Advice on Buying Property Abroad
Buying property abroad is a big decision in itself and you will need to address the legal requirements as set out by the local governing Authorities if you decide to invest in Australian real estate.
In Australia, the Foreign Investment Review Board examines proposals by foreign interests to undertake direct investment in Australia and makes recommendations to the Government on whether those proposals are suitable for approval under the Government's policy.
The Commonwealth Government of Australia seeks to ensure that foreign investment in residential real estate* increases the housing stock. The Government therefore seeks to channel foreign investment into activity that directly increases the supply of new housing (house and land packages, flats/ units, townhouses etc) and brings benefits to the local building industry and their suppliers. So as you can see, the Australian Government is on side with those of you wanting to purchase Australian real estate.
The policy on developed residential real estate helps reduce the possibility of excess demand building up in the existing housing market and secondly, it aims to encourage the supply of new dwellings, many of which would become available to Australian residents, either for purchase or rent. This maintains greater stability of housing prices and the affordability of housing for Australians.
Purchases of vacant residential land are normally approved provided as long as continuous construction of a dwelling is commenced within 12 months.
Approval for purchases of flats/units and townhouses “off the plan” are normally given approval. This is conditional upon no more than 50% of the units/flats in any one development being sold to overseas investors.
Buying Property Abroad in Australia:
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.
Who is exempted from obtaining FIRB approval?
Australian citizens resident abroad and foreign nationals who hold permanent resident visas or holding 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.
Under the Act, a foreign person is:
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.
A substantial foreign interest (eg. a controlling interest) occurs when a single foreigner (and any associates) has 15 per cent or more of the ownership or several foreigners (and any associates) have 40 per cent or more in aggregate of the ownership of any corporation, business or trust.
Certain categories of foreign nationals who are temporarily resident in Australia for more than 12 months and who wish to use the property as their principal place of residence while in Australia are normally given approval. These properties are not to be rented. This also includes long time resident retirees.
Generally, all proposals to purchase developed/currently existing residential Australian real estate are not normally approved, except in the case of foreign companies with an established business already in Australia who may wish to acquire residences for named senior executives who have been resident in Australia for longer than 12 months. This is conditional upon the property being sold when no longer required for this purpose. Dependent upon the size of a foreign company in Australia these purchases are normally limited to two only.
Proposed acquisitions of developed non-residential commercial real estate are normally approved unless they are contrary to national interest.
For further information on tourism sector policy, guest houses, holiday flats, strata titled hotels and motels see www.firb.gov.au
* Residential real estate means all Australian urban land other than commercial properties