When foreign residents wish to purchase land within Australia, there are a number of processes they must go through. One that many agents are aware of, but are not completely informed about, is the FIRB (Foreign Investment Review Board) and the requirements and the exemptions that apply to the application process.
The Foreign Investment Review Board decides on applications from foreign resident investors and has set rules on who can invest and in what circumstances. The general default rule is that foreign resident investors can only invest in new dwellings. However, there are some instances where investment into existing dwellings is accepted and some cases where applications are not required by the investor themselves. This is not an area of expertise one would expect an agent to advise upon – however, it is one of the areas of knowledge that an agent should be able to understand to ensure they are dealing with both their buyers and their vendors in the correct manner.
Foreign persons, regardless of citizenship or residency, do not require foreign investment approval to acquire an interest in residential real estate. This is whether the properties are new or near-new dwellings purchased from a developer. The developer needs to hold a new or near-new dwelling exemption certificate that allows the developer to sell dwellings in that specified development to foreign persons.
Property developers and other vendors can apply for an exemption certificate to sell new dwellings and near-new dwellings in a development to foreign persons – which is known quite literally as a “New Dwelling Exemption Certificate and a Near-New Dwelling Exemption Certificate”.
Where the developer holds an exemption certificate, the individual foreign investor will not be required to seek their own foreign investment approval to purchase a new dwelling or near-new dwelling in that development.
Developers (either Australian or foreign) can apply for a New Dwelling Exemption Certificate for a specified development, if the development:
- will consist of 50 or more dwellings (other than townhouses); and
- has development approval from the relevant government authority; and
- if applicable, foreign investment approval was given to purchase the land and those conditions are being met.
Foreign non-residents cannot purchase established dwellings as homes, which will be utilised as a holiday home or to rent out. Temporary residents will normally be allowed to purchase only one established dwelling to live in as their residence (home) in Australia, subject to the conditions that they:
- use the property as their principal place of residence in Australia;
- do not rent any part of the property, which includes ensuring that the property is vacant at settlement; and
- sell the property within three months from when it ceases to be their principal place of residence.
Foreign persons that operate a substantial Australian business may apply to purchase established dwellings to house their Australian based employees. Eligible applications are normally approved subject to conditions, including that the dwelling is sold if it is expected to remain vacant for more than six months.
An agent should be aware of the price for applying for FIRB approval, which can be found on firb.gov.au and can be easily established as $5,500 for every $1 million invested in the property being purchased.
EAC and the Australian College of Professionals (ACOP) have partnered to provide the real estate industry with the highest quality training for new and experienced agents.
EAC members are entitled to discounts on training through ACOP. This training includes Certificate of Registration courses, CPD training, skills training and licensing programs.
For CPD training (flat rate for face-to-face sessions of $150) use the discount code EACCPD – OR – for all other training use the discount code EACTRAIN on www.acop.edu.au.
To obtain training through ACOP call 1300 884 810.