Official FIRB investment license increased 3 times for existing housing

The Federal Parliament has just passed a draft amendment law on fee collection regulations for foreign real estate transactions in 2024, effective from September 1.y 09/4/2024, which will amend the 2015 toll collection act and 2020 toll collection regulations. 

The bill includes:  

• Triple current fees when buying existing housing. 
• And, double vacancy fees for all foreign-owned properties purchased since May 9, 2017.

FIRB INVESTMENT LICENSE IN HOUSING

Under the Foreign Investment Act 1975 (Cth) (FATA), foreigners must apply to the Foreign Investment Review Board (FIRB) and receive approval before purchasing any type of real estate. 

Foreigners are allowed to buy “new housing” when approved by FIRB.

However, to protect Australia’s existing housing supply, foreign individuals are generally not allowed to buy “existing housing”. There are exceptions to this prohibition: 

• If an individual is a temporary resident, he or she is allowed to buy an existing residential property and must sell it within 6 months after the expiration of the temporary residence period. 
• Or, that transaction could reinvigorate development: 

       – Increases Australia’s housing supply.

       – Is a commercial project (subject to the development conditions set by FIRB).

FIRB FEE REGULATIONS BEFORE April 9, 2024

When making a real estate purchase, foreigners must apply to the FIRB and pay a registration fee based on the value of the real estate.

The old registration fee is the same for new housing, existing housing and vacant land. 

Additionally, foreigners who own real estate purchased after May 9, 2017 are required to pay a vacancy fee if the property is not used for residential or rental purposes within 6 months. 

The vacancy fee (if payable) is equivalent to the registration fee at the time of application for FIRB approval.

AMENDMENT OF FIRB FEE REGULATIONS

The bill includes a number of additional changes as follows:

• Triple current fees when purchasing existing real estate.
• And, double the vacancy fee for properties purchased since May 9, 2017.

The Australian government’s objective is to encourage foreigners to invest in new housing developments (rather than existing housing), creating additional housing supply, supporting economic growth, as well as reducing the risk of vacancy, stimulating supply.

FEES INCREASED

Below is an illustration of the changes to the tripling of the FIRB fee for available properties and the doubling of the vacancy fee, effective from April 9, 2024.

Compare registration fees for available properties

Compare empty house fees

Article source: foreigninvestment.gov.au

And the law firm: hwlebsworth.com.au

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