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
More resources on Finder
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If a Chinese resident and investor want to purchase an established Australian tourist accommodation property valued at under 3 million what do they need to do to acquire this property.
Hi Pam,
Thanks for your inquiry.
For foreign investors/residents wanting to purchase a property in Australia, the good news is that the strict foreign investment laws don’t affect you. You are exempt from needing FIRB approval in a range of circumstances, including if you:
Are an Australian or New Zealand citizen
Hold an Australian permanent resident visa
Have a spouse who fits into either of the above categories and the property is being purchased in both names as joint tenants
If you are looking to get a loan for your investment, you’ll need to check whether lending restrictions imposed by the banks will have an impact on your ability to qualify for a home loan. This will depend on your residency status and the lender with which you apply for a loan. This may make it difficult for you to invest in property in Australia, so get to know the rules and regulations before buying.
As a friendly reminder, seek legal and taxation advice to make sure you satisfy all regulatory requirements.
Hope this was helpful. Don’t hesitate to message us back if you have more questions.
Best,
Nikki
Hi
Am an Australian citizen working and living in Saudi Arabia for over 9 years now. Just wondering if I could buy a land or a house while living overseas. I have enough bank balance with an Australian bank so I dont need to apply for a loan. I just would love to have some information on how could I go about that, thanks.
Regards
MMK
Hi MMK,
Thanks for getting in touch! You are most welcome to buy property in Australia even if you are a foreigner – note that properties must only be new properties, off-the-plan apartments, and vacant land. If you’re a non-resident foreigner and you want to buy any residential property in Australia, you will first need to obtain approval from FIRB. You can apply for approval online and, while there is no limit to the number of new dwellings you can purchase, you will usually need to apply for approval before each purchase.
Look through the information above that says “The FIRB application process” to get started.Hope this was helpful. Don’t hesitate to message us back if you have more questions.
Best,
Nikki
Hi, I’m an Australian citizen living as an expat in Singapore and would like to know the law relating to the purchase of either 1) an investment property 2) a personal property. The purchase would be in cash.
Could you also advise payable stamp duty, capital gains tax and any other tax or statutory laws I should be aware of.
Thanks
Hi Jonathan,
Thanks for reaching out.
Actually, there’s not really a hard-fast rule or laws for expatriates buying a property (either investment or residential) in Australia. Since you’re still considered to be an Australian citizen, you should not find it hard to buy a property in Australia. Although the process is the same when applying while you’re in the country, some lenders would need more documentation from you like a Registered and Enduring Power of Attorney. Basically, a mortgage broker can help in finding a suitable lender for you. They will also advise you what are the things to be done and help with the paperwork.
You may also refer to our article about Australian expat home loans which you may find useful.
Meantime, I can’t really be more specific on taxes as I’m not a property tax expert though, but you can click on the following if you want to know more about taxes:
Please note though that taxes are more state-specific, so the laws governing this would entirely depend on where your property is located. So best to check directly with the state revenue office and accountant about any tax implications.
Hope this has helped.
Cheers,
May
Hi, I am a doctor on 457 work visa. I have applied PR but it may take up to 12-15 months. I am looking into purchasing a big block of land with a small bungalow on it. One of my friends advised if I choose to create a family trust(?? or a company) and buy under that, I can avoid FIBR. Is that true?
Hi Andey,
Thank you for getting in touch with Finder.
I am afraid that the answer is no. As per FIRB’s guidance note 5, “Australia’s foreign investment framework imposes strict rules around the purchase of residential real estate. The use of Australian corporations, Australian domiciled trusts, or trustees who are Australian citizens or Australian corporations, does not allow foreign persons to avoid these rules.”
It is best for you to speak to someone from the said government department and a mortgage broker/real estate agent for further assistance on purchasing a property.
I hope this helps.
Please feel free to reach out to us if you have any other enquiries.
Thank you and have a wonderful day!
Cheers,
Jeni
Hi,
My wife and I currently live in Australia on Bridging visas until such time as our permanent residence is approved. Do the same laws, regarding the purchase of an investment property, apply to us as to those people living overseas? In other words would we still be obliged to apply to FIRB and also pay the additional stamp duty?
Hi Neil,
Thank you for contacting Finder.
If you’re thinking of purchasing a property in Australia, you may need FIRB approval if you are a temporary resident or a foreign investor. You are considered a temporary resident if you hold a temporary visa that allows you to stay in Australia for 12 months or if you hold a bridging visa and have completed a permanent residency application.
I hope this helps. Should you have further questions, please don’t hesitate to reach out again.
Have a wonderful day!
Cheers,
Loraine