The Australian Government's foreign investment policy has been developed to encourage investment in Australia and ensure that such investment is consistent with the needs of the Australian community. The Government recognises the important contribution offshore investment makes to the development of Australia's industry, resources and community.
Entering Into A Contract
All contracts by foreign persons to acquire interests in Australian real estate must be made conditional upon foreign investment approval, unless approval was obtained prior to entering into the contract.
For properties to be purchased at auction, prior foreign investment approval must still be obtained and advice provided whether the parties were successful or not, and if so, a copy of the signed contract forwarded to the Foreign Investment Review Board (FIRB) after the auction.
Definition of Foreign Investment
A foreign interest is briefly described as:
a natural person not ordinarily resident in Australia;
a corporation in which a natural person not ordinarily resident in Australia or a foreign corporation holds a controlling interest (that is, a holding of 15 percent or more);
a corporation in which 2 or more persons, each of whom is either a natural person not ordinarily resident in Australia or a foreign corporation, hold an aggregate controlling interest (that is, a total holding of 40 percent or more);
the trustee of a trust estate in which a natural person not ordinarily resident in Australia or a foreign corporation holds a substantial interest;
or
the trustee of a trust estate in which 2 or more persons, each of whom is either a natural person not ordinarily resident in Australia or a foreign corporation, hold an aggregate substantial interest.
Residential
Proposed acquisition of residential real estate is exempt from examination in the case of Australian citizens living abroad who are holders of permanent visas or entitled to hold a 'special category' visa.
Foreign interests are usually given approval to buy vacant residential land on condition that construction of a dwelling is to commence within 12 months. Approval will also usually be granted to buy home units and townhouses off the plan, under construction or newly constructed (but never occupied), on condition that no more than half of the units in any one development are sold to foreign interests.
Commercial
Commercial real estate includes vacant land for commercial development and developed commercial property.
Proposals to acquire the following require notification and approval:
vacant land, regardless of value;
an accommodation facility, regardless of value;
property being acquired by a foreign government or its agent, regardless of value;
developed commercial real estate subject to heritage listing valued at $5 million or more;
developed commercial real estate where the total value of the property being acquired is $50 million or more
Who is Exempt?
Exemptions include:
acquisitions by Australian citizens resident abroad;
acquisitions of property zoned residential by foreign nationals who hold permanent resident visas or hold, or who are eligible to hold, a 'special category visa' (eg a New Zealand citizen); and
foreign persons purchasing, as joint tenants, with their Australian citizen spouse property that is zoned residential
Other situations where approval is normally granted includes:
1. Foreign companies buying residences in Australia for their senior executives
2. Foreign nationals temporarily resident in Australia for more than 12months buying for their own use as a principal place of residence subject to the sale of the property when they cease to reside in Australia.
3. Foreign nationals purchasing residential real estate as joint tenant with an Australian spouse
For more detailed information visit the Foreign Investment Review Board's web site at www.firb.gov.au