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Information for Foreign Buyers

Both state and federal laws regulate the purchase of residential property by foreign persons, companies or trusts. Therefore, foreign buyers need to be aware of the relevant legal requirements before they sign a contract to purchase residential property in Australia.

Foreign Acquisitions and Takeovers Act 1975

Under the federal Foreign Acquisitions and Takeovers Act 1975 and Australia’s foreign investment guidelines, a ‘foreign interest’ must obtain foreign investment approval before purchasing residential real estate in Australia.

A ‘foreign interest’ includes:

a natural person who is not ordinarily resident in Australia; and

a company or trust in which one or more foreign persons or foreign companies hold a substantial interest.

Certain foreign buyers are exempt from the requirement to obtain foreign investment approval. They include:

Australian citizens and permanent residents of Australia who currently reside outside Australia

persons who hold permanent resident visas,

persons who hold (or who are entitled to hold) a ‘special category visa’ (including most New Zealand citizens), and

foreign buyers who are purchasing property jointly with their Australian spouses.

Generally, this need for approval will mean that the sale contract a foreign buyer signs must be conditional upon the foreign buyer receiving foreign investment approval. A foreign buyer should get a solicitor to draft an appropriate condition for inclusion in the contract.

Foreign investment approval is specific to a particular property and is not a general approval for the foreign buyer to purchase any additional residential property. As a result, a foreign buyer must make a new application for each property that he/she wishes to buy.

Where a property is for sale by auction, a foreign buyer would need to obtain foreign investment approval to buy the property before he/she can bid at the auction. If the foreign buyer is successful at the auction, he or she must forward a copy of the signed contract to the Foreign Investment Review Board after the auction.

The foreign investment requirements vary according to whether the relevant property is:

an established property (i.e. a property that has been previously occupied or sold),

a new property (i.e. a property that has NOT been previously occupied or sold, including partially completed properties and ‘off the plan’ purchases), or

vacant land.

Established Properties

The ability of foreign buyers to buy established properties in Australia is severely restricted: foreign buyers cannot buy an established property as an investment. Therefore, foreign investment approval will generally not be granted for a foreign buyer to purchase an established residential property unless at least one of these conditions is met.

The foreign buyer holds a temporary residence visa that allows him/her to remain in Australia for a continuous period of at least 12 months from the date of the application.

The foreign buyer signs a written undertaking that:

	the property will be the buyer’s principal place of residence, the buyer will not rent or lease the property, and the buyer will sell the property immediately to an Australian citizen or other eligible person if the buyer’s visa expires, he/she ceases to reside in the property or ceases to reside in Australia.
	(Note: A breach of this undertaking can result in substantial penalties.)

The foreign buyer is at least 18 years old, holding a student visa, studying a course of at least 12 months duration at a recognised Australian tertiary institution, and is buying a property valued at no more than $300,000.

New Properties

Foreign investment approval will generally be granted for a foreign buyer to purchase a new residential property provided that the property is part of a new development and no more than 50% of the properties in the new development have been sold to foreign buyers.

The foreign buyer must obtain from the property developer a letter indicating that the property has not been previously occupied or sold and will need to include this letter in their application for foreign investment approval.

A ‘one-off’ newly built property that is not part of a development of similar properties built by the same builder at around the same times does not qualify as a new property for the purpose of the foreign investment guidelines and instead would be treated as an established property.

There are no visa requirements for a foreign buyer to buy a new property, and it is not necessary for the foreign buyer to live in the property as his or her home. He/she can buy a new property as an investment if desired.

Vacant Land

Foreign investment approval will generally be given for a foreign buyer to purchase a block of vacant residential land provided that the buyer signs a written undertaking to commence continuous development on the land within 12 months of receiving foreign investment approval. Again, a breach of this undertaking can result in substantial penalties.

Upon completion of construction of a house upon the land, the buyer must give the Foreign Investment Review Board details of the date the house was completed and the actual construction cost.

There are no visa requirements for a foreign buyer to buy a block of vacant residential land, and it is not necessary for the foreign buyer to live on the property once construction of the dwelling is completed. He or she can buy vacant land to build on for an investment.

How to Apply for Foreign Investment Approval

To apply for foreign investment approval, a foreign buyer who is a natural person must complete an R3 Form and a Section 26A Notice.

A foreign buyer who is a company or trust must complete the C1 Form.

These forms are available on the Foreign Investment Review Board website, or copies can be obtained by contacting FIRB on (02) 6263 3795.

Applications for foreign investment approval can be submitted to FIRB by facsimile or post. Contact details for FIRB can be found on the FIRB website. Applications may also be completed and submitted online via the FIRB website. There is no fee for making an application for foreign investment approval.

Applications for foreign investment approval will generally be approved within 30 days after the Foreign Investment Review Board receives a properly completed application. However, if a foreign buyer is intending to bid on a property at an upcoming auction, FIRB will endeavour to approve your application as quickly as possible. But, the FIRB will need at least 5 working days before the auction to process the application.

Foreign Ownership of Land Register Act 1988

Under Queensland’s Foreign Ownership of Land Register Act 1988 there is a legal requirement that a foreign person who buys or sells a residential property in Queensland must give notice of that transaction within 90 days after the purchase or sale takes place. This requirement is in addition to the foreign investment approval requirements outlined above.

Where a foreign person is buying a property, the buyer must complete a Form 25 ‘Foreign Ownership Information’. The buyer’s solicitor will usually attend to the preparation and lodgement of this form as part of the conveyancing process.

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