Understanding the Acquisition of Vacant Residential Land

When choosing to move to Australia as a foreign national, there are a lot of hoops to jump through including if you want to buy property in this country. The same applies if you are a foreign investor looking at purchasing vacant residential land as an investment opportunity so it is important that you take FIRB legal advice.

What is the FIRB?

The Foreign Investment Review Board or FIRB is the organisation that short term visa holders, foreign residents or temporary residents from any country need to apply to if they are looking to buy real estate in Australia. The FIRB is a non-statutory organisation which advises the Australian government on foreign investment policy as well as guidelines on who can buy what.

The main focus of the FIRB’s approach to foreign investment is on new dwellings in order to increase supply. The Australian Government’s goal is to help to drive up jobs in the construction industry, maintain a lid on the price of housing and also increases government taxation revenue. Part of this increased revenue comes from the application charges applied to foreign investors. The charge is just one part of what is a complex process and in order to work through all the relevant requirements, costs and timelines, it is key that you engage professional FIRB advisors.

What is the Latest Guidance on Residential Land State?

The FIRB updated their guidance on acquiring residential land on 15 January 2021. Foreign nationals need to have FIRB approval before they buy residential land or an interest in residential land and this is regardless of the value of the land. Once the approval has been granted, there is a time restriction on the building/construction having to be completed with a four-year time period. The land therefore cannot be sold until that construction has been completed.

What is Allowed and Not Allowed When Buying Vacant Residential Land?

There are a number of permissible actions (as well as restrictions for what is not allowed) and this can depend on what category of foreign national you fall into.

• Temporary residents
• Non- residents

A temporary resident is someone who has applied for a permanent visa (meanwhile holding a bridging visa so they can remain legally in the country until the permanent visa is finalised). Or they hold a temporary visa allowing them to stay in the country for a continuous period of more than 12 months. This is regardless of what is left on the visa. Before seeking to buy vacant residential land, they need FIRB approval. Temporary residents can then seek to buy vacant residential land for residential development. This is subject to completion within four years of approval PLUS they must provide evidence the project is complete and this has to be submitted within 30 days of being received.

Non-residents are those non-citizens that do not live in Australia and therefore it may not be their main area of residence. These are people who have visas that are limited to a certain period of time but can include other groups. These groups could include foreign corporations, governments or general partners of a limited partnership meeting the definition of a foreign person. It can also include trustees of a trust that falls under the definition of a foreign person.

What a foreign resident cannot do is to buy an established dwelling, but they can buy new dwellings without having to comply with any conditions. However, if they are looking to buy vacant residential land either for their own purpose or for investment opportunities then conditions do apply. Again, as for the temporary resident, the development must be finished within a four-year period from the date of the FIRB approval. Evidence of this has to be submitted to the FIRB within a 30-day period of this being received.

What are the Costs of Application?

There is a cost for applying for FIRB approval and this is reviewed on an annual basis. The fee schedules and information are published on the FIRB website as well as a fee calculator.

Working through this process can be time consuming especially for those not familiar with the process so for a speedier and stress-free process, make sure you take FIRB legal advice from an experienced professional.