2024 Revisions to FIRB Application Fees – Higher Costs for Established Residential Properties
- Kai Yeung
- Apr 22, 2024
- 3 min read
Updated: Apr 23, 2024
On 8 April 2024, the Foreign Acquisitions and Takeovers Fees Imposition Amendment Act 2024 received the Royal Assent.
The Foreign Acquisitions and Takeovers Fees Imposition Amendment Act 2024 made several changes to the foreign investment law:
Triple foreign investment fees for the acquisition of established dwellings;
Double vacancy fees for established and new residential dwellings for vacancy years commencing on or after 9 April 2024; and
Makes other related amendments.
The Current Regime
In Australia, there is legislation that generally restricts foreigners from purchasing existing homes, except in specific circumstances. These exceptions include cases where temporary residents buy a home for personal use or when someone acquires an existing property for redevelopment to increase housing availability. Foreigners can typically buy new homes, but they must obtain approval from the Foreign Investment Review Board (FIRB), which incurs a fee.
Additionally, if a foreigner has bought a home since 9 May 2017, they may be subject to a 'vacancy fee'. A vacancy fee is intended as a financial incentive for foreign owners to make their residential dwellings in Australia available for rent. It aims to prioritise housing access for Australians and ensure that habitable homes are not left unoccupied.
This fee is applicable if the home remains unoccupied, is not genuinely available for rent on the market for a minimum term of 30 days, or is not rented out for at least 183 days within a year.
The vacancy fee typically matches the FIRB application fee paid when purchasing the property.
KEY CHANGES FROM 8 APRIL 2024
Tripling of FIRB Fees
The change involves tripling FIRB application fees for acquiring residential land with established dwellings.
The impact of this increase in residential application fees is demonstrated in the table provided below:
Purchase Price of Established Dwelling (AUD) | Previous FIRB Fees to purchase an established dwelling (AUD) | New FIRB Fees to purchase an established dwelling (AUD) |
$1M or less | $14,100 | $42,300 |
$2M or less | $28,200 | $84,600 |
$3M or less | $56,400 | $169,200 |
$4M or less | $84,600 | $253,800 |
$5M or less | $112,800 | $338,400 |
$6M or less | $141,000 | $423,000 |
Doubling of Vacancy Fees
The second amendment involves doubling annual vacancy fees for all foreign-owned dwellings acquired after 9 May 2017. When combined with the tripling of foreign investment fees, this results in a six-fold increase in vacancy fees for future purchases of established dwellings.
The impact of doubling annual vacancy fees is demonstrated in the table provided below:
Purchase Price of Established Dwelling (AUD) | Previous annual vacancy fees for established dwellings (for land purchased between 01/01/2021 to 31/12/2023 (AUD) | New annual vacancy fees for established dwellings (for land purchased between 01/01/2021 to 31/12/2023 (AUD) | New annual vacancy fees for established dwellings (for land purchased after the introduction of the new fees (AUD) |
$1M or less | $14,100 | $42,300 | $84,600 |
$2M or less | $28,200 | $84,600 | $169,200 |
$3M or less | $56,400 | $169,200 | $338,400 |
$4M or less | $84,600 | $253,800 | $505,600 |
$5M or less | $112,800 | $338,400 | $676,800 |
$6M or less | $141,000 | $423,000 | $846,000 |
The Implications for Foreign Investors
Given that FIRB fees for established residential properties have tripled and vacancy fees for such properties have surged by 600%, foreign investors are advised to thoroughly evaluate these considerable transaction expenses and potential ongoing holding costs before committing to the purchase of established dwellings.
SEEKING LEGAL ADVICE
The circumstances for each sale or purchase of a property can be different. Before exchanging a Contract of Sale, you should always plan ahead by speaking with a legal professional about your matter.
At Yorkins Legal, we aim to give our clients hassle-free legal services. We can assess and advise on your circumstances to ensure your next purchase or sale of a property is as smooth as possible.
Our initial consultations are free, confidential and can be discussed over the phone or in person.
We offer after-hours consultations and mobile service for our clients’ convenience. We will meet you wherever it is most comfortable for you, whether at your home or office.
Contact us to speak with our friendly team today.
Related Solicitor
Kai Yeung
Principal Solicitor
T: (02) 7255 2788
Disclaimer - The information contained on this site is intended only to provide a general overview of matters of interest and is intended to apply only within Australia. It does not constitute legal advice. Professional advice should be obtained from a Yorkins Legal professional before taking any action in relation to any information contained on this site.
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