Offmarket rural FIRB sales banned by Treasurer Scott Morrison

Offmarket rural FIRB sales banned by Treasurer Scott Morrison
Offmarket rural FIRB sales banned by Treasurer Scott Morrison

The federal government has imposed tighter foreign investment restrictions on the off-market sale of agricultural land worth $15 million or more.

Treasurer Scott Morrison announced any rural vendor wishing to sell to a foreign investor will need to publicly market the offering to locals for 30 days.

It was designed to stop land being put up for foreign sale without Australians knowing about it.

The responsibility will be on the applicant to demonstrate how they became aware that the property was advertised for sale and whether the acquisition was subject to an open and transparent sale process.

Scott Morrison issued a tweet saying it was about 'putting Australians first."

Offmarket rural FIRB sales banned by Treasurer Scott Morrison

Foreign buyers will need to demonstrate that land "has been part of a public sales process and marketed widely to potential Australian bidders for a minimum of 30 days, and Australian bidders have had an opportunity to participate in the sale process".

"All acquisitions of agricultural land by foreign investors for residential development will also be subject to standard development conditions requiring development to commence within a five year period to prevent land banking. This condition already applies to acquisitions of vacant land," Mr Morrison said.
 
He said the new restrictions on agricultural land were motivated by the national interest.

Previously, the Coalition government has reduced from $252 million to $15 million the threshold at which the Foreign Investment Review Board becomes involved in purchasing land. Similarly, it has lowered the scrutiny thresholds for agribusiness.

"Concerns around the ability of Australians to participate in the sale process of agricultural land acquisitions have been a factor in my previous foreign investment decisions, including approval of the sale of S. Kidman & Co Limited," Scott Morrison advised.

The FIRB gave three examples:

Example 1

Michele is a foreign person and wishes to acquire Joe’s farm. She first saw Joe’s farm advertised in a local newspaper and spoke to the realtor who has had the property listed for the last two months.

Michele confirms with the realtor that the property has been advertised through multiple channels for a period of at least 30 days, including online, through rural real estate brokers, and via advertisements in local and national media. If Michele applies to the Foreign Investment Review Board to acquire Joe’s farm, the sale process is unlikely to raise national interest issues.

Example 2

Susan has been directly approached by a foreign investor seeking to buy her farm. Susan’s farm is not on the market for sale, however, it was advertised for sale five months ago but was taken off the market as it was not sold (either no offers were received or the offers received were not accepted).

The foreign investor, Green Forestry Co, approached Susan because they have significant holdings of land near Susan’s farm for their forestry business and now have the capital available to expand their business.

Green Forestry Co applies to the Foreign Investment Review Board to acquire the property. This acquisition would satisfy the requirement for an open sale process as the property was advertised in the last 6 months.

Example 3

Therese wishes to buy a large parcel of agricultural land that is currently used for crop farming and includes an incidental established residential dwelling.

Therese saw the property advertised in an Australian national newspaper and viewed further information about the property on a real estate agent’s website.

Numerous parties, both foreign and Australian, were given the opportunity to bid or make offers for the property.

If Therese lodges a Foreign Investment Review Board application for the acquisition, it is unlikely that national interest issues will be raised regarding the opportunity for Australians to purchase the land.

 

Jonathan Chancellor

Jonathan Chancellor

Jonathan Chancellor is one of our authors. Jonathan has been writing about property since the early 1980s and is editor-at-large of Property Observer.

Tags: 
Firb Rural Property

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