Australia restricts foreign investment in farmland

Photo: Flannel Fotos

The Commonwealth Government announced the changes this week, highlighting the importance of foreign investment coming in "on our terms" and for the nation's benefit.

Indeed, Australia has become increasingly concerned over levels of overseas investment in its real estate, both land and property. House prices have risen in recent months, which, combined with low supply, has left some domestic buyers unable to afford to purchase homes; a situation that some fear has been exacerbated by the entry of foreign buyers into the market.

Concerns have also arisen surrounding Australia's food security, prompting PM Tony Abbott to introduce the new regulations.

From 1st March 2015, any purchase of agricultural land worth over 15 million Australian dollars will be subject to screening for approval. This threshold has been lowered from 252 million.

The new $15 million screening threshold will apply to the cumulative value of agricultural land owned by the foreign investor, including the purposed purchase.

From 1st July 2015, the Australian Tax Office (ATO) will also start collecting information on all new foreign investment in agricultural land regardless of value, while a foreign ownership register will be introduced as well.

To provide an accurate log of foreign investment, the ATO will commence a stocktake of existing agricultural land ownership by overseas interests.

The announcement could mark the start of a shift towards increased regulation of all foreign investment in Australian real estate.

"The Government is currently considering the recommendations of the Parliamentary Committee inquiry led by Kelly O’Dwyer MP regarding foreign investment in residential real estate," added Abbott's statement.

"There does need to be better enforcement of the rules for foreign purchases of existing homes so that young people are not priced out of the market."

"The Government will announce details of the reforms to foreign investment in residential real estate in coming weeks," confirmed the statement.

"Foreign investment always has, and will continue to be, integral to Australia’s economic success."