Foreign residents must usually obtain approval of Foreign Investment Review Board (FIRB) prior to the purchase of Australian residential property.
FIRB’s requirements are summarised below.
When is FIRB required?
Subject to some exceptions and qualifications, a purchaser does not need FIRB approval to buy Australian residential property if they are:
- an Australian or New Zealand citizen; or
- the holder of an Australian permanent visa; or
- joint tenants with an Australian spouse; or
- certain companies or trusts.
There are also exceptions where the vendor holds advance “off-the-plan” development approval to sell to foreign purchasers.
Eligibility requirements for temporary residents (foreign citizens)
If you are a “foreign temporary resident”, you can purchase existing Australian residential property subject to conditions.
A foreign citizen who meets any of the following criteria, will be considered a temporary resident if they:
- hold a temporary visa that permits you to remain in Australia for a continuous period of more than 12 months (regardless of how much time remains on their visa); or
- live in Australia, have submitted an application for a permanent resident visa and hold a bridging visa that permits them to stay in Australia until that application has been determined.
If you cannot fulfil the above requirements, you are considered a foreign citizen and you cannot purchase an established dwelling in Australia as your principal place of residence or home, unless you intend redeveloping the property and increasing the number of dwellings on the land.
It is usually best to incorporate terms which provide for the expiry of the obligations in the agreement itself.
Established dwellings & temporary residents
As a temporary resident you can purchase an established dwelling. If you are a temporary resident, you are usually permitted to purchase only one established dwelling to live in as your primary residence in Australia with conditions such conditions are usually:
- the property is able to be occupied by you on the date you acquire it, and you cannot rent any part of the property;
- you are using the property as your principal place of residence; and
- you must sell the property within 6 months from when it ceases to be your principal place of residence or your temporary resident visa is terminated.
Established dwellings for development
If you are a foreign person, you are usually permitted to purchase an established dwelling for redevelopment, provided that the redevelopment genuinely increases the housing stock available in Australia. This is generally taken to mean that at least one additional dwelling will be constructed on the land.
If you intend to purchase a property for redevelopment purposes you will be required to submit your development proposal with your application for FIRB approval.
FIRB usually require construction to have been completed within 4 years from the FIRB approval date. If you cannot complete the construction of the new dwellings within 4 years of the FIRB approval date, you will need to submit a variation for your FIRB application.
The property cannot be rented to any party before the property is demolished and construction has started.
Fees and other conditions may also apply.
Submitting an offer – contracts must be conditional
If you wish to make an offer for a property, you must ensure the contract is “subject to FIRB approval”.
It may take up to 40 days for you to receive the required FIRB approval for your purchase.
FIRB application methods
If you are a foreign person and you require FIRB approval to purchase an established dwelling, different applications methods are available for different types of purchase.
How can Nevett Ford help?
Our Property and Conveyancing Team has the knowledge and expertise to assist our clients with FIRB matters. Should you need assistance or if you would like further information, please contact us at melbourne@nevettford.com.au or on +613 9614 7111.