On 29 March 2020 monetary thresholds for acquisitions of leases of land of more than 5 years (including options to renew) by foreign persons were reduced to zero. This meant that a large volume of leasing transactions which previously did not require approval fell into the Foreign Investment Review Board (FIRB) net. On 3 September 2020, the FIRB amended these temporary measures to allow renewals and material variations of leases to proceed without approval in some circumstances. The new measures took effect on 4 September 2020.
What were the key changes?
In summary, the key changes were as follows:
- For the renewal or material variation of existing non-sensitive leasehold interests in developed commercial land (where the same acquirer held a substantially similar interest under a lease before 10:30pm on 29 March 2020), the previous monetary thresholds have been reinstated.
- The reinstated thresholds for the value of the leasehold interest being acquired (below which approval is no longer required) are set out in the table below:
|Type of land||Threshold – more than:|
|Land that is being acquired by a foreign person who is an agreement country or region investor||$1,192 million|
|Land that is being acquired by any foreign person other than an agreement country or region investor, or a foreign government investor||$275 million|
|Land that is being acquired by a foreign government investor||$0|
In this context, “renewal” means the extension of a lease through the exercise of an option to renew or the entering into of a new lease on substantially the same terms as the previous lease. A “material variation” can include things like an extension of the term (including adding options) which can be regarded as a new lease for FIRB purposes.
- Certain transitional arrangements were introduced which govern the treatment of applications submitted under the regime before 3 September 2020 where such applications relate to actions which are no longer notifiable under the new rules set out above (such as withdrawal of applications and waiver or refund of application fees paid). We can provide guidance on this on a case by case basis if required.
- For all other leasehold acquisitions by a foreign person (where the term of the lease including options is reasonably likely to exceed 5 years) the $0 monetary screening threshold continues to apply and the acquisition of the leasehold interest will therefore need to be notified to the FIRB and approval obtained before the transaction proceeds.
- Examples of leasehold transactions still caught where the term is sufficiently long are an agreement for lease where the land is vacant at the time and a lease of developed commercial land which is regarded by FIRB as “sensitive” land.
For more information, the full FIRB guidance note 53 can be found here.
If you have any questions, please reach out to your HSF contact, who will be happy to discuss.