The South Australian Court of Appeal has upheld a decision that a purpose-built student accommodation facility was not used predominantly for residential purposes and therefore qualified for a stamp duty exemption.
In September 2019, Perpetual purchased a 17-level purpose-built student accommodation facility in Adelaide. The lease and all business agreements in respect of the facility were assigned by the sale agreement to a company operating under the Atira brand. Perpetual contended that the transfer of the facility was exempt under s 105A of the Stamp Duties Act 1923 (SA), and the foreign ownership surcharge under s 72 was not payable, on the basis that the facility was not used predominantly for residential purposes.
The evidence showed that in 2018, 63% of students stayed for 26 weeks (or one semester) or fewer. The average length of stay was 175 days or 25 weeks and the median stay was 150 days or 21 weeks. In 2019 49% of students stayed for 26 weeks or fewer. The average length of stay was 206.77 days (29 weeks) and the median stay was 184 days (26 weeks). The only non-student occupants of the facility were tourists.
At first instance, the primary judge held that the term “residential” implied a permanent or long-term commitment to living in a particular place. Since the majority of occupants did not envisage living at the facility for an extended period of time (the average length of stay was 25 weeks in 2018 and 29 weeks in 2019 and the median length of stay was 21 weeks in 2018 and 26 weeks in 2019), the primary judge held that the facility was not being used predominantly for residential purposes. The transfer was therefore exempt and the foreign ownership surcharge was not payable.
The South Australian Court of Appeal has unanimously upheld the primary judge’s decision. The primary judge was correct to conclude that the word “residential” implies a permanent or long-term commitment to living in a particular place and that the facility was occupied by (mainly) students as intended, that is, as a short-term place to live.
(see: http://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/sa/SASCA/2022/117.html)
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