Buying Property in Australia
If you are a foreigner it is important to know the rules for buying property in Australia. Currently, foreigners generally need to apply for foreign investment approval before purchasing residential real estate in Australia.
Foreign non-residents are individuals not ordinarily resident in Australia (except Australian citizens), including a holder of a visa that permits the individual to remain in Australia for only a limited period.
Buying a new dwelling
Foreign persons generally need to apply and receive foreign investment approval (from the Foreign Investment Review Board – FIRB) before purchasing new dwellings.
Applications to purchase new dwellings are usually approved without conditions.
A new dwelling is a dwelling that will be, is being, or has been built on residential land, has not been previously sold as a dwelling and has either:
- Not been previously occupied; or
- If the dwelling is part of a development, was sold by the developer of that development and has not previously been occupied for more than 12 months in total.
New dwellings do not include established residential real estate that has been refurbished or renovated.
A single dwelling that has been built to replace one or more demolished established dwellings would generally not be considered a new dwelling for the purposes of Australia’s foreign investment framework.
Developers of New Dwellings
Property developers and other vendors can apply for an exemption certificate to sell new dwellings in a specified development to foreign persons, without each foreign person purchaser being required to seek their own foreign investment approval (similar to what has previously been known as an ‘advanced off-the-plan’ certificate).
Buying an Established Dwelling
Non-resident foreign persons are generally prohibited from purchasing established dwellings* in Australia.
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, included 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.
Temporary residents are not permitted to purchase established dwellings as investment properties, or rent out, or as holiday homes.
Foreign controlled companies are generally prohibited from purchasing established dwellings, although foreign companies with a substantial Australian business may be permitted to acquire established dwellings for the purpose of providing housing for their Australian based staff.
*An established dwelling is a dwelling (except commercial residential premises such as hotels, motels and caravan parks) on residential land that is not a new dwelling.
Buying Vacant land
Foreign persons generally need to apply and receive foreign investment approval before purchasing vacant residential land for development.
Foreign persons will normally be allowed to purchase vacant land for residential dwelling development, subject to conditions that:
- The development is completed within four years from the date of approval; and
- Evidence of completion of the dwelling/s is submitted within 30 days of being received. This could include a final occupancy or builder’s completion certificate.
Vacant land that previously has an established dwelling on the land would generally not be considered as vacant land for the purposes of Australia’s foreign investment framework.
Buying Established Dwellings for Redevelopment
Foreign persons (temporary residents and foreign non-residents) generally need to apply and receive foreign investment approval before purchasing established residential dwellings for redevelopment.
Foreign persons will normally be allowed to purchase an established dwelling for redevelopment in Australia, provided the redevelopment genuinely increases the housing stock. An increase in Australia’s housing stock is generally taken to mean that at least one additional dwelling will be created. Foreign persons will generally not be given approval to purchase an established dwelling to redevelop into a single new dwelling.
It is important that foreign investors understand and comply with Australia’s foreign investment framework as strict criminal and civil penalties may apply for breaches of the law, including disposal orders.
Costs of Buying Property in Australia
Cost of application to Foreign Investment Review Board
Foreign persons are required to pay a fee for each application made, or notice given, under the Act and the Regulation (limited exceptions apply).
The fees that are payable for residential land applications depend on the price for the acquisition of the interest. Fees payable can also be affected by regulations prescribing circumstances when a lower amount may be payable.
A single fee applies for foreign persons purchasing residential land as joint tenants.
Costs of application can be found on the FIRB Website
Fees for residential real estate applications are payable when the application is lodged.
Annual Vacancy Fee
In December 2017 the Australian Government introduced a vacancy fee for foreign owners of residential dwellings.
Under the legislation, foreign owners of residential dwellings in Australia are required to pay an annual vacancy fee if their dwelling is not residentially occupied or rented out for more than 183 days (six months) in a year.
If you’re a foreign owner of a residential dwelling you may be liable to pay the vacancy fee.
The vacancy fee is part of the Australian Government’s comprehensive housing affordability plan. It is intended as a financial incentive for foreign owners to make their dwelling available for rent and increase available housing in Australia.
The vacancy fee return must be lodged by foreign owners of residential dwellings who:
- made a foreign investment application for residential property after 7.30pm AEST on 9 May 2017
- purchased under a New Dwelling Exemption Certificate that a developer applied for after 7:30pm AEST on 9 May 2017.
How much is the Annual Vacancy Fee?
The vacancy fee will generally be the same amount as the foreign investment application fee paid at the time of submitting the foreign investment application.
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