If your intention is to purchase residential real estate in Australia, there are some rules and regulations governing the sale of these properties to foreign interests. If you are a foreign national, it is a requirement that you attain approval from the Foreign Investment Review Board unless specifically exempted by the Foreign Acquisitions and Takeovers Regulations.

The Foreign Investment Review Board groups acquisitions of residential real estate under the following categories:

Established/ Second-Hand Real Estate

FIRB approval is not usually granted to foreign interests who intend to purchase previously owned or occupied residential real estate unless:

• The foreign national is temporarily resident in Australia and holds a current temporary resident visa which permits continuous residence in Australia for a further period of more than 12 months from the time of application. In this instance, the dwelling must be used as their principal place of residence1 and not for rental purposes, and must be sold immediately when their visa expires, they no longer reside in the property or when they cease to reside in Australia.
• The purchase is made by foreign companies for named senior executives continuously resident in Australia for periods longer than 12 months, provided the dwelling is sold when no longer required for this purpose. A company’s eligibility and the number of properties it may acquire will depend upon the scope of the foreign company’s operations and assets in Australia.

New Dwellings

FIRB approval is normally granted to foreign nationals who intend to purchase real estate in this category as long as the property has never been occupied or sold and provided no more than 50 per cent of the dwellings in any one development are sold to foreign interests.

Properties that fall under this category include new home units, townhouses, house and land packages (where construction has commenced), strata titled hotel/motel units in a new development, either ‘off-the-plan’, during the construction phase or when the dwelling is newly completed. Second-hand residential real estate that has been refurbished is not included in this category.

Stand-Alone Dwellings

Foreign interests may receive approval to purchase a stand alone dwelling (for example a house/land package where construction has commenced or been completed) providing:

• the developer has constructed a similar dwelling with overlapping construction dates;
• the similar dwelling is being sold, or has been sold for a similar consideration;
• the similar dwelling is in a proximal location; and
• the similar dwelling has been, or is to be, purchased by an Australian or other eligible person.
• If a similar dwelling does not exist, foreign investment approval is not available under this category.

A property purchased under this category may be rented out, sold to Australian interests or other eligible purchasers, or retained for the foreign investor’s own use. Once the property has been purchased, it is second-hand real estate and is subject to the restrictions applying to that category.

Vacant land

FIRB approval for acquisitions of vacant land for development (including house and land packages where construction has not commenced) are normally approved subject to:

• continuous substantial construction commencing within 12 months;
• a minimum amount equivalent to 50 per cent of the acquisition cost or current market value of the land (whichever is higher) must be spent on development; and
• once construction is completed, parties notify the completion date and actual development expenditure.

Once these conditions have been fulfilled, properties acquired under this category may be rented out, sold to Australian interests or other eligible purchasers, or retained for the foreign investor’s own use.