As housing pricing in the world market plummeted, especially in the United States and in Europe, smart investors started looking for alternative markets for investment in real estate. That is how Australia became a destination of choice for most investors. Many of them were looking for a safe place to invest: a place where they were sure laws were transparent and the market was regulated.
When buying property in Australia as a foreign investment, it is important to have an idea of the legal system in place. This article briefly touches on the Australian legal system, forms of ownership, as well as the regulatory bodies charged with reviewing and endorsing investment proposals from foreign persons.
The Australian Legal System for Investment
For investors, it is important to have an idea of the laws presently in place. This will help ensure that they make decisions that are legally correct at all times. For this to happen, they also have o understand the law system in the country and how it is organized. Australia operates on common law system just like what obtains in the United Kingdom. The Judiciary has the responsibility to create laws and interpret them. Australian law makes a difference between a barrister and a solicitor. Barristers are those that go to court while solicitors are those authorized to offer advice to their clients as well as file lawsuits. While this may seem out of place in an article on real estate, it is very important that a foreign investor knows whom to consult.
Form of ownership of Investment
Property in Australia can be held under two types of titles; freehold and crown leasehold titles. A freehold title confers the ownership of the land to the buyer of the property for an indefinite period of time. A crown leasehold title on the other hand may award ownership of land based on specific conditions. They can be granted for a fixed or an indefinite period. Both holders of freehold and crown leasehold titles can rent out their land to other third parties.
Foreign Acquisition and Takeover Act (FATA, 1975)
As long as foreign investments promote national interest, the Australian government will be happy to endorse it. When it comes to acquiring property as a foreign person, the FATA is the main regulatory body. The administration of FATA is overseen by the Federal Investment Review Board (FIRB) and the Federal treasurer. All proposals for investment will pass through the FIRB which has the mandate to review all proposals and make recommendations to the Treasurer. Apart from the responsibility of assessing proposals from foreign persons, FATA is also responsible for helping foreign persons make the right investment decisions. At this point, it is important for foreign investors to note that there may be further regulations required by state laws
Criteria for approval
The main criteria for approval of a foreign investment is that it must in one way or the other promote Australia’s “national interest”. Under FATA, the Federal Treasure has a lot of powers when it comes to making approvals. They are responsible for determining what constitutes national interest and by this can decide what investment gets approved or not.