Foreign Buyers

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With internet becoming a major global marketing tool overseas property investment now is a worldwide business.

Over the last decade Australian property has proven to be one of the best performing asset classes, with solid capital growth and increasing rental return. Foreign buyers discovering that Australian property becoming one of the major attractions due to unique combination of stable political, economical and social systems.

Australian economy has enjoyed seventeen consecutive years of steady growth and today is the only country in developed world to have been the least affected by Global Financial Crisis. “Australia has overtaken the US as a top global financial centre, according to the World Economic Forum survey released in October 09. The financial crisis caused most countries' ratings scores to drop significantly, but Australia was an exception.”

Australian lifestyle is one of the most attractive in the world with very diverse multicultural communities.

For the foreign buyers to be able to purchase property in Australia, you must be approved by a Federal Government Body known as the Foreign Investment Review Board (FIRB).

All property contracts entered by the foreign buyers must be made subject to conditional upon foreign investment approval, unless property already approved by FIRB or the buyer obtained approval prior to entering into the contract.

There are a number of reasons why foreign buyers decide to buy property in Australia:

	Buyers looking for brand new properties with managed rental return
	Buyers looking for safe environment to invest excess cash secure to make a solid capital growth
	Buyers are an Australian expats returning back to Australia in the near future and looking for a head start in locating a property from abroad
	Buyers or their children coming to work or study in Australia and looking to buy property as a place of residence while in Australia
	Buyers that have been accepted as a new immigrant to Australia or laying foundations to migrate in the near future and looking to buy property with sound returns while preparing for relocation

      FIRB Investment Rules for Australian non-permanent residents

The Australian Federal Government controls the purchasing of Australian businesses and properties by foreign investors and persons, either in or outside Australia, through the Foreign Investment Review Board (FIRB).

Where a foreign interest in charge of, owns or controls 15% or more of an Australian company, it may be deemed by the FIRB to be a foreign company.

Foreign investors and persons, who fail to comply with the FIRB’s investment rules, are subject to a possible

	two years imprisonment or a fine of AU$50,000.00 (for foreign persons)
	cancellation of contracts and compulsory divestiture (forced sale) of Australian property
	fine of AU$250,000.00 (for foreign companies)

With that, Australian investment rules require certain legalities and contracts involving foreign persons must first be subject to FIRB approval.

A general outline not advice to be relied upon is below of the FIRB rules faced by foreign nationals (i.e. people who are not permanent Australian residents thinking of buying):

1. New residential property that has never previously been sold by the builder and has never previously been inhabited can be sold to a foreign person where certain conditions are satisfied. Builders and developers are only to sell half of the residential properties they build to foreign persons. FIRB approval must first be obtained
2. A foreign person may not purchase existing residential property unless a proposal for substantial improvement or re-development of the property has been carried out. FIRB approval must first be obtained
3. Rural land holdings valued over a prescribed sum must first have the FIRB’s approval
4. Businesses-Commercial property valued at less than $50,000,000.00 can be sold to foreign persons without FIRB approval. Business or commercial property that is valued more than $50,000,000.00 must first have FIRB approval (Note, special rules relate to investors of the U.S.A). Other special rules are applicable depending on industry sector
5. Off the plan units/apartments can be sold to a foreign person or entity provided the developer selling has pre-approval from the FIRB (note, no more than 50% of the development can be sold to foreign persons)
6. Vacant land can be purchased by a foreign investor who undertakes to commence construction of a building on the land within 12 months of its acquisition. FIRB approval must first be obtained

Recent changes to Foreign Investment Policy as of 04.08.2009 click here

Special FIRB rules relating to permanent and temporary Australian visa holders

1. A foreign person who is married to an Australian generally is permitted to acquire property jointly with their cohabitating spouse that can include an eligible de-facto partner. FIRB approval must first be obtained
2. A permanent resident visa holder is permitted to purchase an Australian property or business interest in Australia without FIRB approval
3. A temporary resident visa holder can only purchase property or business in Australia subject to FIRB rules outlined. Approval from the FIRB though can be sought for a person or recognised entity holding a temporary residence visa (generally with a duration of no less than 12 months eg 457, 309, 820) to purchase one (1) residential property that will serve as their private residence while remaining in Australia for the duration their visa allows

For more information about foreign investment rules go to FIRB