New Homes and Vacant Land
Foreign purchasers generally need to apply and receive foreign investment approval before purchasing new dwellings and vacant residential land for development – and these applications can be made by the purchaser or the developer (to cover the entire development).
Applications to purchase vacant land are normally approved subject to construction being completed within four years, and once new dwellings are built or purchased, they may be rented out, sold, or retained for the foreign investor’s own use.
Non-resident foreign purchasers are generally prohibited from purchasing established dwellings in Australia, however foreign persons who are temporary residents need a place to live during their time in Australia, and temporary residents can apply to purchase one established dwelling to use as a residence while they live in Australia (and are not able to rent this out or use as a holiday home). Once they are no longer a temporary resident (and have not obtained permanent residency or citizenship), then this property must be sold when they leave Australia.Foreign purchasers (both temporary residents and non‑residents) can apply for approval to purchase an established dwelling for redevelopment (that is demolishing the dwelling and constructing new residential dwellings in its place) which are normally approved on the condition that at least two dwellings are built for the one demolished.
When to seek approval?
Foreign purchasers must have received foreign investment approval before they acquire an interest in residential real estate which can include:
- signing an unconditional contract agreeing to purchase a dwelling;
- an option that provides the right to purchase a property at an agreed price at some time in the future (such as a put and call option);
- a leasehold agreement that is reasonably likely, at the time the interest in the agreement is acquired, to exceed five years;
- increasing the share of ownership of a dwelling that the foreign person already has an interest in; or
- acquiring shares in a corporation or units in a unit trust where interests in residential real estate exceeds 50 per cent of the entity’s assets
FIRB approval process
Foreign persons should apply for approval before taking an interest in residential real estate, and must wait to receive that approval before taking an interest in residential real estate. To take any action before approval is received is a breach of the law.
Foreign persons who want to minimise the risk of a property they are interested in purchasing being sold to someone else before they receive foreign investment approval can enter into a contract as long as the contract is conditional on receiving foreign investment approval.
The decision maker has a statutory period of 30 days to make a decision from the date of full payment of the relevant fee on application, and a further 10 days to notify the applicant of the outcome.
Exemptions for Australian Citizens
Australian citizens do not require foreign investment approval to purchase residential real estate, regardless of whether they are resident in Australia or not.
New Zealand citizens and holders of Australian permanent residency visas are also exempt from the requirement to seek foreign investment approval to buy residential real estate.
Spouses of Australian citizens, New Zealand citizens and holders of Australian permanent visas do not require foreign investment approval when purchasing residential real estate as joint tenants.