Australia has a complex foreign investment framework with a greater focus on compliance since new rules were introduced in December 2015. Verity Law breaks down the big things you need to know before you invest in property in Australia.

Are you a Foreign Non Resident or Australian Temporary Resident?

A foreign persons generally need to apply for foreign investment approval before purchasing residential real estate in Australia. Whether you are a Foreign Non Resident or Australian Temporary Resident affects the type of property you can purchase

Foreign Non-Resident are individuals who are no ordinarily residents in Australia including a holder of a visa that permits the individual to remain in Australia for only a limited period.

Australian Temporary Residents are individuals who holds a temporary visa that permits them to remain in Australia for a continuous period of more than 12 or is residing in Australia and has

 

Temporary Residence

What kind of property are you purchasing?

Established Dwelling

Established dwellings are residential property on residential land that is not new.

You are normally only allowed to purchase one established dwelling to live as your home. This is subject to the conditions that

  1. The property is your principal place of residence in Australia
  2. You do not rent out any part of property. You must ensure that the property is vacant at settlement and
  3. You have to sell the property within 3 months from when it ceases to be your principal place of residence

You will need to apply and receive approval before purchasing dwelling for redevelopment.

You may not purchase established dwellings as investment properties to rent out or as holidays homes.
Established Dwellings for Redevelopment

Temporary residents will normally be allowed to purchase an established dwelling for redevelopment in Australia, provided the redevelopment genuinely increases the housing stock. The redevelopment will be subject to conditions such as

  • The existing dwelling cannot be rented out prior to demolition and revelopment
  • The existing dwelling is demolished and construction of the new dwellings are competed within 4 years of date of approval and
  • Evidence of completion of the dwellings is submitted within 30 days of being received by the applicant. This could include a final occupancy or builder’s completion certificate.

New Dwellings

A new dwelling is a dwelling that will be, is being or has been built on residential land and has not been sold as a dwelling and has either

  1. Not been occupied or
  2. If the dwelling is part of a development and was sold by the developer of that development and has not been previously occupied for more than 12 months in total.

Temporary residents are allowed to purchase new dwellings in Australia without being subject to any conditions. You may purchase new dwellings in addition to one established dwellings. There is no limit on the number of new dwellings a temporary resident may purchase but approval is generally required prior to each acquisition.

Vacant Land

Temporary residents will normally be allowed to purchase vacant land for residential dwelling development subject to conditions that

  1. The development is completed within 4 years from the date of approval and
  2. Evidence of completion of the dwellings is submitted within 30 days of being received. This could include a final occupancy or builder’s completion certificate

Foreign Residents

Established Dwellings

Foreign non-residents cannot purchase established dwellings as homes for use as a holiday home or to rent out.

An exception is that if you own a substantial Australian business. You may apply to purchase established dwellings in this case to house your Australian based employees. These applications are usually subject to conditions including

  • that the dwelling be sold if it is expected to remain vacant for more than six months
  • the dwelling is to be used solely to accommodate Australian-based employees of the business

Established Dwellings for Redevelopment

Foreign non-residents will normally be allowed to purchase an established dwelling for redevelopment in Australia provided the redevelopment genuinely increases the house stock subject to conditions such as:

  • The existing dwelling cannot be rented out prior to demolition and redevelopment
  • The existing dwelling is demolished and construction of the new dwellings are competed within 4 years of date of approval and
  • Evidence of completion of the dwellings is submitted within 30 days of being received by the applicant. This could include a final occupancy or builder’s completion certificate.

New Dwellings

As a foreign non-residents, you will normally be allowed to purchase new dwellings in Australia without being subject to any conditions. While there is no limit on the number of new dwellings in Australia you can purchase, approval is generally required prior to each acquisition.

Vacant land

Foreign non-residents will normally be allowed to purchase vacant land for residential dwelling development. This will be subject to conditions such as:

  • the development must be completed within four years from the date of approval; and
  • evidence of completion of the dwellings is submitted within 30 days of being received. This could include a final occupancy or builder’s completion certificate.

If the development cannot be completed within the specified four years, the foreign non-resident can apply for a variation to the condition. The application for the variation must be made at least two months prior to the end of the 4 year period and a fee will apply. Variations are considered on a case by case basis.

Note that vacant land that previously has an established dwelling will not be considered vacant land for foreign investment purposes.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.