Australia restores no-review threshold for foreign acquirers of leasehold interests in certain commercial land

On 3 September 2020, the Federal Parliament passed the Foreign Acquisitions and Takeovers Amendment (Commercial Land Lease Threshold Test) Regulations 2020 (Cth), which amended the Foreign Acquisitions and Takeovers Regulation 2015 (Cth) to reinstate normal monetary thresholds for the renewal or material variation of existing leasehold interests in non-sensitive and non-vacant commercial land under certain conditions. That is, the $0 threshold introduced in late March 2020 (insofar as it relates to the renewal or material variation of existing non-sensitive leasehold interests in developed commercial land) is reversed for most foreign investors.

What do these changes mean for foreign investors acquiring commercial land?

The Amendment affects foreign investors who held a substantially similar interest as lessee in non-sensitive and non-vacant commercial land immediately prior to the threshold reductions in March 2020.

The Amendment prescribes thresholds:

• for acquisition of leasehold interests in commercial land that is not vacant; and
• where the interests are being acquired by a foreign person,

irrespective of whether or not the foreign person is an agreement country or region investor.

However, foreign investors of leasehold interests in non-vacant commercial land are not subject to the reinstatement of normal monetary thresholds if the interest is sensitive. These sensitive interests include where the land will be leased to the Commonwealth, a State, or a Territory or their representative bodies; or where the land will be used for certain prescribed actions, such as biological agent storage, mines, telephone or internet data centres, or accommodating servers critical to the Australian banking industry or stock exchange.

What are the monetary thresholds?

NB: An agreement country or region currently means those from the United States of America, New Zealand, Chile, Japan, the Republic of Korea, China, Singapore, Canada, Mexico and Vietnam.