Australia: Streamlined Foreign Investment Screening For Residential Real Estate

Last Updated: 4 February 2009
Article by Justin Lethlean and Jodie Masson

Key Points

  • Simplified screening protocol for foreign persons who acquire Australian residential real estate.
  • The changes will reduce notification requirements, decrease compliance costs for temporary residents and the building industry, and align the definition of temporary residents with current visa categories.
  • New application forms and statutory notices will be introduced to facilitate the streamlined procedure.


Since 1989, the regulations regarding foreign investment screening for acquisitions of residential real estate have been complicated for both foreign investors and local vendors. However, on 18 December 2008, the Assistant Treasurer announced administrative changes to the foreign investment screening regime for residential real estate. The changes are in accordance with the recommendations of the 2006 Banks Taskforce. In essence, the changes will facilitate a reduction in transactional costs and the number of acquisitions that require notification to the Foreign Investment Review Board (FIRB).

Although the changes provide much needed relief for both foreign investors and the domestic construction industry, the new policy and regulations do not radically alter the current review procedure. FIRB's screening procedure remains a mechanism for reviewing foreign investment and encouraging foreign investors to act as exemplary corporate citizens.

Who does the notification exemption apply to?

The amended regulations have broadened the scope of 'temporary residents'. The definition of temporary resident now includes all foreign persons living in Australia with any valid visa regardless of the expiry date. This includes a person with a bridging visa who is awaiting the outcome of a visa application. However, short-term visitors such as tourists or business people are not considered temporary residents.

The existing notification requirements remain unchanged for non-residents, who must still notify FIRB of all proposed property acquisitions.

Notification exemptions and limitation changes

The following points detail the changes to the notification exemptions and threshold limitations for a variety of dwellings:

  • Temporary residents are no longer required to notify the FIRB of proposed acquisitions of established dwellings for the purpose of primary residency. An established dwelling refers to real estate that has been previously owned or occupied.

    Additionally, foreign students acquiring an established dwelling as their primary residence are no longer subject to the $300,000 purchase price limit.
  • Temporary residents are no longer required to notify the FIRB of proposed acquisitions of single blocks of vacant residential land. A single block of vacant residential land refers to land where only a single dwelling can be constructed (ie not intended for subdivision).

    Previously, foreign-owned companies, trust estates and non-resident foreign persons who acquire land had 12 months to begin construction. The amended regulations have extended the time limit to a period of 24 months to begin construction. This amendment also applies to foreign persons who wish to redevelop second hand dwellings.
  • Temporary residents are no longer required to notify the FIRB of proposed acquisitions of new dwellings. A new dwelling refers to real estate that has never been sold or occupied. The amended regulations will extend the definition of new dwelling to include dwellings that have been rented out for no more than 12 months.

    Formerly, only 50% of the dwellings in one development could be sold to foreign interests (including temporary residents and non-residents). However, new regulations will abolish this limitation so long as the developers market internationally as well as locally. Currently, there is no threshold or specification of the international and domestic marketing required. Nevertheless, when the new application forms are published the developer will be required to prove advertising activity in both international and local markets.

    Where the new dwelling to be purchased is a stand-alone dwelling (for example a house/land package where construction has commenced or been completed) the vendor is no longer required to have concurrently developed a similar dwelling in order to sell to a foreign interest.
  • Accommodation facilities such as hotels and holiday units are now considered commercial real estate. However, if an accommodation facility or a single unit in an accommodation facility is acquired, which is valued below the applicable developed commercial property threshold, no FIRB notification is required. The developed commercial property threshold is $5 million for a heritage listed property, $50 million for non-heritage listed property and $953 million for US investors.

The above exemptions to the notification requirement also include the acquisition of property by temporary residents via a wholly owned trust or Australian incorporated company.

The FIRB will be issuing updated policy documents determining whether temporary residents can retain title of real estate after the expiration of their visa or if they no longer reside in Australia.

Acquisitions by foreign-owned companies

Foreign-owned companies are now able to acquire established residences for the use of their Australian-based staff provided that they sell or rent the residence if it is anticipated to remain unoccupied for a period greater than 6 months. If the dwellings are acquired solely for the purpose of employee accommodation, there is no limit to the amount of second hand dwellings that can be purchased.

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.

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