19th Oct, 2010
The Australian Government is aware of the fact that some of Australia’s citizens are cautious about foreign individuals or companies buying residential real estate. It wants to ensure that the foreign real estate ownership it does allow is of benefit to the community and in keeping with the community needs. Therefore, the Australian Government insists that all applications from foreign citizens or companies to buy residential real estate (either already developed - such as houses and apartments - to be developed, to be redeveloped or existing only at plan stage) are put before the Foreign Investment Review Board (FIRB), one of its advisory boards.
This advisory board reports to Treasury and reviews all applications by to purchase residential real estate, no matter what the value of the intended purchase is, by anyone who is NOT an Australian citizen, an approved migrant, a permanent resident of Australia, a foreign national holding a permanent visa or a person who, despite being a foreign citizen, is entitled to permanent residence status in Australia, should they take it up, such as a citizen of New Zealand. These people are holders of "special category visas".
There are usually no problems when the foreign spouse of an Australian citizen applies to be allowed to purchase property with his/her spouse on a 50/50 or "Joint Tenant" basis, but there still must be an application to the FIRB.
How long does an FIRB review take?
Thirty days is needed for an application to be looked at by the FIRB. There are no "general" approvals available. An approval can only be granted on a specifically nominated property. Therefore, real estate contracts with foreign citizens must contain a clause saying that going ahead with the purchase is conditional upon getting FIRB approval and that 30 days must be allowed for that approval to be granted or denied.
What influences an FIRB decision?
If the FIRB feels that the residential real estate in question is only being purchased by a foreign citizen or company just for the purpose of renting it out, or because the purchaser wants to speculate on the property’s future value, permission to purchase will be refused.
On the other hand, approval IS usually granted to foreign applicants in the following circumstances:
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A. Where the applicant is residing in Australia on the basis of a Temporary Entry Visa (with more than 12 months validity) and is wanting to buy a residence for themselves - as long as the property is sold when the person no longer lives in Australia Applicants who are entitled to purchase on these terms include students over 18 studying at a recognised tertiary institution for more than one year who need accommodation, but a general limit of $300,000 applies to the value of any such property acquired by a student temporarily resident in Australia. Other applicants entitled to purchase are long stay retirees and people in Australia for work reasons who need accommodation. Again, any property must be sold when these categories of buyers no longer live in Australia.
This category does not cover people with visitor or bridging visas. -
B. Where a company from a foreign country wants to provide housing for its senior executives while they are posted to Australia for more than 12 months - again, as long as the property is sold when the employee is no longer living in Australia. These senior executives have to be specifically named. Usually, the purchase of two houses per company are permitted.
The purchase of another residence, such as a "weekender" for recreational use, is not approved under any of the above circumstances.
For specific information please contact Scott Partners so that we may refer you to a legal specialist.
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