How foreigners can buy investment properties in Australia
Foreign buyers can purchase Australian property as investors. But there are strict rules.
Key takeaways
- Buying an investment property in Australia as a foreign buyer comes with extra rules and regulations that you'll need to follow.
- The Foreign Investment Review Board (FIRB) oversees foreign property purchases and has its own application process.
- Most foreign buyers are limited to buying investment properties that are newly built.
Can foreigners buy property in Australia?
Yes. Non-Australians can buy property in Australia as investments. In Australia, foreign property purchases are regulated by FIRB (meaning foreign buyers must apply for approval through the FIRB before buying residential real estate) and there are limitations in place.
According to the FIRB website:
The Australian Government's policy is to channel foreign investment into new dwellings. The overarching principle is that a proposed investment should increase Australia's housing stock. Investment into new dwellings creates extra jobs in the construction industry, helps support economic growth, and increases government revenues.
In other words, Australia's foreign property investment rules encourage foreign buyers to purchase new buildings and therefore stimulate the construction of new housing.
Purchasing new dwellings
Foreign investors can get approval to buy new buildings or vacant land (provided you construct a property on the land) for investment purposes.
Foreign investors are currently unable to invest in established dwellings (existing homes) unless you're planning significant redevelopment.
How does the FIRB application process work?
Before you apply for approval to purchase an investment property, it's recommended that you obtain expert legal advice to make sure you understand and comply with all the necessary legal requirements. Then you can follow the steps below to apply for foreign investment approval:
- Check the FIRB website to read the guidance and check if you need FIRB approval.
- Visit the ATO website and click on "Start your application".
- Fill out the application form with your contact details, passport, visa documents and any previous FIRB application reference numbers.
- Provide the address and title details of the property you wish to purchase.
- Read and sign the declaration.
- Submit the application and pay the relevant fee.
- A decision on your application is usually made within 30 days and you will be informed of that decision within 10 days.
You must obtain approval from the FIRB before you can apply for a home loan with an Australian lender. Fees are payable at the time of lodging your application.
Penalties for breaking rules on foreign investment
There are serious potential penalties for breaching Australia's rules on foreign investment. Acquiring property without FIRB approval can involve hefty fines or time in prison.
There are higher penalties for foreign companies breaching these rules.
Home loan restrictions
If you need a home loan to cover your purchasing costs it's important to compare loans and lenders carefully. Many Australian lenders impose tighter lending criteria on foreign buyers. This can include:
- A lower loan-to-value ratio (LVR). LVR refers to your deposit size relative to the price of the property. You may need a larger deposit (around 30-40%) to qualify for a mortgage.
- A higher interest rate. A lender may only offer a loan for your investment with a higher interest rate than the lowest rates on the market.
- Restrictions on foreign income. Some lenders won't accept loan applications from temporary residents unless they earn an income in Australia.
If you want to get a home loan for your foreign investment you should approach lenders and ask directly about borrowing as a foreign investor. You could also focus on international banks that operate in Australia, such as HSBC.
Speaking to a local mortgage broker is also a good idea.
Tax implications
Finally, it’s also worth remembering that there are tax implications for investing in Australian property. Any rental income you receive from your investment will need to be declared on an Australian tax return. You will need to pay Capital Gains Tax on any profit you make when selling the property.
Sources
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My husband and I are parents of a married daughter who is now an Australian permanent resident as is her husband. We want to visit annually for 3-6 months a year and are interested in buying a property to stay in while we are there. We envisage that we would again visit on a visitor visa; it seems unlikely that the parent sponsor route would be realistic for us at our age.
1 Can we buy an established property to use for our visits
2 If yes – Can this be rented out when we are not using it
3 If no – can we buy a new property and rent it out ?
Regards
Irene
Hi Irene,
Foreign property purchasers are able to buy new investment properties in Australia, subject to approval from the Foreign Investment Review Board (FIRB).
But foreign purchasers are not able to buy established homes.
You would be able to buy a property and rent it out, but there are limitations on how often you would be able to live there yourself. For example, FIRB guidelines state that: “Foreign persons who own residential property will be required to pay an annual vacancy fee if their property is not residentially occupied or genuinely available for rent for more than 183 days (approximately six months) during a year.”
There are other rules and regulations in purchasing a property as a foreign investor and renting it out so make sure to check with the FIRB first for the latest information.
I hope this helps.
Regards,
Richard
Can purchasing a residential property result in residential visa for a foreigner?
Hi Nilly,
Purchasing or owning a property cannot get you a Permanent Residency (PR) in Australia. It is not an essential criteria to be met when applying for permanent residency or citizenship. Other factors such as family connections, work history, and time in Australia are still considered when applying for permanent residency.
You can visit this page for the list of requirements when applying for a permanent visa.
I hope this helps!
Regards,
Sarah
If I apply to the FIRB and submitt a circa $12K fee to buy an established property. Does the fee get reimbursed? Secondly, other sites I have looked at seem to indicate strongly that foreign investors cannot buy established properties? Thirdly, does a tourist visa 651 suffice?
Hi Mike,
Yes, you’re correct, this scheme is designed to stimulate the product of new articles. There are some exceptions where you may be able to buy established properties, as outlined in the article (eg.
Buying a home to live in as a temporary resident. You have to sell it once you leave, unless you become a permanent resident or citizen; or Buying an established dwelling to demolish it and develop more dwellings.)
According to the ATO, fees are only waived or reimbursed in limited circumstances. Generally, the fee is designed to cover the cost of relevant staff and resources required to process the application, although $12,000 is quite substantial.
Regarding visas, it’s worth contacting FIRB directly for information, it is best to contact FIRB directly to confirm the latest information. Visit https://firb.gov.au/about-firb/contact-us or get more info at https://firb.gov.au.
Hope this helps!
Many thanks,
Sarah
I am a UK citizen looking to split my time between the UK and Australia for the purposes of visiting family. I would like to purchase a property in Australia to live while visiting. Do you see any problems with this?
Additionally to my previous question. I would not be requiring an Australian mortgage nor would I rent the property out. I would also prefer to purchase and established property rather than a new build.
Hi Mike,
You can definitely buy an established property in Australia. As long as you follow the rules and regulations, there will be no problem. If you are a foreign buyer you may need approval from the FIRB.
I hope this helps.
Kind regards,
Richard
If I am a Aussie citizen living in Hong Kong and filing tax return every year. I am also 100% holding a private company in HK. Now I am interested in buying an apartment in NSW. Is there any advantage to buy the property by that HK company?
Hi Danny,
This is a complicated situation and we can’t really provide much of a detailed answer. If buying as a foreign company you may need Foreign Investment Review Board (FIRB) approval.
Here’s FIRB’s email addresses (varies depending on the type of the property):
– Foreign investment in residential real estate: FIRBresidential@ato.gov.au
– Foreign investment (excluding residential real estate): firbenquiries@treasury.gov.au
I hope this helps!
Cheers,
Richard