Australia’s Foreign Investment Review Board (“FIRB”) – A brief overview
The FIRB examines proposals from foreign persons who wish to invest in Australia and makes recommendations to the Treasurer under both the Foreign Acquisitions and Takeovers Act 1975 and in accordance with Australia’s Foreign Investment Policy. Applications for foreign investment approval, can be made in respect to both real estate investments and business investments.
It is recommended that all real estate investments made by person who are not Australian citizens should be subject to notification to the FIRB in order to gain prior approval.
Note that residential real estate, being all land and housing that can be used for residential purposes, is treated differently to commercial real estate and to rural land.
Please note that residential real estate, means all Australian urban land other than commercial properties (such as offices, factories, warehouses, hotel, restaurants and shops). Rural residential blocks and hobby farms are considered residential real estate.
Temporary residents can only acquire one established (or second hand) dwelling which must be used by that resident as their principal place of residence. There is no restriction however, on the number of vacant or new properties, or established dwellings for redevelopment, that a temporary resident can receive approval to purchase. Thus, established/second hand dwellings purchased by a temporary resident can’t be rented because that dwelling should be the temporary resident’s principal place of residence. New dwellings however, or dwellings built on vacant land, and dwellings built as part of a redevelopment can be rented out.
Foreign non-residents or short term visa holders, cannot buy established/second hand dwellings unless it is for the purpose for redevelopment. Such persons may invest in Australian real estate however, by acquiring new dwellings, or off-the-plan properties under constructions or yet to be built or vacant land for development.
Temporary residents, providing they are a person who holds a visa which permits them to stay in Australia for continuous period of more than 12 months, or has submitted an application for permanent residency, may acquire one establish dwelling only, but it must be used as their residence in Australia. However, they will still need to make an application if they wish to buy an established dwelling. Such applications are normally approved provided that:
- The property is vacant at the time of settlement;
- The property will be used as the applicant’s principal place of residence;
- No part of the property is rented;
- They will be required to sell the property when it ceases to be their principal place of residence, or when they depart Australia.
You do not need government approval to be buy residential real estate if:
- You are a foreign national who holds an Australian permanent residency visa;
- Or you are a foreign national buying a property as a joint tenancy with an Australian citizen spouse.
- Further you do not need government approval regardless of your citizenship or residency status if:
- you are buying new dwellings brought from a developer who has a pre-approval to sell to foreign persons;
- Or you are buying interest in a time shares scheme that allows you to use that for up to four weeks per year;
- Or you are buying residential real estate in an integrated tourism resort
All acquisitions in urban land corporations or trust estates (with some exemptions) must also be notified (to FIRB) irrespective of the value or the nationality of the investor.
Developer Pre-Approval for new Dwellings
Where a developer has been granted pre-approval to sell new dwellings to foreign persons, an individual foreign purchaser does not need to submit an application for approval. Pre-approvals remain valid for as long as the building is a new dwelling, in the development identified.
Commercial Real Estate
Commercial real estate in general terms includes offices, factories, warehouses, hotels, restaurants and shops or other retail outlets. It does not include rural land (which is defined as land wholly and exclusively used for the purposes of carrying on a substantial business of primary productions). If rural land does not fall within this definition then it could be considered commercial real estate.
Foreign persons need to notify FIRB if they want to take interest in developed commercial real estate that is valued at AUD$54 Million or more. However if the real estate is heritage listed, then a $5 Million threshold applies. There is an exemption for developed commercial real estate applicable to purchase by New Zealand or US investors (this can be up to AUD $1,078 million).
Please note that developed commercial real estate also includes hotels, motels, hostels and guest houses, as well as individual dwellings that are part of these properties. However, a unit in a hotel that is owner occupied or rented out privately (and therefore not part of the hotel business) is considered to be residential property.
In respect to land for commercial development, Foreign persons need to apply to buy or take an interest in land for commercial development (including for instance to start a forestry business), regardless of the value of the land.
Such proposals are normally approved subject to development conditions.
There are monetary thresholds as to notification to the FIRB, which exist for all investors other than New Zealand and US investors as follows:
• AUD $5 million for the purchase of developed non-residential commercial real estate where the property is heritage listed;
• AUD $54 million for the purchase of developed non-residential commercial real estate where the property is not heritage listed;
• AUD $248 million where the purchase is an interest in an Australian business (valued above this sum).
These amounts are indexed.
In respect to land only, all of the following must be notified, irrespective of the value or nationality of the investor:
• All vacant non-residential land
• All residential real estate.
Full Policy as at 2015 can be found here.