a clearance certificate from the ATO. Sellers who are foreign residents can apply to the ATO for a variation notice and potentially reduce the amount required to be withheld.

Without a clearance certificate or a variation notice, all buyers must withhold the required percentage of the purchase price, even if the seller is an Australian resident.

For sales of taxable real property before 1 January 2025, the foreign resident capital gains withholding amount was 12.5%. From 1 January 2025 it is 15%.

The effect of these amendments is that ALL sellers of real property in all states and territories, whether Australian residents or foreign residents, need to apply for a clearance certificate from the ATO and provide it to the buyer before the completion of the sale. If they do not, then the buyer must pay 15% of the purchase price to the Australian Taxation Office on settlement. For those jurisdictions with electronic conveyancing, this may be able to be done via the settlement platform.

All By Lawyers publications that cover foreign resident capital gains withholding have been updated to reflect this change. This includes the Conveyancing and Property and Estates guides in each state and territory, Retirement Villages (NSW), and 1001 Conveyancing Answers (VIC), (NSW), and (QLD).

Common seals – NSW

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Some common seals are not only back, they are here to stay!

From 30 September 2022, owners corporations and community associations can no longer execute documents by signing. Instead, owners corporations and community associations can now only execute documents using either a physical or an electronic form of their common seal.

These new requirements allowing execution via electronic seals replace the previous temporary COVID-19 measures which have applied to both strata and community schemes since June 2020.

Documents that now need to be executed under the entity’s common seals include NSW Land Registry Services instruments and dealings.

There are also new requirements relating to electronic voting at meetings for strata and community schemes. Voting can be done by electronic means and physical attendance is no longer required. However, this only applies if the notice of the meeting specifies an alternate means of voting. If votes can be cast other than in person, then the secretary of the owners corporation, the secretary of the association, or the managing agent must take reasonable steps to ensure each person entitled to vote can in fact vote and participate in the meeting.

The By Lawyers Conveyancing and Property publications, including 1001 Conveyancing Answers (NSW), have been updated accordingly.

Strata schemes – NSW

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Amendments to the Strata Schemes Management Act 2015 have commenced. They make permanent the previous COVID-related changes which permit procedural and service requirements to be met electronically.

Section 263 as amended allows owners corporations and strata managers to serve documents on owners and occupiers in strata schemes via electronic transmission.

The seal of an owners corporation can be kept and affixed electronically. The regulations can prescribe the requirements for storing the seal in electronic form, affixing the seal, and record keeping.

Owners corporations and strata committees are able to meet and vote in ways other than by physical attendance. The amendments enable the regulations to govern how voting is conducted, voting procedures and reasonable steps taken to allow participation and voting at meetings.

The amending Act provides for these arrangements to be reviewed after 18 months to assess whether the amendments assist strata schemes to operate effectively and efficiently.

The By Lawyers 1001 Conveyancing Answers publication been amended to reflect these changes, with updated links to the new legislative sections.

Retail leases – NSW

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Certain COVID-19 related arrangements for retail leases have been made permanent.

The COVID-19 and Other Legislation Amendment (Regulatory Reforms) Act 2022 No 5 preserves temporary protections for certain lessees impacted by COVID-19. This is achieved by inserting a savings provision, s 88(1A), into the Retail Leases Act 1994. This has the effect of retaining the relevant provisions of the Retail and Other Commercial Leases (COVID-19) Regulation 2022 even though it is to be otherwise automatically repealed on 14 July 2022.

The COVID-19 protections in question include:

  • Landlords cannot act against an impacted lessee failing to pay rent, failing to pay outgoings, or not being open for business during the hours required under the lease;
  • Rents cannot be increased, except for parts of rents that are calculated based on turnover;
  • Any breaches of a lease which are caused by the tenants’ compliance with Commonwealth or State COVID-19 laws are excused;
  • An obligation on both parties to retail leases to renegotiate in good faith the rent payable under the lease, based on the economic impacts of COVID-19.

The protections reflect those of the National Code of Conduct’s leasing principles. Impacted lessees are generally those who have received government assistance during COVID-19.

The amending Act also creates a new s 89, generally empowering creation of savings or transitional regulations on leases in response to COVID-19.

The commentary in the By Lawyers Leases guide and the relevant section of the 1001 Conveyancing Answers (NSW) publication has been amended to reflect these arrangements, including links to these new sections.

Property law updates – QLD

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Various property law updates have been incorporated in the comprehensive By Lawyers reference manual 1001 Conveyancing Answers (QLD)

Recent judgments which have been added include:

• Contempree v BS Investments Pty Ltd & Anor [2020] QCA 255 – A long term lease that is not registered can still be enforced.
• Legal Services Commissioner v Sheehy [2018] 1 QCA 151 – Solicitors acting on behalf of two people, such as a married couple, require authority from both clients.
• Woolford v Oliver [2017] QMC 14 – Instalment contracts carry additional obligations and duties.
• K7 Developments Pty Ltd v Abbotsford Estates Pty Ltd [2021] VSC 422 – Judicial consideration of the consequences of a contract ceasing to be a Going Concern for GST purposes after contract and before settlement.
• Re Tucker; Nunan v Aylward [2019] VSC 210 – affirming that the younger joint tenant is presumed to have survived the older joint tenant, if time of death cannot be ascertained.

1001 Conveyancing Answers (QLD) is available in all By Lawyers Queensland conveyancing and property law guides. It assists property lawyers and conveyancers to understand the conveyancing process and to solve problems for their clients. The publication receives regular property law updates.

1 January updates – All states

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1 January updates are always a big focus for By Lawyers. While the profession takes a well-earned break By Lawyers remains hard at work ensuring our publications are updated for legislative and regulatory changes that take effect from the new year.

Updates

This year’s 1 January updates for relevant jurisdictions include:

Land tax

In New South Wales and Victoria, land tax is calculated for the calendar year. Threshold values increase annually.

In New South Wales, the 2022 threshold combined land value has increased to $822,000 for all liable land. Special trusts and non-concessional companies are excepted. A marginal tax rate of 1.6% of the aggregate taxable value above the tax-free threshold, plus $100 applies from 1 January. If the aggregate taxable value exceeds the premium rate threshold of $5,026,000 then $61,876 is payable, plus a marginal tax rate of 2% over that amount.

In Victoria, the tax-free threshold for general land tax has increased to $300,000. The trust surcharge threshold remains at $25,000.

All relevant commentary and precedents in the By Lawyers Conveyancing and Property and Trusts guides for each relevant state will be updated for these new threshold amounts from 1 January.

By Lawyers Contract of sale of land

The 2022 edition of the By Lawyers contract will be available 1 January in the Sale of real property publications for Victoria and New South Wales. The contract is located in the Contract folder on the matter plan.

Leases and subleases

In New South Wales, Victoria, Queensland, South Australia and Western Australia the 2022 editions of lease and sub-lease precedents will be available from 1 January. these are found in the Leases – Act for Lessor section of each Leases publication.

Keeping up to date

In addition to our 1 January updates, By Lawyers updates our publications for 1 June and other regulated adjustments where necessary.

Of course we always update our content for relevant legislative amendments and other legal developments throughout the year, in all jurisdictions, as required.

Keeping up to date is one of the ways By Lawyers help our subscribers enjoy practice – and holidays – more!

The team at By Lawyers wishes everyone a prosperous and safe 2022.

1001 Conveyancing Answers – VIC

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The very popular By Lawyers reference manual 1001 Conveyancing Answers (VIC) has received an extensive review by our author Russell Cocks.

As part of Russell’s review, many relevant 2019 and 2020 cases have been added. These include:

1001 Conveyancing Answers (VIC) is available in all of our Victorian property law guides. This comprehensive reference work assists property lawyers and conveyancers to understand the conveyancing process and to solve problems for their clients as and when they arise. The publication includes detailed information to address issues quickly and clarify areas of uncertainty.

This cornerstone By Lawyers publication is a must have for all lawyers and conveyancers dealing with property matters and the conveyancing process in Victoria.

 

Water access rights – NSW

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A new chapter on water access rights has been added to the By Lawyers Reference Guide 1001 Conveyancing Answers (NSW).

The new content covers water access rights via licences (WAL’s) issued under the Water Management Act 2000, which are required to extract water from rivers or aquifers to use for irrigation, industrial or commercial purposes.

Note that WaterNSW is responsible for issuing water access licences.

By Lawyers do not currently offer a full commentary on the increasingly complex and valuable rights attaching to the usage, allocation and trading of water, but the new content in 1001 Conveyancing Answers assists as a starting point for NSW practitioners who are called upon to advise clients in relation to the rights attaching to water in various circumstances, whether in the context of property transactions, property development, or stand-alone water trading transactions.

Helpful interactive links are also provided in the new content to allow users to quickly access the detailed information available on the WaterNSW website.

Water rights – QLD

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A new chapter on water rights has been added to the By Lawyers reference guide 1001 Conveyancing Answers for Queensland.

The new content covers water allocations, water licences, overland flow, water trading and searching the register. Note that the Registrar of Land Titles is also the Registrar of Water Allocations.

By Lawyers do not currently offer a full commentary on the increasingly complex and valuable rights attaching to the usage, allocation  and trading of water, but the new content in 1001 Conveyancing Answers assists as a starting point for Queensland practitioners who are called upon to advise clients in relation to the rights attaching to water in various circumstances, whether in the context of property transactions, property development, or stand-alone water trading transactions.

Helpful interactive links are also provided in the new content to allow users to quickly access the detailed information available on the Business Queensland website.

For LEAP users, the new matter types now available in Queensland for Rural Law/Agribusiness, which include Water licences and Water allocations, contain all relevant Land Registry forms relating to water rights. These new matter types are available via Other Areas of Law in the Browse tab from within any LEAP matter.

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