The Federal Government has announced changes to foreign investment rules for residential housing which basically takes things back to where they were pre 2008. That is, many of the exceptions to the requirement to make an FIRB application have now been removed so that even Temporary Residents seeking a home loan and purchasing property in Australia to live in (which was an exception) will fall within the regime and an FIRB application will need to be made.
This does not apply to those temporary residents on a spouse or defacto spouse visa purchasing with an Australian Citizen as joint tenants. Information on spousal visa home loans here.
Temporary residents that are looking to move into the property though should not be concerned. Whilst it is an extra hurdle with a few extra forms to complete, the approval should just be a technicality. The fact is that the government does not generally oppose such purchases as their policy is more to prevent foreign ownership by investors outside of Australia forcing up the cost of buying an established home in Australia.
The new rules will however require that temporary residents sell the property when they leave Australia or move out of the property unless of course they have in the mean time obtained permanent residency.
It is important though that any contract for purchase is now signed “subject to Foreign Investment Review Board approval” or no formal contract entered into without first obtaining FIRB approval. This can be frustrating when it comes to a negotiation point of view. If the seller has another buyer at the same price without this condition then the likelihood is they will go with that other buyer.
The FIRB website has yet to be updated fully so the exact details are not available. This blog is all based on my discussions this morning with the FIRB and I will continue to provide updates as more information is provided.
To summarise, whilst this is an inconvenient step introduced by the government it is still business as usual. More information on home loans for Temporary Residents can be found here.