foreign investment

The Foreign Investment Review Board (FIRB) is the Australian government authority that  examines proposals by foreign investors to initiate direct investment in Australia. They also make recommendations to the Government on whether these proposals are suitable for approval under the Government’s foreign investment policy.

 

The main functions of the Board are to:

• Examine proposals by foreign investors;

• Advise the Government on foreign investment matters;

• Foster awareness of the investment policy;

• Provide guidance to foreign investors to ensure conformance with the policy;

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If a non-resident or temporary resident wishes to buy residential property in Australia, they must first obtain the FIRB approval by meeting specific requirements. Failing to comply with FIRB requirement may give rise to fines of up to $157,500 and three years imprisonment.

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FIRB EXEMPTION

There are certain people and types of property that do not need to seek approval from the FIRB. These types of people include Australian citizens, New Zealand Citizens, Australian permanent visa holders, and any foreign person(s) who are purchasing property with their spouse and their spouse comes under one of these exceptions.

The types of property that are excluded include:

• Certain student accommodation, aged care facilities and retirement villages

• A time share where the total entitlement to access is no more than 4 weeks in any year

• Property acquired directly from the commonwealth, state, territory, or a local governing body

• New or near-new dwellings purchased from a developer who holds and exemption certificate that allows them to sell specific dwellings to foreign persons.

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NON-RESIDENTS

There are rules around certain types of property that non-residents are allowed to purchase. Non-resident, with the approval of the FIRB, are only allowed to purchase new residential properties, established dwellings for redevelopment, and vacant blocks of land for development.

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In addition, there are certain constraints on how a non-resident holds the property. A non-resident must live in or rent out their property for at least six months of every year (unless the land is for redevelopment purposes which cannot last for more than 5 years). Failure to do so will result in the non-resident being subject to a vacancy charge.

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Another important fact to note is that una non-resident buying vacant land that the FIRB does not consider any land that has previously had a dwelling on it to be vacant land. Under FIRB rules, non-residents who purchase vacant land must complete construction of a residential swelling within four years of approval. A non-resident then has 30 days to provide proof that the dwelling has been completed.

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TEMPORARY RESIDENTS 

The Foreign Acquisitions and Takeovers Act 1975, considers a temporary resident to be someone who holds a temporary visa that allows them to reside in Australia for a continuous period of more than 12 months. Someone is also considered a temporary resident if they have applied for a permanent visa, have a bridging visa, and they are residing in Australia.

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Types of Property Allowed to be Purchased

Temporary residents are allowed to purchase new properties, second-hand properties, vacant land on which they plan to build a dwelling, commercial property or commercial vacant land. If you are a temporary resident and purchased a second-hand property, you are required to use the property as your primary place of residence and cannot rent any part of the property. Additionally, you must sell the property within 3 months of it no longer being your principal place of residency.

 

There is, however, no limitation on the number of residential properties a temporary resident can purchase for investment purposes as long as those residential properties are new or off-the-plan.