The purchase of Australian residential real estate by foreign persons is governed by the Foreign Acquisitions and Takeovers Act 1975. The Foreign Investment Review Board (FIRB) is responsible for advising the Government on foreigners purchasing a property in Australia.
All contracts involving “foreign person” buyers acquiring an interest in any Australian real estate must be made conditional upon FIRB approval unless approval was obtained prior to entering into the contract. If a property is to be purchased at auction, prior FIRB approval must still be obtained and a copy of the signed contract must be forwarded to FIRB after the auction.
“Foreign persons” will be in breach of the Act if they enter into an unconditional contract to acquire property before FIRB approval is given and this may lead to significant penalties. The FIRB will only grant approvals for foreigners purchasing new dwellings. This includes “off-the-Plan contracts” and House and Land Packages.
Applications for the purchase of vacant residential land are usually approved subject to specific conditions, including that construction must commence within 12 months. An approval will generally not be granted for a previously occupied residence.
The following are exempt from any requirement to obtain FIRB approval when purchasing a residential property:
- Australian citizens (even if living overseas);
- Foreign persons who hold permanent resident visas; and
- Foreign persons purchasing as joint tenants with their Australian citizen spouse.
When including a FIRB special condition in a contract, it must allow for at least 40 days (from date of application) to obtain FIRB approval as they have 30 days to consider the application and a further 10 days to notify the applicant.