Buying in Australia (for Overseas Investors)

Foreigners seeking to buy residential real estate in Australia in many cases need to seek prior approval from the Foreign Investment Review Board (FIRB).

However, there are still many opportunities for foreigners to acquire and develop real estate in Australia, both through certain exemptions from needing approval and through situations where approval is usually granted.

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While the Australian Government recognises the strong benefits of foreign investment, particularly direct foreign investment, to Australia, its foreign investment policies are designed to help maintain stability in the Australian property market.

A government briefing paper, Foreign Investment Policy in Australia – A Brief History and Recent Developments, notes:

"The government seeks to ensure that foreign investment in residential real estate increases the supply of residences and is not speculative in nature. The government's foreign investment policy, therefore, seeks to channel foreign investment in the housing sector into activity that directly increases the supply of new housing (i.e. new developments – house-and-land, home units, townhouses etc.) and brings benefits to the local building industry and their suppliers."

As a result of this approach, new dwellings account for most of the properties foreign buyers purchase in Australia – and many of them are purchased off the plan, meaning buyers sign a contract to purchase the property in advance of the completion of construction.

Rule changes

The Australian Government under Kevin Rudd has recently made widespread changes to the foreign investment rules governing the purchase of residential property in Australia, in a bid to improve flexibility.
The changes, which took effect in March 2009, include:

• Temporary residents are now allowed to buy an established dwelling as their principal place of residence. They can also buy any new dwelling regardless of purpose without needing to notify the government.
• Foreign-owned companies, overseas trust estates and non-residential foreign persons purchasing vacant residential land need to build within two years of the purchase date. Previously, they had only 12 months.
• Foreign companies can now buy existing property for the use of their Australian-based staff, provided they sell or rent the property if it’s vacant for more than six months.
• Developers are no longer limited to selling a maximum of 50 per cent of one development to foreign buyers, so long as they still market their product locally as well as overseas.
• Accommodation facilities such as resorts and hotels are to be treated as commercial real estate rather than residential real estate.

Non-residents of Australia aren't allowed to purchase an established property for straight investment purposes.

However, investors are able to purchase established dwellings for the purposes of a redevelopment that will increase the number of dwellings or make an existing dwelling inhabitable. In this case, buyers must notify the FIRB of their intentions and must commence the redevelopment within 24 months of purchase. They can't rent out the existing dwelling before redevelopment.

Non-residents can purchase newly built dwellings – whether they be units within a complex or standalone houses – so long as the property has never been sold before and has not been occupied for longer than 12 months.

Buyers must notify the FIRB of their intentions and receive approval for purchases of this kind.


http://www.apimagazine.com.au/api-online/property-investment-articles/buying-real-estate-in-australia-for-overseas-investors