FIRB application for foreign developers in the purchase of established dwellings for “redevelopment” purposes.
There are a number of restrictions for foreign investors acquiring second hand residential properties in Australia (“established dwellings” in foreign acquisition legislation terms). Foreigners are generally prohibited from purchasing established dwellings with few minor exceptions. Most are aware of the exception that an established dwelling be purchased for owner occupier purposes but another category is for development or redevelopment purposes.
In addition to the standard FIRB approval conditions, some of the approval conditions specific to the development component are:
1. property/properties must be vacant at settlement (this makes it very important when negotiating contracts with existing tenants);
2. the demolished dwelling must also be replaced with multiple dwellings, each of a comparable size and value to each other (i.e. it needs to increase housing supply in Australia);
3. evidence of completion of the dwellings being submitted to the Government within 30 days of it being received;
4. not selling or transferring the property prior to completion of all dwellings.
We have recently acted for a foreign developer in the FIRB application of a townhouse development project in QLD involving multiple sites navigating these tricky conditions, not only strategizing the contract terms from a development perspective but also navigating the additional layer of complexity of FIRB compliance conditions.
Should you have any queries please contact Stephen Kwok or our firm to discuss.
