Buying property in Vietnam

Exemptions include:

• Acquisitions by Australian citizens resident abroad
• Acquisitions of property zoned residential by foreign nationals who hold permanent resident visas or hold, or who are eligible to hold, a “special category visa” (eg a New Zealand citizen); and
• Foreign persons purchasing, as joint tenants, with their Australian citizen spouse, property that is zoned residential.

Under the Act, a foreign person is:

• A natural person not ordinarily resident in Australia
• A corporation in which a natural person not ordinarily resident in Australia or a foreign corporation holds a controlling interest (that is, a holding of 15 percent or more)
• A corporation in which 2 or more persons, each of whom is either a natural person not ordinarily resident in Australia or a foreign corporation, hold an aggregate conrolling interest (that is, a total holding of 40 percent or more)
• The trustee of a trust estate in which a natural person not ordinarily resident in Australia or a foreign corporation holds a substantial interest
• The trustee of a trust estate in which 2 or more persons, each of whom is either a natural person not ordinarily resident in Australia or a foreign corporation, hold an aggregate substantial interest. A substantial foreign interest (ie, a controlling interest) occurs when a single foreigner (and any associates) has 15 per cent or more of the ownership or several foreigners (and any associates) have 40 per cent or more in aggregate of the ownership of any corporation, business or trust.

The Government seeks to ensure that foreign investment in residential real estate increases the housing stock. The Government, therefore, seeks to channel foreign investment into activity that directly increases the supply of new housing (that is, new developments – house and land packages, home units, townhouses, etc) and brings benefits to the local building industry and their suppliers.

The policy on developed residential real estate is negative. The effect is twofold. First, it helps reduce the possibility of excess demand building up in the existing housing market and secondly, it aims to encourage the supply of new dwellings, many of which would become available to Australian residents, either for purchase or rent, therefore maintaining greater stability of house prices and the affordability of housing for Australians.

Acquisitions of residential real estate that has been previously owned or occupied, that is second-hand houses, flats or units, are not normally approved except for the following two categories:

• Foreign Nationals temporarily resident in Australia, holding a current temporary resident visa which permits continuous residence in Australia for a further period of more than 12 months from the time of application. The dwelling must be used as their principal place of residence and not for rental purposes, and must be sold immediately when their visa expires, they no longer reside in the property or when they cease to reside in Australia.

Note: Persons who hold visitor or bridging visas are not eligible for approval under this category.

Note: This category includes students 18 years of age and over studying courses of more than twelve months duration at recognised tertiary institutions. A general limit of $300,000 applies to the value of properties acquired by these students.

• Foreign companies with a substantial Australian business, buying for named senior executives continuously resident in Australia for periods longer than 12 months, provided the dwelling is sold when no longer required for this purpose. Whether a company is eligible, and the number of properties it may acquire under this category, will depend upon the scope of the foreign company’s operations and assets in Australia.

Note: Unless there are special circumstances, foreign companies normally will not be permitted to buy more than two dwellings under this category.

Acquisitions of vacant land for development (including house and land packages where construction has not commenced) by foreign interests are normally approved subject to:
Continuous substantial construction commencing within 12 months;

A minimum amount equivalent to 50 percent of the acquisition cost or current market value of the land (whichever is higher) must be spent on development; and
Once construction is completed, parties notify the completion date and actual development expenditure. Once these conditions have been fulfilled, properties acquired under this category may be rented out, sold to Australian interests or other eligible purchasers, or retained for the foreign investor’s own use.

Acquisitions of new home units, townhouses, house and land packages (where construction has commenced), strata titled hotel/motel units in a new development, either “off-the-plan”, during the construction phase or when the dwelling is newly completed and normally approved, provided that is has never been occupied or sold and provided no more than 50 percent of the dwellings in any one development are sold to foreign interests.

This category includes dwellings that are part of extensively refurbished buildings where the building’s use has undergone a change from non-residential (eg office, warehouse) to residential and the cost of redevelopment is a minimum amount equivalent to 50 percent of the total acquisition cost based on purchase price or market value of the property, whichever is the greater.

This category does not include second-hand residential real estate that has been refurbished.

Where the new dwelling to be purchased is a stand alone dwelling (for example a house/land package where construction has commenced or been completed) the purchase may be approved under this category providing:

• The developer has constructed a similar dwelling with overlapping construction dates;
• The similar dwelling is being sold, or has been sold for a similar consideration.
• The similar dwelling is in a proximal location; and
• The similar dwelling has been, or is to be, purchased by an Australian or other eligible person. If a similar dwelling does not exist, foreign investment approval is not available under this category.

A property purchased under this category may be rented out, sold to Australian interests or other eligible purchasers, or retained for the foreign investor’s own use. Once the property has been purchased, if is second-hand real estate an is subject to the restrictions applying to that category

Applications may be made by developers of 10 or more dwellings for advance approval to sell up to 50 percent of new residences to foreign interests. Developers are required to provide a copy of their approval letter to each prospective purchaser and to report all sales (that is, Australian and foreign) to the FIRB. The initial report is due within 12 months and thereafter on a 12 monthly basis until all the dwellings in the development have been sold or occupied.

Where such approval has been granted, it is not necessary for individual investors to apply. If the developer has not sought advance approval, then the individual investor must seek approval.

Applications to acquire existing residences for redevelopment are considered on a case-by-case basis. Proposals approved under this category must provide for an increase in the housing stock, that is, an increase in the number of dwellings. An amount equivalent to a minimum of 50 percent of the acquisition cost or current market value (which ever is the greater) must be spent on the redevelopment of the site.

• The existing residence cannot be occupied prior to demolition and redevelopment.
• Where the property is at the end of its economic life (i.e., derelict, uninhabitable) a proposal may be approved for the construction of one dwelling.
• To demonstrate that the property is uninhabitable and must be demolished, a valuation of the existing structures by a licensed valuer may be required. Photographs and other forms of evidence may also be required.
• Once construction is completed, parties notify the completion date and actual development expenditure.
• Once these conditions have been fulfilled, properties acquired under this category may be rented out, sold to Australian interests or other eligible purchasers, or retained for the foreign investor’s own use.

Most applications for approval to purchase Residential Real Estate by individuals can be made by downloading an R3 Form and a Section 26A Notice. These should be filled out and returned with all relevant documents attached by fax or post.

For applications by companies and trusts purchasing Residential Real Estate or Vacant Land, the C1 Form should be completed and returned with relevant documents. For any applications that fall outside the scope of the R3 Form or C1 Form, please refer to the Urban Land Policy Guidelines.

For applications by individuals and companies for Advanced Off The Plan Approval For Developers, please download the D2 Form, fill out and attach all relevant documents and return by fax or post.

Use the following link to download your application for FIRB approval: http://firb.gov.au/content/application_form.asp?NavID=46 Alternatively, as a service when you purchase a property through RE/MAX First, we will take care of all the FIRB paperwork and submit it to FIRB on your behalf.

Email us at integrityqld@remax.com.au to request further assistance with your FIRB approval.