20 May Foreign Investment In South Australian Real Estate: What Are The Legal Requirements?
Under Australian law, if you’re from overseas you will ordinarily have to apply for foreign investment approval before purchasing residential real estate in South Australia.
As there is a shortage of housing in South Australia like the rest of Australia, your application will be viewed more favourably if it is considered a genuine investment that has the effect of creating at least one new additional dwelling in South Australia.
You will need to understand and comply with Australia’s foreign investment framework as strict criminal and civil penalties may apply for breaches of the law.
We can assist you and advise of your rights and obligations along the way.
New dwellings and vacant land
As a foreign investor, you will need to apply for and receive foreign investment approval before purchasing new dwellings and vacant residential land for development.
Applications to purchase new dwellings are usually approved without conditions.
Applications to purchase vacant land are normally approved subject to construction being completed within four years (to prevent land banking).
Once new dwellings are built or purchased, they may be rented out, sold, or retained for you to live in.
If you’re a foreign investor and a non-resident, you will usually be prohibited from purchasing established dwellings in South Australia.
If you’re a foreign investor and a temporary resident, an exception may apply on the basis that you will need a place to live in during your time in South Australia, and you can therefore apply to purchase one established dwelling to use as a residence while temporarily resident in South Australia.
The purchase of an established dwelling in these circumstances would normally be conditional on you selling the property when you leave Australia, or cease being a temporary resident and do not become a permanent resident or an Australian citizen. Temporary residents cannot acquire established dwellings to rent out or for use as a holiday home.
You may be able to apply for approval to purchase an established dwelling for redevelopment (ie demolishing the dwelling and constructing new residential dwellings in its place). These applications are normally approved on the condition that at least two dwellings are built for the one demolished.
When will you need to seek approval?
Foreign persons must have received foreign investment approval before they acquire an interest in residential real estate in South Australia.
An interest in residential real estate can include among other things:
- signing an unconditional contract agreeing to purchase a dwelling;
- signing an unconditional contract agreeing to purchase a share of a dwelling (such as joint tenants or tenants in common with any number of other people);
- an option that provides the right to purchase a property at an agreed price at some time in the future (such as a put and call option)
What is the approval process?
You should apply for approval before assuming an interest in residential real estate in South Australia.
However, as a foreign investor there is nothing to stop you from negotiating and entering into a contract to purchase real estate in South Australia that is expressed to be conditional on receiving foreign investment approval.
What are the exemptions?
If you’re living overseas but you’re an Australian citizen, you do not require foreign investment approval to purchase residential real estate in South Australia.
New Zealand citizens and holders of Australian permanent residency visas are also exempt from the requirement to seek foreign investment approval to buy residential real estate in South Australia.
Spouses of Australian citizens, New Zealand citizens and holders of Australian permanent visas do not require foreign investment approval when purchasing residential real estate as joint tenants.
An application for approval to purchase residential real estate in South Australia will not be considered until the application fee (currently $5,500 for residential real estate under $1 million) has been paid in full.
Strict penalties (including civil and criminal penalties and disposal orders) may apply for breaches of Australia’s foreign investment rules.
Cases of non-compliance with Australia’s foreign investment framework may also be brought to the attention of law enforcement agencies and other Commonwealth departments such as the Department of Immigration and Border Protection.
SOUTH AUSTRALIAN STAMP DUTY AND THE FOREIGN OWNERSHIP SURCHARGE
If you obtain foreign investment approval, you must also be aware that upon acquiring an interest in residential land in South Australia you will be required to pay a foreign ownership surcharge of 7% of the value of the interest in residential land in addition the usual stamp duty that applies to all purchases of residential real estate in South Australia.
If you’re from overseas and looking to invest in the South Australian residential real estate market, and not sure of the legal requirements, call us on 08 8276 7955 or email us your query at email@example.com.
This blog is published by Di Rosa Lawyers for informational purposes only and is not considered legal advice on any subject matter. By reading and re-publishing the blog, you acknowledge that there is no solicitor-client relationship between you and Di Rosa Lawyers. This blog should not be used as a substitute for legal advice from a legal practitioner who specialises in the area and you are urged to consult us or seek your own independent legal advice on any specific issue or matter.