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There are certain requirements for foreigners wishing to own residential property in Australia. Generally, foreigners can only buy new residential accommodation in Australia. To be more specific, a new residential dwelling is a dwelling that will be, is or has been built on residential land, has not previously been sold as a dwelling and has either:
- has not been previously occupied; Where
- if the dwelling is part of a subdivision (50 dwellings or more) and has been sold by the promoter of this subdivision, has not been previously occupied for more than 12 months.
An established dwelling is a dwelling located on residential land that is not a new dwelling. A foreigner is generally not allowed to buy settled accommodation, except in the following cases:
- Buy an established home to live in as a temporary resident. Other requirements in this circumstance include that the foreign buyer’s visa must be for at least 12 months or more at the time of purchasing the property. In addition, the foreign buyer must not rent any part of the property, in particular by ensuring that it is vacant at the time of payment. And finally, the buyer must sell the property within three months of the date it ceases to be their principal place of residence, unless that buyer becomes a permanent resident of Australia (PR) or a citizen Australian by then.
- Buy established housing to demolish and develop more housing. Since the objective of the foreign investment regime is to encourage the construction of new housing, the buyer can apply for the purchase of an existing dwelling if he plans to demolish this established dwelling and build new dwellings . The condition is that the buyer must build and furnish additional new accommodation, ie. Replace 1 house with 3 townhouses. In this case, the overseas buyer will need to contact a town planner to verify any prior council approval in this regard. Other requirements in this circumstance include that the existing dwelling cannot be rented out prior to demolition and redevelopment. In addition, the existing dwelling must be demolished and the construction of the new dwellings must be completed within four years from the date of approval. And finally, the proof of housing completion must be submitted to the Foreign Investment Review Board within 30 days of receipt by the foreign buyer. This could include a final occupancy or certificate of completion from the builder.
The same requirements apply to foreign assignees in transactions where the consideration is in the form of a gift.
Strict penalties (including civil and criminal penalties and disposal orders) may apply for violations of any of Australia’s foreign investment rules. Such penalties may also be imposed on any party, such as real estate agents or others who assist in or are involved in such violations.
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