Changes to FIRB guidelines in relation to lease renewals

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:

  1. 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.
  2. 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.

  1. 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.
  2. 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.
  3. 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.

Further information

For more information, the full FIRB guidance note 53 can be found here.

Contact Us

If you have any questions, please reach out to your HSF contact, who will be happy to discuss.

 

Implementation of eConveyancing in NSW – the (almost) Final Milestones

The transition to electronic conveyancing (eConveyancing) has a been a long time coming, with legislation first passed by the NSW Parliament to facilitate the process in 2012.[1] A transition timetable was introduced in 2017 by the NSW Government following its announcement that the transition into eConveyancing would be accelerated in 2016. With version 5 of the Conveyancing Rules (Rules) which became effective on 1 July 2019, a major milestone in the government’s mandated timeline has been reached.

Subject to some minor exceptions, the Rules now mandate that all Mainstream Dealings or combination of Mainstream Dealings signed between 1 July 2019 and 30 June 2020 must after 1 July 2019 be lodged electronically (except where accompanied by another dealing which is not a Mainstream Dealing) be it standalone, or in combination of Mainstream Dealings. Unless a waiver or exemption applies, they include:

  1. Transfers;
  2. Mortgages;
  3. Discharges of Mortgages;
  4. Caveats;
  5. Withdrawals of caveat; and
  6. Transmission applications.

To find out more about whether a particular dealing is eligible to be lodged electronically, please see the Registrar’s General’s Guidelines or call us.

Waivers & Exemptions

From time to time, the Registrar General (Registrar) may waive compliance with all or any provisions of the Rules in accordance with section 12E of the Real Property Act 1900 (NSW). The Registrar has issued a variety of waivers that include the following where:[2]

  1. an unrepresented party is lodging a caveat or withdrawal of caveat; the caveat requires a plan or affects only part of a lot or affects a leasehold or other registered interest; there are multiple caveators and they are separately represented; or the written consent of the caveator is required;
  2. an unrepresented mortgagee (an individual) is registering a mortgage or a discharge of mortgage;
  3. both the transferee and transferor are unrepresented; the parties wish to register a standalone transfer which will create a life estate and estate in remainder; where the transfer has an attachment or creates an easement; or not all registered owners are affected;
  4. an unrepresented applicant wishes to lodge a transmission application or the transmission application affects an interest in land is, rather than the freehold;
  5. the transaction involves a transfer of a water access licence; or
  6. written evidence from the OSR or an ELNO saying that the transaction cannot be processed electronically is presented to NSWLRS with the paper dealings.

For more detail about the Registrar’s waivers and exemptions, please see the Conveyancing Rules Waivers published by the Registrar or call us.

Beyond 1 July 2019

Moving forward, the Registrar will gradually remove various waivers and exceptions. Marking the end of the transition into eConveyancing, rule 8.8 of the Rules mandates that all dealings that are available electronically, must be lodged electronically from 1 July 2020. The detail on this will be released next year and we will update clients on this blog when the information becomes available.

Action required

There is additional work and time required to assess whether transactions can be processed manually or electronically and, if electronically, to set up workspaces and engage with the other parties to the transaction electronically. Please call us early on to discuss your transaction and we can assess how it should proceed.

Footnotes:

[1] Electronic Conveyancing (Adoption of National Law) Act 2012
[2] https://www.registrargeneral.nsw.gov.au/__data/assets/pdf_file/0007/526732/Conveyancing-Rules-Waiver-CR-2-2019-Mainstream-dealing-exceptions.pdf

Nicholas Cowie
Nicholas Cowie
Partner, Sydney
+61 2 9225 5551
Chrislynn Soong
Chrislynn Soong
Solicitor, Sydney
+61 2 9322 4678