By Tony Butler, Partner
The Australian Government’s Foreign Investment Review Board (FIRB) requires non-residents of Australia to apply for approval prior to purchasing residential property in Australia. This article summarises who needs to apply, timeframes and exemptions.
Who needs to apply and Property types
Persons who do not ordinarily reside in Australia (foreign non-resident) or a holder of a visa allowing a limited stay in Australia will need to apply. Corporations are treated similarly based on the usual residence of the directors.
FIRB considerations are based on the following property types:
- New dwellings – there is no limit to the number of new dwellings you may purchase and new dwellings will normally be approved without conditions. New dwellings are described as:
- Built on residential land
- Not previously been sold as a dwelling
- Not been previously occupied
- Sold as part of a development and has not been occupied for more than 12 months
- Developments – this comprises 50 or more dwellings and is generally the subject of an exemption (below)
- Vacant land – this can be purchased for development of residential dwellings, but will be subject to conditions:
- Must be completed within four years from date of approval
- Evidence of completion to be submitted within 30 days of receipt of evidence, e.g. builder’s completion certificate
- Established dwellings for redevelopment – this is usually permitted where redevelopment will increase housing stock. On top of the conditions applicable to vacant land, you cannot rent the property prior to demolition.
Timeframes and Fees
An application is made online through the Australian Taxation Office’s website and is quite simple. An application fee is required to be paid which is calculated based on your purchase price. For example, for a property up to $1 million, a fee of $5,000 is payable. The fees increase significantly at $1 million intervals.
Upon receipt of payment of the application fee by FIRB, the turnaround time for the approval is 30 days. This period will be longer if approval is sent via post as opposed to email.
It is imperative that any contract be conditional upon receipt of FIRB approval. Obviously this can mean that contracts will take longer to settle and there will be a chance that approval may not be provided, resulting in a contract falling through. Developers should consider whether it is in their best interests to obtain a new dwelling exemption certificate to ensure efficient settlement of new residential properties offered for sale.
FIRB approval is not required if you are an Australian or New Zealand citizen or if you fall into any of the following categories:
- You are buying a new property from a developer who holds a new dwelling exemption certificate (allowing the developer to sell property to foreign persons specific to that development);
- You hold an Australian permanent visa;
- You are purchasing property with your spouse (as joint tenants) who is an Australian or New Zealand citizen or is an Australian permanent resident;
- You acquired the property by Will or transferred by law;
- You acquired the property directly from the Australian Commonwealth or State government;
- You are acquiring an interest in a time share scheme whereby your access to the property is no more than 4 weeks per year;
- You are purchasing a property which is a designated integrated tourism resort.
There are also exemptions for certain companies, trusts and charities.
The above information is an overview only. Before proceeding with any contract you should seek legal advice specific to your circumstances to ensure you do not fall foul of the legislation.
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