• How to Buy Land in Australia: A Complete Guide

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    Investing in Australian land plots is comparably easy to other Asian countries like Thailand, the Philippines, and Indonesia.

    Foreign investors generally only have to apply for approval to the Foreign Investment Review Board (FIRB), but few applications have been rejected.

    Worth mentioning is that your nationality and what land type you plan to buy affect the requirements. In this article, I present the key information when foreigners buy land in Australia.

    Topics covered:

    • Can foreigners buy land in Australia?
    • Land Types Available to Foreigners
    • Process of Buying Land in Australia
    • Land Prices in Australia
    • Taxes

    Can foreigners buy land in Australia?

    Australian citizens can own land on a freehold basis, which is contrary to developing countries like Vietnam where land is controlled by the state. As such, in this article, we primarily focus on how it works when foreigners acquire land in Australia.

    According to the Foreign Acquisitions and Takeovers Act 1975 (the Act), foreign persons have to submit an application to the Treasurer called ‘notifiable actions’ or ‘notifiable national security actions.’

    To understand more how they define foreign persons, I recommend you to check FIRB’s website.

    Foreign ownership regulations also differ slightly depending on what kind of land type you plan to buy.

    Land Types Available to Foreigners

    Below I have listed different and regulations that apply for various land types.

    The land types covered include agricultural land, commercial land, and residential land.

    Agricultural Land

    Agricultural land is not easily available in Asian countries. Malaysia has some of the most relaxed ownership regulations of land but agricultural land is significantly more difficult to buy compared to most other land types.

    In Australia, you’ll come across fewer hurdles even if foreign investors have to seek approval from FIRB if transactions exceed AUD 15 million.

    With that said, foreigners from countries that are free trade agreement partners can invest in land worth more than AUD 15 million and with substantially higher thresholds.

    FTA partners with Australia:

    • ASEAN
    • Canada
    • Chile
    • China
    • Japan
    • Mexico
    • New Zealand
    • Peru
    • South Korea
    • United States

    For example, for private investors from New Zealand, Chile, and the United States the threshold is AUD 1216 million, a significantly higher value.

    Worth mentioning is that government investors have to get approval from the FIRB for each land investment, no matter what the land value is.

    Other notable regulations for foreigners

    • If the land is considered to be ‘National Security Land’, approval is always needed
    • The development of agricultural land generally are usually subject to certain development conditions
    • Others not mentioned in this article

    Commercial Land

    Commercial land is described by the Australian government as follows:

    • Land that is only used for a primary production business (if not, it’s treated as agricultural land)
    • There are less than 10 residential units that can be built on the land (if not, it’s considered residential land)
    • There are at least one residential units, except a commercial residential premise

    Not to forget: Commercial land is further divided into developed or vacant land as follows:

    • Commercial land is considered vacant if there are no structures on the land that can be lawfully occupied by goods, persons, or livestock
    • Developed commercial land, on the other hand, is defined as land that doesn’t meet the definitions and requirements for vacant land. Simple as that

    Investment thresholds for commercial land:

    The same as it goes for agricultural land, government investors have to apply for permission from FIRB for investments starting from AUD 0.

    Private investors from free trade agreement partner countries (excluding Peru and Hong Kong SAR) have to apply for permission for vacant land investments of AUD 0 or more. Developed commercial land has a higher threshold of AUD 1216 million.

    Private investors from Peru and Hong Kong enjoy additional benefits as the monetary threshold for sensitive developed land start at AUD 61 million.

    Residential Land

    Foreign persons (as defined above) generally need approval for any investment in residential land.

    As explained in my article about buying real estate in Australia, the government encourages foreigners to invest in new/off-plan projects as this is beneficial for the local economy.

    In addition:

    • All transactions of residential land must be informed to the Register of Foreign Ownership of Residential Land
    • Foreigners also generally need approvals for the purchase of vacant residential land and the construction of physical premises to be finalized within 4 years and where the land is not sold until the construction is finalized

    Process of Buying Land in Australia

    First of all, I recommend you to read the requirements that apply for foreign investors on FIRB’s website. I have included some general guidelines above, but suggest that you go through these in greater detail.

    You can also email FIRB if you have any particular questions. A property lawyer can also help you with further clarifications.

    Second, you have to find a land plot that meets your investment targets. A time-saving and efficient choice is to work with a partner that can present multiple land plots for sales, instead of scrolling through endless listings.

    When you’ve found a land plot, investors generally visit the site to confirm the quality of the land and engage in deeper discussions, reviewing the title, checking the land boundaries, previous and current ownership, and more.

    A valuation is also needed and foreigners sometimes open new companies overseas to hold the land investment. Not to forget, it’s important to confirm that the land has service connections, might it be in remote or greenfield areas in urban areas.

    This should be discussed with credible local partners in greater detail to reduce future pitfalls and to make the investment as smooth as possible. This is something we can help with at Asia Property HQ.

    Land Prices in Australia

    Australia is one of the biggest continents in the world and is mainly inhabited on the East Coast. Naturally, prices differ significantly depending on where you buy.

    You can find land that costs as little as AUD 0.18 per square meter close to Tara, a town in Queensland. At the same time, land can cost more than AUD 1,000 per square meter in Western Sydney, a rate more than 50,000 times higher.

    New South Wales

    Looking at farmland prices in New South Wales, we saw a reduction in land transactions of -14.5% in 2019 compared to a year earlier. Yet, the median price increased by 17.2% to AUD 5.066 per hectare.

    Below I’ve also included information from listings for different land plots in New South Wales:

    Terranora / NSW

    • Type: Residential land
    • Price: AUD 1,750,000
    • Size: 0.75 ha (7,500 sq.m.)
    • Price per sq.m.: AUD 233

    Laguna / NSW

    • Type: Residential land
    • Price: AUD 329,000
    • Size: 9.14 ha (91,400 sq.m.)
    • Price per sq.m.: AUD 3.59

    Western Australia

    The median price for farmland increased by a hefty 28.2% in 2019 compared to a year earlier. At the same time, land transactions in terms of sold land areas were reduced by 4.6%.

    Examples of listings with land plots in Western Australia:

    Burnside / WA

    • Type: Residential land
    • Price: AUD 1,750,000
    • Size: 16.32 ha (163,200 sq.m.)
    • Price per sq.m.: AUD 10.72

    Geographe / WA

    • Type: Residential land
    • Price: AUD 569,000
    • Size: 1,166 sq.m.
    • Price per sq.m.: AUD 487

    Queensland

    In Queensland, the price for farmland decreased by 0.8% and to AUD 4,650 per hectare. We saw a decrease of 5.9% in traded land areas compared to a year earlier.

    Examples of listings with land plots in Queensland:

    Craiglie / Queensland

    • Type: Residential land
    • Price: AUD 875,000
    • Size: 10.93 ha (109,300 sq.m.)
    • Price per sq.m.: AUD 8

    Picnic Bay / Queensland

    • Type: Residential land
    • Price: AUD 200,000
    • Size: 280 sq.m.
    • Price per sq.m.: AUD 714

    Taxes

    Below I have included taxes that you have to pay when acquiring land in Australia.

    Transfer Duty

    Transfer duty is charged for transactions of vacant land, commercial or industrial properties, and businesses which include land. The duty should be paid within 3 months.

    The rate typically ranges from 4% to 6%.

    Land Tax

    Land tax is charged with different thresholds and with a rate that is changed every year. For more information about the tax, you can check the Revenue Department’s website.

    Vacant land is usually considered a capital asset subject to capital gains tax (CGT) as well according to the government.

    I hope that you found this article interesting and useful. If you want to know more about buying land, I also recommend you to read my separate that explains how you can buy commercial property in Australia.

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