Buying Property on a Bridging Visa: FIRB Rules
The real question: can a bridging visa holder buy a home in Australia?
This is an important question for many people awaiting a decision on a permanent residence visa. The short answer is: possibly, but with significant restrictions under the rules of the Foreign Investment Review Board (FIRB).
Bridging visa holders — whether on a BVA, BVB, BVC or any other type of bridging visa — are not treated as permanent residents under foreign investment law (the Foreign Acquisitions and Takeovers Act 1975). As a result, they are treated as a “foreign person” and must comply with the FIRB rules that apply to non-citizens buying property in Australia.
What is FIRB and why does it matter?
FIRB (the Foreign Investment Review Board) is the federal body that oversees foreign investment into Australia, including the purchase of property. When a “foreign person” wants to buy property in Australia, they generally need approval from the Treasurer through FIRB.
Most FIRB applications for residential property are processed by the ATO (Australian Taxation Office) on FIRB’s behalf. Where FIRB rules are not followed, the consequences can include being forced to sell the property, heavy financial penalties (which can run into millions of dollars for serious breaches), and even criminal prosecution in cases of fraud.
What type of property can you buy?
This is the most important point to understand:
Only new dwellings: Bridging visa holders are generally only permitted to buy new property — that is, a home or apartment that has never been owned or lived in by anyone else. This includes:
- Brand-new, unused homes or apartments (including brand-new off-the-plan)
- Vacant land for building a new home (subject to a requirement to build within a set period)
- Certain specified property development projects
Established dwellings cannot generally be bought: This is the biggest restriction. Bridging visa holders generally cannot buy a home or apartment that has previously been owned or lived in, apart from a few very limited exceptions (for example a dwelling that is so dilapidated it needs to be fully demolished and rebuilt).
FIRB fees
Even when a purchase is permitted, bridging visa holders must also pay a FIRB fee. This fee is calculated according to the value of the property:
- Property valued under 1 million AUD: a fee of around 14,100 AUD
- Property from 1 to 2 million AUD: a fee of around 28,200 AUD
- Property from 2 to 3 million AUD: a fee of around 56,400 AUD
This fee is paid when you lodge the FIRB approval application and is not refunded even if the application is refused.
In addition, many states also apply a Foreign Purchaser Additional Duty — an additional property transfer duty for foreign buyers, typically between 7% and 8% of the property value depending on the state.
The process of buying property on a bridging visa
If you decide to buy property while holding a bridging visa:
Step 1 — Identify a suitable type of property: Only consider new property or vacant land for building. Do not waste time looking at established dwellings.
Step 2 — Lodge a FIRB approval application: Apply through the ATO/FIRB online portal at firb.gov.au. Processing usually takes 10–30 days but can take longer in some cases.
Step 3 — Do not sign a contract before you have FIRB approval: This is an important point. You should not sign a contract to buy property before you receive FIRB approval, or the contract must be made conditional on FIRB approval.
Step 4 — Get advice from a property lawyer: A property transaction as a foreign person is far more complex than for a permanent resident. A property lawyer experienced in working with non-citizens is essential.
Practical considerations when buying while awaiting a visa
Even though it is legally permitted, there are several practical factors to weigh up before deciding to buy property while on a bridging visa:
Visa risk: If your permanent residence application is refused, you will have to leave Australia and manage the sale or management of the property from overseas. FIRB fees for people who are not resident in Australia are considerably higher.
Lending difficulties: Many Australian banks will not lend, or apply stricter conditions (a lower LVR, higher interest rates), to temporary visa holders, including bridging visa holders.
Timing: If you expect to receive permanent residence within a few months, it may be worth waiting until you have PR to avoid the FIRB fee and additional duty.
Possible price negotiation: Some new-property developers are willing to contribute towards the FIRB fee as part of a promotional package — ask carefully when you negotiate.
Buying property is the largest financial decision in many people’s lives. While your visa status is still unsettled, weigh it up very carefully before you commit.