This section outlines the eligibility criteria relating to specific categories of residential real estate:
Second hand dwelling (established) dwellings
Acquisitions by individual(s)
Foreign persons are prohibited from acquiring established dwellings for investment purposes (that is, they cannot be purchased to be used as a rental or holiday property), irrespective of whether they are temporary residents in Australia or not.
However, temporary residents can apply to purchase one established dwelling to use as their residence in Australia. Approval is usually provided subject to a condition that the temporary resident sells the dwelling when it ceases to be their residence.
Acquisitions by companies
Proposals by foreign–owned companies to acquire second-hand dwellings for the purpose of providing housing for their Australian-based staff are normally approved subject to the following condition:
- the company undertakes to sell or rent the property if it is expected to remain vacant for six months or more.
- Proposed acquisitions of vacant land for residential development are normally approved subject to development condition(s) imposed under the FATA.Acquisitions of single blocks of vacant land (that is, land which is zoned to permit the construction of no more than one residential dwelling per block of land) for the purpose of building a single residential dwelling on each block are normally approved subject to the following condition:
- continuous substantial construction must commence within 24 months.
Acquisitions of other vacant land (not single blocks) for the purpose of building multiple residential dwellings are normally approved subject to the following conditions:
- continuous substantial construction must commence within 24 months; and
- at least 50 per cent of the acquisition cost or the current market value of the land (whichever is higher) must be spent on development.
Once these conditions have been fulfilled, properties acquired under this category may be rented out, sold to Australian interests or other eligible purchasers, or retained for the foreign investor’s own use.
New dwellings acquired ‘off the plan’ (before construction commences or during the construction phase) or after construction is complete are normally approved where the dwellings:
- have not previously been sold (that is, they are purchased from the developer); and
- have not been occupied for more than 12 months.
There are no restrictions on the number of such dwellings in a new development which may be sold to foreign persons, provided that the developer markets the dwellings locally as well as overseas (that is, the dwellings cannot be marketed exclusively overseas).
This category includes dwellings that are part of extensively refurbished buildings where the building’s use has undergone a change from non-residential (for example, office or warehouse) to residential. It does not include established residential real estate that has been refurbished or renovated.
A property purchased under this category may be rented out, sold to Australian interests or other eligible purchasers, or retained for the foreign investor’s own use. Once the property has been purchased, it is second-hand real estate and is subject to the restrictions applying to that category.
Advanced Off The Plan Approval For Developers
Developers of 10 or more dwellings may have previously applied for advance approval to sell up to 50 per cent of new residences to foreign interests. If such pre-approval was granted, the developer is required to provide a copy of their pre-approval letter to each prospective purchaser and to report all sales (that is, Australian and foreign) to FIRB on a 12 monthly basis until all the dwellings in the development have been sold or occupied.
As the administrative procedures are streamlined, the current system for developers seeking advance approval to sell new dwellings to foreign persons will be discontinued. Until further notice, the pre-approval arrangements that have been operating for some time will continue to operate on a case-by-case basis. Please contact FIRB for specific advice.
All current pre‑approvals remain valid. Where such approval has been granted, foreign purchasers should not apply for individual approval. If the developer has not been granted advance approval, then the individual investor must seek approval.
Residential Real Estate for Redevelopment
Established dwellings may be acquired for the purpose of redevelopment (that is, to demolish the existing dwelling and build new dwellings). This does not include refurbishing or renovating the existing dwelling. Proposals for redevelopment are normally approved subject to the following conditions:
- the proposal must provide for an increase in the housing stock, that is, an increase in the number of dwellings;
- the existing residence cannot be rented out prior to demolition and redevelopment; and
- the existing dwelling must be demolished and continuous substantial construction of the new dwellings must commence within 24 months.
A redevelopment proposal which does not increase the number of dwellings may be approved where it can be shown that the existing dwelling is at the end of its economic life (that is, derelict or uninhabitable), since constructing a new dwelling would effectively increase the housing stock. To demonstrate that the property is uninhabitable and must be demolished, a valuation of the existing structures by a licensed valuer and/or a builder’s report is generally required. Photographs and other forms of evidence may also be required. Approval of such proposals would be subject to the same conditions outlined above.
Once these conditions have been fulfilled, the new dwellings that have been constructed may be rented out, sold to Australian interests or other eligible purchasers, or retained for the foreign investor’s own use.
If you are eligible for approval under the policy, then the acquisition will be approved subject to legally binding conditions according to the category of property (if applicable). Your application must include the relevant Declaration confirming that you meet the eligibility criteria and that you will abide by the relevant conditions.
If you are not eligible for approval under the policy, then the acquisition is generally considered to be contrary to the national interest and will not normally be approved.
Nb All cases are subject to the Firb (Foreign invesntment review board)
Sourced from www.firb.gov.au