International Investors
Australia welcomes people living outside the country to purchase property. Rules and regulations governing foreign investment are overseen by the Foreign Investment Review Board (FIRB). The following is an excerpt from their website www.firb.gov.au
Suitable properties for international investors can be searched easily on www.geewizauctions.com - there is a separate search box on the home page.
Residential
Residential real estate means all Australian urban land other than commercial properties (that is offices, factories, warehouses, restaurants, shops). Acquisitions of 'hobby farms' and 'rural residential' blocks by foreign interests are included in the residential real estate category
Foreign purchasers intending to acquire real estate in Australia must seek prior approval from the Government through the Foreign Investment Review Board unless specifically exempted by the Foreign Acquisitions and Takeovers Regulations.
Entering Into A Contract
All contracts by foreign persons to acquire interests in Australian real estate must be made conditional upon foreign investment approval, unless approval was obtained prior to entering into the contract.
For properties to be purchased at auction, prior foreign investment approval must still be obtained and advice provided whether the parties were successful or not, and if so, a copy of the signed contract forwarded to the Foreign Investment Review Board (FIRB) after the auction.
Who is Exempt?
Exemptions include:
acquisitions by Australian citizens resident abroad;
acquisitions of property zoned residential by foreign nationals who hold permanent resident visas or hold, or who are eligible to hold, a 'special category visa' (eg a New Zealand citizen); and
foreign persons purchasing, as joint tenants, with their Australian citizen spouse property that is zoned residential.
Under the Act, a foreign person is:
a natural person not ordinarily resident in Australia;
a corporation in which a natural person not ordinarily resident in Australia or a foreign corporation holds a controlling interest (that is, a holding of 15 percent or more);
a corporation in which 2 or more persons, each of whom is either a natural person not ordinarily resident in Australia or a foreign corporation, hold an aggregate controlling interest (that is, a total holding of 40 percent or more);
the trustee of a trust estate in which a natural person not ordinarily resident in Australia or a foreign corporation holds a substantial interest; or
the trustee of a trust estate in which 2 or more persons, each of whom is either a natural person not ordinarily resident in Australia or a foreign corporation, hold an aggregate substantial interest. A substantial foreign interest (ie, a controlling interest) occurs when a single foreigner (and any associates) has 15 per cent or more of the ownership or several foreigners (and any associates) have 40 per cent or more in aggregate of the ownership of any corporation, business or trust.The Government seeks to ensure that foreign investment in residential real estate increases the housing stock. The Government, therefore, seeks to channel foreign investment into activity that directly increases the supply of new housing (that is, new developments - house and land packages, home units, townhouses, etc) and brings benefits to the local building industry and their suppliers.
The policy on developed residential real estate is negative. The effect is twofold. First, it helps reduce the possibility of excess demand building up in the existing housing market and secondly, it aims to encourage the supply of new dwellings, many of which would become available to Australian residents, either for purchase or rent, therefore maintaining greater stability of house prices and the affordability of housing for Australians.
FAQs
Q21. The property I wish to buy is coming up for auction next Saturday. Do I need prior approval to bid at the auction?
A. The nature of auction sales is that bids are made without conditions. If you make a bid and have not previously obtained FIRB approval, then you will already have broken the law. Moreover, the vendor may enforce the contract and depending on whether the purchase accords with Government policy, you may be subject to legal action. It is in your own best interests to get prior approval from the Government. Whilst no guarantees can be given, every effort is made to process your request in time for the auction date. Obviously, the more notice the better.
Q22. I want to purchase a house at auction, but I can't make the contract conditional, what should I do?
A. If you submit your application before the auction and give us reasonable time (approximately 5 working days before the auction), we try to ensure that you have the decision before the auction.
Source: www.firb.gov.au Feb 2008
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