Even before the pandemic, Australia was an attractive prospect for overseas investors. After all, our country has been blessed with a stable political environment, strong institutions, plentiful natural resources and a strong economy which, until only recently, had experienced 30 years of uninterrupted growth.

As a result, foreign money poured in – particularly to buy our real estate. In the 2018-19 financial year, combined investment in commercial and residential real estate by foreign buyers totalled $87.8 billion, far outstripping other sectors.

However, our global reputation has jumped to a whole new level since then thanks to our handling of the pandemic. And with a booming property market and a rapidly recovering economy, the real estate industry is forecasting an influx of foreign buyers once travel restrictions lift.

But buying property as a foreigner comes with extra hoops to jump through – which can put some investors off.

 Foreign investment rules and regulations

 In Australia, all foreign investment is governed by the Foreign Acquisitions and Takeovers Act 1975 which seeks to balance between facilitating investment and protecting Australia’s national interest.

Under this legislation, all overseas investors have to seek approval from the Foreign Investment Review Board (FIRB) before they acquire an interest in a property.

And there are strict rules about what non-residents can and can’t buy.

Permitted investment:

  • New-build properties
  • Off-the-plan properties under construction
  • Vacant land with a view to development
  • Buying a home to live as a temporary resident – however, the property must be sold when you leave Australia

Non-permitted investment:

  • Established properties – unless the existing dwellings will be demolished and replaced with a greater number of properties than were there previously

The application fees aren’t cheap either, as the table below shows.

Property purchase price FIRB application fee
$1 million or less $5,700
$1 million – $1,999,999 $11,500
$2 million – $2,999,999 $23,100
$3 million – $3,999,999 $34,600
$4 million – $4,999,999 $46,200
$5 million – $5,999,999 $57,700
$6 million – $6,999,999 $63,300
$7 million – $7,999,999 $80,900
$8 million – $8,999,999 $92,600
$9 million – $9,999,999 $104,100
$10 million+ Contact ATO for estimate


Penalties for breaching Australia’s rules on foreign investment are even harsher – involving fines of up to $157,000 or up to three years in prison. If a foreign company falls foul of the law, they face up to $832,000 in fines.

If you’re concerned the FIRB process is putting off potential foreign buyers, don’t worry.

There’s a legal loophole that can help.

FIRB exemption certificates

Overseas investors are exempt from the FIRB process if a developer obtains an exemption certificate for the property.

There are two types of FIRB exemption certificates available:

  • New Dwelling Exemption Certificates (NDEC)
  • Near-New Dwelling Exemption Certificates (NNDEC)

Developers must pay FIRB a fee for every new dwelling sold under an NDEC. The fee is equivalent to the amount payable if the foreign buyer had sought approval from FIRB themselves.

Developers have to report foreign sales and reconcile fees with the FIRB on a six-monthly basis, starting from the date on which the NDEC was first obtained.

As sales sometimes fall through before settlement, the NNDEC allows you to re-sell a building that is no longer “new” to another foreign buyer if necessary.

Freya Southwell is a property lawyer who assists clients with property development.

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