It is a well known fact more and more foreign investors are buying property in Australia, and more specifically, on the Gold Coast and Northern NSW.
We are often asked to provide advice on when and how foreigners can buy properties in Queensland and NSW. There have been some major changes to legislation relating to applications for consent from the Foreign Investment Review Board (FIRB) with the most significant change being substantial fees are now payable for each FIRB application. It is vital that property developers, owners and their agents make proper enquiries of the buyers as to their citizenship status and make any contracts subject to obtaining approval from the FIRB. Likewise, agents should ensure foreign investors obtain appropriate legal advice from lawyers who are familiar with this complex area of law. Agents should be wary of using or referring cheap conveyancers to buyers.
What follows is a summary of the current status regarding foreigners buying property in Australia:
New Dwellings and Vacant Land:
Foreign persons need to apply and receive approval before they are entitled to purchase any new dwelling and/or vacant residential land for development. Applications to purchase new dwellings are usually approved without conditions whilst vacant land are normally subject to the construction of a house being completed within four years from the date of the application. Once the new dwelling is built, it may be rented out, sold or retained for the foreign investors own use.
Non resident foreign persons are generally prohibited from purchasing established dwellings in Australia. Temporary residents are usually allowed to apply to purchase one established dwelling as a residence whilst they live in Australia. Consent would normally be granted but be conditional on the foreign person selling the property when they leave Australia. They can also not acquire an established dwelling to rent it out or to use it as a holiday home. It must be their principal place of residence while they are in Australia.
In what circumstances are approvals required:
Foreign persons must have received approval before they acquire an interest in residential real estate. An interest may include any of the following:
- Signing an unconditional contract;
- Signing an unconditional contract to purchase a share of a dwelling;
- Obtaining a security interest and a real property mortgage;
- Signing an option that provides for the right to purchase a property in the future;
- Signing a lease which exceeds five years;
- Increasing the share of an ownership of a dwelling the foreign person already has an interest in;
- Acquiring shares in a company where the interest in residential real estate exceeds 50% of the company’s assets.
New Zealand citizens and holders of Australia Permanent Residency Visas are exempt from requirements to seek foreign investment approval to buy residential real estate.
Spouses of Australian residents, New Zealand residents and holders of Australia Permanent Residency Visas do not require approval when purchasing residential real estate as joint tenants.
The following fees are now payable for each and every application:
Acquiring an interest to a maximum purchase price of $1 Million
Acquiring an interest between $1 Million and $2 Million
Acquiring an interest between $2 Million and $3 Million
For every $1 Million after $3 Million
$10,000.00 per $1 Million
Applying for a variation to an approved condition
Property developers may apply for an exemption certificate to sell new dwellings in a specific development to foreign persons without each foreign person being required to seek its own foreign investment approval.
The approval will be granted for a specified development on conditions that dwellings for sale are marketed in Australia, however developers can also choose to market the development overseas.
The developers can apply for the exemption provided that the development:
- Will consist of 50 or more dwellings;
- Has development approval from the relevant Government Authority;
- If applicable, that foreign investment approval was sought to purchase the land and that any conditions specified are being met.
- Foreign persons can purchase new dwellings in a specified complex up to a maximum of $3 Million. Any purchase above $3 Million will require an application by the foreign person.
The developer is responsible to pay a fee for the initial application in an amount of $25,000.00. In addition, the developer is responsible to pay the fee for each dwelling in the development acquired by a foreign person as per the fees set out above.
You are welcome to contact our office with any enquiries concerning property and commercial advice. Please contact our Property and Commercial Department Manager, Jess Kimpton on direct line 07 5506 8214, email firstname.lastname@example.org.