NSW Residential Tenancy Reforms: What Landlords and Tenants Need to Know

property

Further scaling back of surcharge land tax and surcharge purchaser duty

In February of this year, Revenue NSW announced a scaling back of the application of surcharge purchase duty and surcharge land tax for citizens (and certain affiliated entities) of New Zealand, Finland, Germany, and South Africa.  We commented on those changes here: Tax treaties and the scaling back of surcharge land tax and surcharge purchaser duty - McCabes   Surcharge Regime By way of background, the surcharge purchaser duty and surcharge land tax have applied to certain acquisitions of residential property in New South Wales since 2016. In summary, the current regime for acquisitions of residential property by foreign persons results: in the application of a surcharge duty (since 1 July 2017 calculated at 8% of the dutiable value of the subject property), which is payable in addition to the ad valorem transfer duty assessed in the ordinary course; and in an annual surcharge land tax assessment (for the 2023 land tax year, calculated at 4% of the land value of the subject property) which is payable in addition to land tax assessed in the ordinary course, and without the tax-free threshold.   Further exemptions In a media release on 29 May 2023, Revenue NSW announced that India, Japan, Norway, and Switzerland are further countries whose tax treaties with the Commonwealth may render the assessment of surcharge purchaser duty and surcharge land tax inconsistent. As such, citizens of those countries will be exempt from assessments for surcharge purchaser duty and surcharge land tax for residential land in New South Wales purchased in their personal capacity. Moreover, as we previously outlined, the liability for both surcharge purchaser duty and surcharge land tax of non-individuals (such as corporations, trustees, partnerships) who are affiliated with the affected countries may be affected by the relevant international treaties.  However, if the non-individual comprises, either directly or indirectly, a foreign person or persons with a substantial interest (or aggregate substantial interest) who are not citizens of India, Japan, Norway, or Switzerland (or, indeed, in accordance with the earlier scale-back, citizens of New Zealand, Finland, Germany, or South Africa), the surcharge regime will continue to be applied.   Refund period extended When the scaling back of the surcharge regime was first announced, Revenue NSW indicated that parties who had paid surcharge purchaser duty or surcharge land tax from 1 July 2021 may have been eligible to apply for a refund. In the latest media release, Revenue NSW announced that parties who have paid either surcharge purchaser duty or surcharge land tax on or after 1 January 2021 may be able to obtain a refund. Whilst Revenue NSW intended to contact potentially affected parties, if a landowner or purchaser/transferee has not been contacted by Revenue NSW, those parties should contact Revenue NSW directly to enquire further, particularly if they believe they may be eligible for a refund of surcharge purchaser duty or surcharge land tax.

property

Restoring confidence in the residential apartment building sector

The NSW Government has sought to restore a degree of consumer confidence in the residential apartment building sector through the Residential Apartment Buildings (Compliance and Enforcement Powers) Act 2020 ("RAB Act"). The RAB Act commenced on 1 September 2020.  The RAB Act arms the Department of Customer Service ("The Department") and the Building Commissioner with a suite of comprehensive powers to combat non-compliant developers and address serious defects identified in residential apartment buildings. The Department is actively looking to use the powers conferred upon it by the RAB Act, by establishing an initiative it calls Project Intervene. Project Intervene is an invitation to owners corporations in NSW to apply for the Department's assistance to rectify serious defects in the common property of residential apartment buildings. To be eligible to participate in Project Intervene, residential apartment buildings must have: been completed in the last 6 years (i.e. an occupation certificate was issued no longer than 6 years ago); four or more storeys; and serious defect(s) in the common property.   Importantly for owners corporations, participation in Project Intervene: is at no cost to owners corporations; does not involve destructive testing; does not affect an owners corporation's right to call on statutory warranties under the Home Building Act.   The RAB Act allows the Department to give building work rectification orders ("BWRO") to developers if a reasonable belief is held that building work was carried out in a manner that could result in a serious defect in the building or that the building has a serious defect.  The Department can require developers to eliminate, minimise or remediate the serious defects or if works are still underway, stop specific building work. Critically, failure to comply with an order in force is an offence under the RAB Act. Final BWROs are published on a publicly available register, which is found on the NSW Government Fair Trading website.   The McCabes property team has worked closely with the Department's roll out of Project Intervene, in assisting them with the drafting of BWROs.