Australian residential real estate means all urban land (other than commercial properties like offices, factories, warehouses, restaurants, shops). Acquisition of 'hobby farms' and 'rural residential' blocks by foreign interests are included in this category.
Foreign buyers 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.
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 be obtained and advice provided whether the parties are successful or not, and if so, a copy of the signed contract must be forwarded to the Foreign Investment Review Board (FIRB) after auction.
Acquisitions by Australian citizens resident abroad; acquisitions of property zoned residential by foreign nationals who hold permanent resident visas 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.
Include 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, holds 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, holds 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 housing stock. Therefore, the Government 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.