Brief introduction to different types of FIRB approvals with respect to foreign acquisition of residential properties in Australia
The Foreign Investment Review Board (‘FIRB’) requires foreign purchasers to have received FIRB approval prior to entering into an unconditional contract of sale for a residential property in Australia.1
The most common types of FIRB approvals are as follows:
- FIRB approval for new dwellings;
- FIRB approval for vacant land;
- FIRB approval for established dwellings; and
- New dwelling exemption certificates.
FIRB approval for new dwellings is required for foreign purchasers when purchasing a new dwelling in Australia.2 The application of FIRB approval for a new dwelling will generally be approved without conditions subject to the applicant satisfying the prescribed requirements. A typical example of a new dwelling is an off-the-plan property.3
FIRB approval for vacant land is required for foreign purchasers when purchasing vacant land in Australia.4 The application of FIRB approval for vacant land will generally be approved with conditions requiring the applicant to complete construction on the vacant land within four years and evidence of the completion of dwelling submitted within 30 days of it being received.5 Such evidence is normally in the form of an occupancy permit or builder’s completion certificate.
FIRB approval for an established dwelling allows foreign purchasers who are temporary residents of Australia to purchase one established dwelling as their primary place of residence in Australia. To obtain FIRB approval for a purchase of an established dwelling, it will generally include the following conditions:6
- The foreign purchaser must use the established dwelling as the primary place of residence;
- The foreign purchaser must not rent out the established dwelling; and
- The foreign purchaser must sell the established dwelling if the foreign purchaser ceases to use this property as the primary place of residence.
Some developers can apply for the new dwelling exemption certificate for their development project.7 Foreign purchasers are generally not required to apply for the FIRB approval if the developer provides the foreign purchasers with a copy of the new dwelling exemption for the development project. Foreign purchasers must check if the contract of sale has included the new dwelling exemption certificate for the development project.
Whether a foreign purchaser is obliged to apply for FIRB approval with respect to the purchase of a residential property in Australia, must be assessed on a case by case basis. It is strongly suggested that each foreign purchaser should seek independent legal advice before purchasing a residential property in Australia. Otherwise, heavy penalties may apply.
This article is intended to provide general information in summary form on legal topics, current at the time of first publication. The contents do not constitute legal advice and should not be relied upon as such. Formal legal advice should be sought in particular matters.
1. Foreign Investment Review Board, Australian Government, Residential Real Estate – Overview [Guidance Notes 1] (1 July 2017).
2. Foreign Investment Review Board, Australian Government, Residential Real Estate – Foreign Non-residents [Guidance Notes 3] (1 July 2017).
3. Above n.
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6. Foreign Investment Review Board, Australian Government, Residential Real Estate - Temporary Residents [Guidance Notes 2] (1 July 2017).
7. Foreign Investment Review Board, Australian Government, Residential Real Estate - New (and Near-New) Dwelling Exemption Certificate [Guidance Notes 8] (1 July 2017).