The FIRB Approval Process for Foreign Buyers Explained

Foreign persons buying residential real estate in Australia generally need approval under the foreign investment framework before they sign a contract, not after. This approval process sits alongside the usual conveyancing steps for a residential purchase, but it has its own timing, documentation and conditions that a conveyancer needs to plan around from the very first conversation with a foreign buyer.

Who Needs Approval and When

Generally, a foreign person must notify the relevant authority and receive approval or an exemption certificate before entering into a contract to buy residential land in Australia, regardless of the value of the property. This is a meaningful difference from a standard purchase, where finance and building inspections are typically arranged as conditions within the contract itself. With a foreign investment approval, the expectation is that the buyer has already sought approval, or has an exemption certificate in hand, before they are legally committed to the purchase, which means the conveyancer's contract review needs to happen earlier in the process than usual.

Applying Through the ATO's Online Services

Applications for foreign investment approval to buy residential property are made through the Australian Taxation Office's online services for foreign investors, along with payment of the relevant application fee. Processing times can vary, and a buyer who leaves the application until after finding a property risks missing their preferred settlement timeline or losing the property to another buyer while the application is assessed. A conveyancer working with a foreign buyer will usually recommend starting the application as early as possible, ideally before making an offer, so approval or an exemption certificate is already in place by the time a contract is ready to be signed.

Established Dwellings Versus New Dwellings

Current foreign investment settings draw a sharp distinction between established dwellings and new or near-new dwellings, with foreign persons largely restricted from purchasing established homes for a defined period, subject to limited exceptions. New and near-new dwellings, and vacant land intended for development, are treated differently, generally without the same restriction, though vacant land purchases are usually subject to conditions requiring construction to be completed within a set timeframe. Because these rules affect what a foreign buyer can even apply to purchase, your conveyancer needs to confirm early in the process whether the specific property falls into a category the buyer is eligible to acquire, rather than only checking this after an offer has already been made.

Special Conditions in the Contract of Sale

Because approval, or the outcome of an application, is not always guaranteed at the time an offer is made, many contracts involving a foreign buyer include a special condition making the contract conditional on foreign investment approval being granted by a set date. Your conveyancer will draft or review this clause carefully, since it needs to reflect realistic processing timeframes and give the buyer a genuine right to withdraw, or extend, if approval has not come through. Leaving this condition out, or drafting it too loosely, can leave a buyer exposed if approval is delayed or ultimately refused after they have already exchanged unconditionally.

How Settlement Timing Is Affected

Where a contract is made conditional on approval, the settlement date effectively needs to allow for both the standard conveyancing steps, such as searches and finance, and the separate approval timeline running in parallel. If approval comes through close to the settlement date, there may be little room left to complete the remaining conveyancing work, so conveyancers generally recommend building a buffer into the settlement period for foreign buyer transactions rather than using the same timeframe as a domestic purchase. Coordinating this timing with the seller's conveyancer early avoids disputes later about whether an extension is warranted.

State Duty Surcharges Sit Alongside FIRB Approval

Foreign investment approval is a federal requirement, but most states also apply a separate foreign purchaser duty surcharge on top of standard transfer duty when a foreign person buys residential property, and in some states an additional land tax surcharge applies as well. These state-based surcharges are assessed independently of the FIRB approval process, so obtaining approval does not tell you anything about the duty outcome, and vice versa. Your conveyancer will calculate the applicable surcharge for the specific state the property is in, whether that is New South Wales, Victoria or elsewhere, as part of preparing the transfer and settlement figures, since this affects the total funds the buyer needs at settlement in addition to the standard purchase price. Foreign buyers are frequently drawn to new apartment developments in major capitals such as Sydney and Melbourne, which is exactly the new dwelling category the approval framework treats most favourably.

Registration and Ongoing Obligations After Settlement

Foreign ownership does not end at settlement. Buyers are generally required to notify the relevant register of foreign ownership of Australian assets when the purchase completes, and again if the property is later sold. Some approvals also carry conditions about how the property must be used or occupied, and failing to meet these conditions can have consequences separate from anything the conveyancing process controls. A conveyancer cannot advise on the fine detail of these ongoing obligations, which sit with immigration and taxation specialists, but they can make sure the buyer is aware that settlement is not necessarily the end of the compliance requirements attached to the purchase.

Working With a Conveyancer Experienced in Foreign Buyer Transactions

A conveyancer who regularly acts for foreign buyers will know how to sequence the approval application, the contract conditions and the settlement timeline so they work together rather than working against each other. According to the Foreign Investment Review Board's guidance on residential land, foreign investors must generally notify the authority before acquiring residential land regardless of value, and current settings largely restrict established dwelling purchases for a defined period with limited exceptions. Given how specific these rules are to individual circumstances, this is general information rather than immigration or tax advice, and foreign buyers should confirm their own position with a specialist adviser before making an offer.

If you are a foreign buyer considering a residential purchase in Australia, or an agent working with one, engaging a conveyancer early, well before an offer is made, gives the approval process a genuine chance of running alongside the purchase rather than delaying it.