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Foreign Investment Review Board (FIRB)

If you want to invest in the laid back Australian lifestyle, by looking to purchase a property Down Under we offer a simple way to achieve your Australian dream. In Australia, foreign investors are able to benefit from Australia’s physical beauty and political stability, and at the same time acquire wealth. Globalisation of the world’s financial markets has enabled foreign investment to significantly increase. Participating in this new world, Guardian Property Specialists is empowering overseas investors to own a property in Australia by simply, purchasing a property over the internet! Our web site provides all the information any overseas investor would need to purchase a property. This sections gives you a summary on Australia’s stance towards foreign investment, the entities involved and how to find out if your choice of investment property has foreign investment approval and if not, how to apply.

Australia – ‘An Investment Haven’

Australia recognises the importance of direct foreign investment to the growth of the economies, by liberalising investment policies in order to encourage investment inflows. Therefore, the policy stance of the Federal Government is to welcome foreign investment in Australia providing it benefits economically and is consistent with the needs of the Australian community.

By far the largest number of foreign investment proposals involves the purchase of real estate. The Government seeks to ensure that foreign investment in residential real estate increases the supply of residences and is not speculative in nature. The Government’s foreign investment policy, therefore, seeks to channel foreign investment in the housing sector into activity that directly increases the supply of new housing (ie, new developments - house and land, home units, townhouses, etc) and brings benefits to the local building industry and their suppliers.

Benefits for foreign investors include at times some of the following, comparatively high initial yields, low cost of funds, potential for income growth as rentals increase, and opportunity to obtain taxation benefits from depreciation and building allowances. Stability of the Australian market assures overseas investors Australia as a safe investment haven.

Foreign interests may apply to acquire home units, town houses, house/land packages (where construction has commenced), strata titled hotel/motel units etc in a new development, either ‘off-the-plan’, during the construction phase or when the dwelling is newly completed, provided that it has never been occupied or sold and provided no more than 50 per cent of the dwellings in any one development are sold to foreign interests. A property purchased under this category may be rented out, sold to Australian interests or other eligible purchasers, or retained for the foreign investor's own use. All applications from foreign citizens or companies to buy residential real estate are put before the Foreign Investment Review Board (FIRB).

FIRB

The Foreign Investment Review Board (FIRB) was established in April 1976 for the purpose of assisting and advising the government in the administration of foreign investment policy. The Board examines proposals by foreign interests to undertake direct investment in Australia and makes recommendations to the Government on whether those proposals are suitable for approval under the Government’s policy.

Main Functions of FIRB:

• to examine proposals by foreign interests for investment in Australia and, against the background of the Government's foreign investment policy, to make recommendations to the Government on those proposals;
• to advise the Government on foreign investment matters generally;
• to foster an awareness and understanding, both in Australia and abroad, of the Government's foreign investment policy;
• to provide guidance, where necessary, to foreign investors so that their proposals may be in conformity with the policy; and to monitor and ensure compliance with foreign investment policy.

FIRB Approval

·    Foreign interests intending to invest in real estate in Australia are required to seek prior approval from the Government through the Foreign Investment Review Board for that investment unless specifically exempted by regulation should apply.

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     Exemptions for FIRB approval include:

• acquisitions by Australian citizens resident abroad, foreign nationals who hold permanent resident visas or hold, or are entitled to hold, a ‘special category visa’ (eg a New Zealand citizen) who are purchasing property zoned as residential either in their own names or through an Australian corporation or trust;
• foreign nationals purchasing (as joint tenants) with an Australian citizen spouse property zoned as residential.

The FIRB normally gives approval to foreign interests to buy:

• House and land packages where construction has commenced, home units, townhouses, etc ‘off-the-plan’, under construction or
• Newly constructed but never occupied or previously sold. ‘Off-the-plan’ sales to foreigners are only permitted for new development projects or extensively refurbished commercial structures, which have been converted to residential, on condition that no more than half the dwellings in any one development are sold to foreign interests. Usually the developer has pre-approval to do so, normally the developer gains written approval from the FIRB in advance.
• Vacant residential land, including house and land packages where construction has not commenced, (on condition that continuous construction of a dwelling is commenced within 12 months): and
• New residential properties, which have never been sold by the builder and have never been lived in may be sold to foreign persons if certain conditions are met. Builders and developers may only sell half of the dwellings they construct to foreign people.

All other proposals by foreign interests to acquire developed residential real estate are examinable and are not normally approved. Existing residential properties may not be purchased by a foreign person unless a proposal for substantial redevelopment or improvement of the property is undertaken.

How to apply for FIRB approval?

In many instances, Guardian Property Specialists and/or developer will get a pre-approval for a development. Applications for foreign investment in property developments have to consist of ten or more dwellings, for advance approval to sell up to 50 per cent of residences to foreign interests (in special circumstances, advance approval may also be given for developments consisting of between four and ten dwellings).

In which, developers are required to provide a copy of their approval letter to each prospective purchaser and to report all sales (ie, Australian and foreign) to the Board. The initial report is due usually within twelve months and thereafter on a twelve monthly basis until all the dwellings in the development have been sold or occupied. Where such approval has been granted, it is not necessary for individual investors to apply.

If a developer has not sought advance approval, ie not FIRB approved, then the individual investor should seek approval, Guardian Property Specialists can assist in submission of an application on an individual basis for overseas applicants.

General Migration

On migration application forms, the question is always asked:

What is the value of money, goods and assets which you (and your spouse) intended to bring to Australia?

While level of assets is not a criterion for migration, except in business Visa categories, there is no doubt that to own assets in Australia, particularly property, indicates a seriousness about settling here and is evidence that the applicants will have no difficulty establishing themselves in Australia, which is a criterion for a successful application.

Student Visas

In student visa applications a great deal of evidence is required of the financial resources of the family from which the student comes before a visa will be granted.

The ownership of property in Australia would strengthen such an application, particularly if it is property in which the prospective student can be accommodated or if the income from it could be used to support the prospective student while he or she was studying here.

Visitor Visas

Visitor visas are difficult to obtain from many countries.

The ownership of property in Australia would not make it any easier to make a successful application for a visitor visa to Australia, but it would probably make it easier to secure the grant of a Business Visitor visa. To inspect properties with a view to investing in them, or to personally inspect properties already owned and check on the management of them by people acting on your behalf here would seem to be good grounds for the grant of a Business Visitor visa.

Business Migration

In business skills categories, companies which are set up to hold rental property, or to speculate by buying and selling property cannot be included in your assets, but companies set up for property development (building or renovating property) can.

In business skills categories, the personal assets of the applicant and spouse are a factor in a successful application. One of the forms asks for the total value of business assets + personal assets which can be transferred to Australia in the next two years.

Thus property owned in Australia in their own names, rather than in a company structure, would assist applicants in meeting this criterion handsomely.

In the investment-linked category in particular, real estate property is one of the "eligible investments" which may be included in assessing the eligibility of the applicant and their spouse for this Visa class. However, the property must be owned and managed by the applicants. The form says that management means "involvement in key decisions concerning evaluation, selection, purchase and sale of investments."

So real estate property in Australia owned by the applicants and satisfying the definition of management would be "an eligible investment" for this criterion and it would be possible for overseas investors to build up eligibility for this Visa category over a number of years.

The central requirement of this Visa category is that a very substantial sum of money (minimum $A 750,000) be deposited in a designated investment in Australia. It is a requirement that the funds used for this purpose should have been accumulated as a result of the business or eligible investment activity of the applicant and/or spouse. In other words, it must not have been acquired by inheritance or gambling!

Retirement Visas

Retirement visa is available for overseas people to come to Australia as temporary residents, for four years initially with two year extensions after that. Applicants must have capital of $A650,000 or capital of $A200,000 and an income from investments or pension of $A45,000 per annum.

If you begin early and build up a property portfolio in Australia, then, once you are 55 years of age and your children all left home(perhaps they migrated to Australia!), you can spend long periods in Australia without losing citizenship or property rights in your original country.
Thus, whether you have family and friends in Australia, or you just think it is a great place to spend a lot of time, you can have the best of both worlds: your country of citizenship and Australia!