Foreign Investment Review Board: Everything You Need to Know
If you’re interested in buying property in Australia but live overseas, you may have seen the name ‘Foreign Investment Review Board’ (FIRB) crop up during your initial research.
One of the many responsibilities of this advisory body is to review Australian property proposals from foreign persons. All foreign investment applications must first go through the FIRB before they can be given the green light.
You may be wondering what kind of purchases require FIRB approval? And what’s the application process? Below, we explore everything you need to know about the Foreign Investment Review Board.
The Origins of the Foreign Investment Review Board
The Foreign Investment Review Board (FIRB) was set up in 1976 following the passing of the Foreign Acquisitions & Takeovers Act 1975 (FATA). FATA requires that certain foreign investments in Australian business, entities or land are reviewed by an established body.
The body is, of course, the FIRB, which advises the Treasury and Federal Government on all things related to Australia’s foreign investment policy. Since its establishment, the FIRB has been steadily granted greater influence over the foreign investment review process.
The FIRB’s various responsibilities are shared by the chair, six part-time members appointed by the Treasurer, and the First Assistant Secretary of the Foreign Investment Division.
What Does the FIRB Do?
The FIRB reviews foreign investment proposals for Australian businesses, properties and other entities on a case-by-case basis. It then submits its recommendations to the Treasurer for final decision.
FIRB approval is only required for proposals submitted by foreign persons, which generally refers to non-citizens and non-permanent residents. The investments of Australian citizens, expats and permanent residents aren’t subject to FIRB approval.
As stated on the FIRB website, the role of the body is six-fold:
- To examine proposed investments in Australia that are subject to the foreign investment policy and make recommendations to the Treasurer on these proposals;
- To advise the Treasurer on the operation of Australia’s foreign investment policy;
- To foster an awareness and understanding, both in Australia and abroad, of Australia’s foreign investment policy;
- To provide guidance to foreign persons and their representatives or agents on Australia’s foreign investment policy;
- To monitor and ensure compliance with Australia’s foreign investment policy; and
- To provide advice to the Treasurer on Australia’s foreign investment policy and related matters.
In short, the FIRB’s role is to ensure foreign investment policy is working effectively and incoming foreign investment aligns with the national interest.
Who Needs FIRB Approval?
Your citizenship status is one of the main factors that determine whether you’ll need to apply for FIRB approval. If you’re an Australian citizen, an Australian expat living overseas or an Australian permanent resident, you don’t need FIRB approval for any type of investment.
However, you’ll likely need to apply for FIRB approval when making an acquisition in Australia if you’re a foreign investor or a temporary resident. Pushing ahead with a purchase without FIRB approval can cause delays, a breakdown in the investment or even criminal sanctions.
Foreign investors, meaning any persons living overseas without Australian citizenship, require approval from the FIRB.
The investment property must be a new property or vacant land to build a new property. It cannot be an established dwelling, unless it is bought together with an Australian spouse as joint tenants——this means having equal ownership and interest in the property.
Certain exceptions apply to foreign investors, such as when the property developer has received an exemption certificate for the property or the property is inherited.
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Australian residents with a temporary visa, such as a student visa, spouse visa, or Temporary Skill Shortage (TSS) visa, require FIRB approval when making an investment in Australia.
In addition, temporary residents are only eligible to buy one established dwelling, and it must be to live in. Once you move out of the property, it must be sold. Temporary residents can purchase an investment property, but it must be a new property or vacant land to build a new property.
However, you don’t need FIRB approval as a temporary resident if you’re buying a property as a joint tenant with an Australian citizen or permanent resident.
What Types of Properties Require FIRB Approval?
Barring any exemptions, non-citizens must apply for FIRB approval for any type of property they intend to buy in Australia, including residential property, commercial real estate, and agricultural land. Provided that you follow FIRB’s guidelines, your proposal will likely be accepted.
Generally, all investments in new properties and vacant land to build a new property will be approved, no questions asked. Once new properties are built or purchased, they can be rented out, sold or retained as the foreign investor sees fit.
The FIRB is less likely to green light purchases of established dwellings, unless they are to be lived in by the buyer for the duration of their time in Australia. This helps prevent housing speculation, which offers little benefit to the Australian economy and limits the housing stock.
The FIRB Application Process
If you’re a foreign investor or temporary resident and have chosen a specific property to buy, you can begin the FIRB application process on the Australian Taxation Office website.
There are separate application forms for residential real estate and other investments, such as commercial property and agricultural land, so make sure to check that you’re using the appropriate form.
To complete the form, you’ll need to include various personal details as well as information about the property you wish to purchase. Once the application is submitted, the FIRB typically takes 30 days to grant approval.
Many property developers will include a condition in the contract that allows you to withdraw from a purchase if FIRB approval is not provided, allowing you to push on with your investment even if you haven’t yet received FIRB approval.
FIRB Application Fee
You’ll also be required to pay an application fee to submit your FIRB application. The amount is determined by the value and type of property you plan to purchase.
For purchases valued at $1 million or less, the application fee is $5,600. For more expensive acquisitions, the fee rises.
You can use the fee estimator service on the FIRB website to get a rough idea of how much your application fee will cost.
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If you’re a non-resident looking to purchase property in Australia, you’ll likely cross paths with the FIRB. However, if you’re an Australian citizen living overseas or a permanent resident in Australia, you needn’t worry; any investments you make will not be subject to FIRB approval.
Even for foreign investors and temporary residents, it’s unlikely the FIRB will stand in your way when making an acquisition in Australia, provided you stick to the body’s guidelines and submit your application in a timely manner.
The only time you’re likely to struggle is when purchasing an existing dwelling, unless you plan to live in the home yourself. This is because housing speculation can price locals out of homes, and is therefore seen as contrary to the national interest.
If you need assistance in purchasing a house as an Australian citizen living overseas, please get in touch with the Odin Mortgage experts.
Frequently Asked Questions
We’ve answered some of the most common questions about the FIRB below.
What Does the Foreign Investment Board (FIRB) Do?
The Foreign Investment Review Board (FIRB) oversees Australia’s foreign investment policy and reviews all investment proposals from foreign nationals wishing to purchase property, businesses and other entities in Australia.
The advisory body reviews foreign investment proposals on a case-by-case basis, before making recommendations to the Treasurer. Its role is to ensure foreign investment aligns with the national interest, such as growing the housing stock or supporting national security.
Do I Need Foreign Investment Board (FIRB) Approval?
If you’re an Australian citizen living overseas or a permanent resident, you don’t need approval from the Foreign Investment Board (FIRB) on any purchases you make in Australia. That means you can buy Australian real estate for investment or other purposes as you see fit.
However, FIRB approval is required for acquisitions made by foreign investors and temporary residents, including proposals for residential real estate, commercial property and agricultural land. The vast majority of applications are approved.
When Might Foreign Investment Board (FIRB) Applications be Rejected?
The Foreign Investment Board (FIRB) approves almost all foreign investment applications. Proposals are only denied when they are deemed to go against the national interest, which is rare. For instance, an acquisition could limit housing availability or damage an industry.
Why Does the Government Monitor Foreign Investment?
The Government monitors foreign investment to ensure that investment benefits the economy and supports the national interest. For example, established dwellings are generally off-limits for foreign investors interested in purchasing residential real estate.
Instead, foreign investors are limited to new properties or vacant residential land to build a new property. This ensures investment adds to the country’s housing stock and prevents speculation, which can have a negative impact on housing availability and affordability.