The thriving Australian property market is an appealing idea to people in and outside the country. However, purchasing property isn’t the most straightforward process, especially for investors from overseas and foreign buyers. Every country has their own laws, and therefore it’s vital to research before attempting to purchase property in another country. In Australia, foreigners can buy land, however, there are some conditions and regulations you need to be aware of to avoid serious ramifications down the line.
So, with all that in mind, let’s examine the ins and outs of investing and owning property in Australia. We’ll look at the logistics of purchasing land, who you need to talk to and the fees you can expect to incur.
Is it possible for a foreigner to buy land in Australia?
Yes, however, there are conditions. First, you’ll need to submit an application to the Foreign Investment Review Board (FIRB). This board’s role is to assess non-Australian residents and their claims to purchasing Australian property. Ultimately, the board is determining whether this investment will have a positive impact on the Australian economy and society.
If you do get approved by the FIRB, there are some restrictions on what you can buy, which are:
- The land you purchase must be vacant land to build a new property.
- Therefore, you can not purchase a pre-existing dwelling, unless it has never been lived in before.
This ties into the idea of helping the Australian economy. Building a new property will lead to work in the construction industry among others or investing in a business opportunity could bring money into the community.
Can any foreign investor purchase Australian property without FIRB approval?
There are a few situations or cases where you may be exempt from needing FIRB approval. For starters, if you’re an Australian citizen who happens to reside overseas, you can still buy property in Australia while you’re overseas. It probably goes without saying that Australian citizens who live in Australia also don’t need FIRB approval. Temporary residents will still need to get FIRB approval before they can buy Australian real estate.
If you’re from New Zealand, you may find you don’t have to go through the same hoops as foreigners from other countries, as our Kiwi neighbours usually get the same rights as the locals.
If your de facto partner or spouse is an Australian citizen and is purchasing property with you, you also won’t have to get approval from the FIRB. You’ll need to hold the title of the property together as joint tenants for this to apply.
Remember, even if you’re exempt from needing FIRB approval, you won’t necessarily be exempt from paying Additional Foreign Aquirement Duty.
Fees for foreigners buying property in Australia
You’ll be required to pay capital gains tax, foreign citizen stamp duty
Amount Fee
| Value of Property | Fee |
| Less than $75,000 | $4,200 |
| $1million or less | $14,100 |
| $1 million – $2 million | $28,200 |
| $2 million- $3 million | $56,400 |
| $3 million – $4 million | $84,600 |
| $5 million-plus | $112,800 |
Stamp Duty and other surcharges per state
| Queensland | 7% stamp duty |
| New South Wales | 8% stamp duty + 2% land tax |
| Victoria | 8% foreign purchase additional duty |
| Western Australian | 7% foreign stamp duty surcharge |
| Southern Australia | 7% stamp duty |
| Tasmania | 8% Foreign Investor Duty Surcharge |
| ACT | 0.75% land tax surcharge |
What are the different categories of land ownership in Australia?
Torrens Title (freehold)
This is by far the most common property title type in Australia and is used with houses and land purchases. The property ownership is recorded in a central register therefore making official the new title.
A Torrens title gives you full ownership over everything within the boundary lines, and complete control over the development of the property (providing, of course, that you comply with local council and national laws and guidelines).
Limited Torrens Title
The main feature that distinguishes a Torren Title is the accuracy of the government ledger that confirms the title of the land. However, sometimes details can be hazy regarding a title, be it due to complications regarding ownership due to lack of documentation or a dispute over other boundary lines between neighbours. In these situations, a limited Torrens title may be issued which declares ownership of some of the property, but not all of it. This can cause issues with reselling as buyers will be reluctant to purchase property with these types of issues.
The good news is that if the issue is resolved, for example, documentation is provided to clear up ownership claims or the boundary dispute is settled, then a limited title can become a Torrens title.
Strata Title
Strata titles apply more to multi-unit developments including apartment buildings, townhouses and similar commercial buildings. This allows for individual ownership of a lodging, the unit itself for example, and shared ownership of common facilities, like lifts, lobby areas, swimming pools, laundry and so on.
Leasehold Title
Under this arrangement, ownership of the land isn’t sold to the individual. Rather the buyer is allowed to lease the land for a specified amount of time (this can be quite a while, even several decades).
What are the agricultural land rules & regulations for foreign investment?
Foreign investors can purchase acreage properties, however, just like any other land, they will need to get approval. More detailed information can be found by clicking here.
What are the commercial real estate rules & regulations for foreign investment?
Along with getting approval from the Foreign Investment Review Board to purchase the commercial property, you’ll need to register the asset with the Australian Taxation Office (ATO), regardless of the value of the property. This registration can be done on your behalf authorised representative.
The established dwellings rule doesn’t usually apply to the same extent as it does with residential property, meaning you’ll be able to purchase an existing building.
What process do foreigners need to go through to buy land in Australia?
Organise a team
Even the savviest investor with years of experience can’t get it done alone. You’ll potentially need to find yourself a solicitor, real estate agent, builder, accountant, financial advisor and builder. We’d also recommend hiring a local building broker, like Buildi, who is familiar with the local building industry and can help guide you through the process.
Sort out your finances
It’s never too early in the process to talk to your financial institution or advisor about loans and what you can realistically buy. Simply put, you can’t be too organised or prepared with your finances.
Get in touch with the Foreign Investment Review Board and place an application
As we’ve discussed above, this is a key step that will make or break your project. What the FIRB are most interested in is how your foreign investment will help the Australian economy or benefit the community. A strong case is something as simple as providing work for the construction industry.
Find an Australian Property
It’s a cliche, but the old saying still stands. Location, location, location. Finding the best location will make a world of difference to your investment or your future life in Australia. Having a local advisor will help you determine the best choice for you, especially if you’re unfamiliar with Australian suburbs.
Seek FIRB approval for your property purchase
Once you’ve found an ideal block, you’ll need to get Firb approval for your investment.
Negotiate a purchase price
The price of land in Australia can vary wildly depending on where you’re buying. Talk to a local real estate agent or buyers’ agent about negotiating the sales price. You might just save as much as 10-15% of the advertised price.
Obtain your mortgage approval
By this stage, most of the vetting process should have been completed, and barring some drastic change in your financial situation, you should be approved. Your mortgage broker will contact a lender and organise the necessary paperwork for you to sign.
Contracts
Your solicitor will be the driving force in this step, organising the legal proceedings. Your solicitor will exchange contracts with your seller’s legal representative and you’ll need to pay a deposit.
Double-check that everything is in order to purchase your property
This is when you should go over everything in your contract, and touch base with your team to make sure everything has been taken care of.
Settle
Settling is the final stage of purchasing property and will usually take place around six weeks after the contract has been finalised and signed.
Get in touch with Buildi to find the perfect builder for your new home.
Now that you’ve got a block of land in Australia, it’s time to build your new dream home.
Can I get a home loan from an Australian lender?
Yes, however, there are a lot of catches and it’s not as straightforward for foreigners as it is for Australian citizens. A lot of this can be put down to the logistics if something goes wrong. Australian lenders willing to offer loans to overseas investors will enforce more stringent rules and criteria than they would for locals. This will likely include:
- Higher interest rate
- Being required to pay a higher deposit (between 30-40% but possibly more).
- Restrictions imposed on foreign income used to pay back the loan.
- And of course, your lender will want proof you’ve received approval from the FIRB.
What happens if I don’t get FIRB approval before buying property in Australia?
If you don’t get FIRB approval before a property purchase when you’re legally required to do so, there could be some serious consequences. How severe your punishment will be will depend on what degree you’re in breach of FIRB rules. Each penalty point is worth $222, so minor infractions may only cost you a few hundred dollars.
However, if you’ve committed a number of infractions or have simply bought commercial or residential property without consulting the FIRB at all, you could end up paying huge fines or even face prison time.
What are the benefits for foreign investors when buying land in Australia?
- The Australian property market is stable, which is always welcome regarding investment.
- The land is a more stable investment than the stock market. Though you’re unlikely to make a fast profit like you potentially can with the stock market, your chances of losing everything overnight are also much less likely.
- There is constant demand for rental properties, especially in capital cities
What are the drawbacks for foreign investors when buying land in Australia?
- Investment property is always a gamble, even in thriving markets. The best safety net you can provide yourself.
- The application fee along with other extra costs will likely make this a more expensive proposition than investing in your own country. This can pay off, but be sure this is the correct investment for you.
- If you’re looking into a commercial property, research the area to ensure your business idea is a viable option.
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