Under Australia’s foreign investment framework, foreign persons need to apply for foreign investment approval before purchasing residential real estate in Australia.
The Government’s policy is to channel foreign investment into new dwellings as this creates additional jobs in the construction industry and helps support economic growth. Foreign investment applications are considered in light of this principle.
It is important that foreign investors understand and comply with Australia’s foreign investment framework as strict penalties may apply for breaches of this law, including orders requiring you to dispose of property purchased by you without approval.
New Dwellings and Vacant Land
Foreign persons generally need to apply and/ or receive foreign investment approval before purchasing new dwellings and vacant residential land for development.
Applications to purchase new dwellings are usually approved without conditions. Applications to purchase vacant land are normally approved subject to construction being completed within four years. Once new dwellings are built or purchased, they may be rented out by the foreign investor, sold, or retained for their own use.
Land that has previously had an established dwelling on it would generally not be treated as vacant land for the purposes of Australia’s foreign investment framework. Further, a single dwelling that has been built to replace one or more demolished established dwellings would generally not be considered a new dwelling for the purposes of Australia’s foreign investment framework.
Non-resident foreign persons are generally prohibited from purchasing established dwellings in Australia. However, reflecting the fact that foreign persons who are temporary residents need a place to live during their time in Australia, temporary residents can apply to purchase one established dwelling to use as a residence while they live in Australia.
The purchase of an established dwelling in these circumstances would normally be conditional on the foreign person selling the property when they leave Australia or cease being a temporary resident and do not become a permanent resident or an Australian citizen.
In addition to his, temporary residents cannot acquire established dwellings to rent out or for use as a holiday home.
The Application Process
Foreign persons should apply for approval before taking an interest in residential real estate. However, foreign persons who want to minimise the risk of a property they are interested in purchasing being sold to someone else before they receive foreign investment approval can enter into a contract as long as the contract is conditional on receiving foreign investment approval.
Foreign persons are required to pay a fee for each application made or notice given, under the Act and the Regulation (limited exceptions apply).
The fees that are payable for residential land applications depend on the price for the acquisition of the interest and can end up being quite costly, another reason why foreign persons may wish to enter into a conditional contract.
The board has a statutory period of 30 days to make a decision from the date of full payment of the relevant fee on the application, and a further 10 days to notify the applicant of the outcome.
Article from: NL & Associates
Written by: Nicole Leggat