To begin with, a foreign person may only enter into the Australian property market if their entry can add to the market - that is, help strengthen and support Australia’s economic growth.
Therefore, the Australian government have allowed foreign people to only buy new dwellings and vacant land to develop new properties.
Who needs to apply?
Both foreign residents and non-residents will need to apply for the foreign investment approval before purchasing any property in Australia.
A foreign resident is an individual who:
- resides in Australia and holds a bridging visa or has applied for a permanent visa; or
- holds a temporary visa and can remain in Australia for a continuous period of more than 12 months.
A foreign non-resident is an individual who:
- does not ordinarily reside in Australia (except Australian citizens); or
- holds a visa that permits a stay for only a limited period.
Where to apply?
Foreign residents and non-residents who plan to buy a property in Australia must seek approval from the Australian Foreign Investment as purchasing residential real estate. This includes a purchase for a dwelling, vacant residential land or a second-hand or established dwelling. These applications are to be submitted through an online system on the Foreign Investment Review Board website and are processed by the Australian Taxation Office (ATO).
Which residential real estate can be purchased?
Foreign non-residents are prohibited from purchasing any established/existing dwellings in Australia. The Australian government have aimed to reserve these dwellings for Australian citizens and therefore have only allowed foreign people to purchase either new dwellings or vacant land to develop new properties.
A foreign person can purchase a new dwelling in Australia but must seek approval before signing any contract. Generally, these applications are approved without any conditions, as the government wants foreign people to purchase this type of residential real estate.
A new dwelling is a dwelling that has never been previously sold or occupied before or if sold by the developer, the dwelling must not have been occupied for more than 12 months.
Just like purchasing a new dwelling, a foreign person must apply and receive foreign investment approval before signing and purchasing any vacant residential land for development.
The conditions for this approval will be that the development must be completed within four (4) years from the date of approval and evidence of the completion must be submitted within thirty (30) days.
Please note any vacant land that has previously had an established dwelling on the land is not considered as vacant land for the purposes of Australia’s foreign investment framework.
As mentioned earlier, there are exemptions where a foreign person will not have to seek foreign investment approval before purchasing residential real estate. This includes a person who is:
- An Australian/New Zealand citizen;
- The holder of an Australian permanent visa; or
- The foreign person is purchasing as joint tenants with their spouse who is an Australian/New Zealand citizen or an Australia permanent resident.
In addition to those, a foreign person will not need to seek approval if they are purchasing a residential real estate that is:
- an aged care facility, retirement village or certain student accommodation;
- acquired by will;
- acquired directly from the Commonwealth, a State/Territory or local governing body; or
- an interest in certain residential real estate in a Designated Integrated Tourism Resort.
A ‘Designed Integrated Tourism Resort’ include the following places in Queensland:
- Hamilton Island Resort, Whitsunday Passage, Queensland
- Hope Island Resort, Hope Island, Queensland
- Hyatt Regency Resort, Coolum, Queensland
- Kooralbyn Valley Resort, Queensland
- Laguna Quays Resort, Repulse Bay, Queensland
- Mirage Port Douglas Resort, Port Douglas, Queensland
- Palm Cove Travelodge Resort, Queensland
- Royal Pines Resort, Ashmore, Queensland
- Sanctuary Cove, Hope Island, Queensland
- Kingfisher Bay Resort Village, Fraser Island, Queensland.
A foreign person should determine whether their proposed acquisition is exempt and if in doubt, seek legal advice. Strict penalties (including civil and criminal penalties and disposal orders) may apply for breaches of Australia’s foreign investment framework.