PURCHASING AUSTRALIAN PROPERTY
Australian Permanent Residents and Citizens can purchase any property in Australia without restriction. New Zealanders who hold a Special Category visa are also exempt from seeking approval to purchase property.
Those non-residents who do not hold a visa or hold a temporary visa will need to seek the approval of the Foreign Investment Review Board. Your real estate agent should advise you regarding the requirements if you are unsure.
The following is an explanation of the policy in respect to the purchase of commercial or residential property by non-residents.
Australia’s Foreign Investment Policy:
The Foreign Investment Review Board is a non-statutory body established in April 1976 to advise the Australian Government on foreign investment policy and its administration. The Foreign Investment Review Board examines proposals by foreign interests to undertake direct investment in Australia, including real estate, and makes recommendations to Government on whether those proposals are suitable for approval under the Government’s policy. The Real Estate Institute of Australia and the Foreign Investment Review Board have prepared a summary of Australia’s Foreign Investment Policy in relation to residential real estate.
For foreign investors
The Foreign Investment Review Board (FIRB) have prepared a summary of Australia’s Foreign Investment Policy as it relates to acquisitions of residential real estate in Australia by foreign interests. The policy covers developed residential real estate, residential real estate for development and off-the-plan purchases.
Foreign Investment Policy - Summary for residential real estate - Previous Changes
The Federal Government implemented changes to the Foreign Investment Review Board regulations for foreign investment in Australian real estate, on 10 September 1999. The following is a summary.
Increase the notification threshold for foreign investment in existing businesses from $5 million ($3 million for rural businesses) to $50 million - Remove foreign investment approval requirements for individuals, who hold or are entitled to hold a special category visa and invest in Australian residential real estate through Australian companies and trusts; and - Increase the limit for which applications for investment in businesses are registered but are generally not fully examined from $50 million to $100 million.
Real Estate for Redevelopment
Applications to acquire existing residences for redevelopment are considered on a case-by-case basis. Proposals approved under this category must provide for an increase in the housing stock, that is, an increase in the number of dwellings.
An amount equivalent to a minimum of 50 per cent of the acquisition cost or current market value (which ever is the greater) must be spent on the redevelopment of the site. The existing residence can not be occupied prior to demolition and redevelopment. Where the property is at the end of its economic life (ie, derelict, uninhabitable) a proposal may be approved for the construction of one dwelling. To demonstrate that the property is uninhabitable and must be demolished, a valuation of the existing structures by a licensed valuer may be required. Photographs and other forms of evidence may also be required. Once construction is completed, parties notify the completion date and actual development expenditure.
Once these conditions have been fulfilled, properties acquired under this category may be rented out, sold to Australian interests or other eligible purchasers, or retained for the foreign investor’s own use.
Vacant land and house packages
Acquisitions of residential real estate (including vacant building allotments and house and land packages where construction has not commenced) for development by foreign interests are normally approved subject to a specific condition requiring continuous construction to commence within 12 months; once construction is completed, parties are required to provide the completion date and actual development expenditure. To be eligible for approval under this category it is expected that a minimum of fifty per cent of the acquisition cost or current market value (whichever is higher) be spent on development.
Non-residential commercial properties
Where properties are not subject to heritage listing, the notification threshold applying to the acquisition of developed non-residential (ie, it is not an accommodation facility) commercial properties will be raised from $5 million to $50 million.
In addition, acquisitions of developed non-residential commercial properties, valued between the notification threshold and $100 million, will no longer be subject to detailed examination, unless the facts of the proposal raise issues pertaining to the national interest.
Integrated Tourism Resorts The policy of designating Integrated Tourism Resorts (ITRs), within which foreign persons are permitted to acquire residential property without restriction, will only apply to developed residential property leased back to the resort operator to be available for tourist accommodation when not occupied by the owner. Owners of residential property in existing ITRs will retain their current entitlements.
Strata titled hotel accommodation Sales will be permitted to foreign interests of strata-titled hotel rooms in designated hotels where each room is subject to a long-term (10 years or more) hotel management agreement. The hotel management agreement must limit the owners’ rights to an income stream, not occupancy. The management must retain ownership of the common property. In addition, owners will not have the right to opt out of the management agreement. The hotel must provide a full range of facilities consistent with industry accepted hotel features.
Australian citizens and foreign spouses Australian citizens and their foreign spouses purchasing as joint tenants will no longer be required to seek approval for purchases of residential property in Australia.
Foreign trustees acquisition of interests in urban land Exemption will be given for the acquisition of interests in Australian urban land by foreign-owned responsible entities acting on behalf of managed unit trusts and other managed public investment schemes registered under Chapter 5C of the Corporations Law, where they are investing for the benefit of fund investors or unit holders ordinarily resident in Australia. This is consistent with the rules applying to foreign-owned life insurers and superannuation funds.
If you would like to receive more details regarding Australia’s Foreign Investment regulations, further information is available at www.firb.gov.au
