FIRB Approval: Who Needs It and Why It’s Required in Australia

FIRB approval is a statutory authorisation required under Australian federal law for certain acquisitions by foreign persons, including interests in residential land, commercial property, businesses, and sensitive assets. It is not a procedural formality and does not depend on commercial rationale, financial capacity, or representations made by third parties. This regime operates independently from state-based buyer incentives such as first home buyer grants, which are governed by separate revenue legislation and do not displace FIRB obligations.

From a legal standpoint, FIRB approval operates as a pre-transaction compliance requirement. The obligation arises automatically where legislative thresholds are met, and failure to obtain approval before acquiring an interest may result in mandatory divestment, substantial civil penalties, or criminal liability.

What Is FIRB Approval in Legal Terms?

FIRB approval is a formal authorisation issued under the Foreign Acquisitions and Takeovers Act 1975 (Cth), permitting a foreign person to acquire a specified interest in Australian land, businesses, or assets.

Legally, FIRB approval:

• Is transaction-specific and does not apply broadly to future acquisitions
• Does not replace or override state property, planning, or contract laws
• May be granted subject to enforceable conditions
• Remains subject to post-approval monitoring and enforcement

Approval is granted by the Treasurer, following advice from the Foreign Investment Review Board, but legal responsibility for compliance remains with the investor. Buyers who are uncertain about their classification or obligations should find a property lawyer before entering into any binding arrangements.

Why FIRB Approval Is Required Under Australian Law?

FIRB approval is required because Australian federal law mandates government oversight of certain foreign acquisitions to protect the national interest. This requirement is imposed by the Foreign Acquisitions and Takeovers Act 1975 (Cth) and applies automatically where a foreign person seeks to acquire a regulated interest in Australian land, businesses, or assets.

Legally, the FIRB regime exists to control foreign participation in sectors affecting housing supply, economic stability, national security, and strategic infrastructure. Approval allows the Treasurer to assess proposed acquisitions, impose enforceable conditions, or prohibit transactions that may be contrary to Australia’s national interest. Without this statutory approval, the acquisition itself is unlawful, regardless of commercial intent or financial capacity.

Who Is Legally Required to Obtain FIRB Approval?

FIRB approval is legally required for any person classified as a “foreign person” under Australian law who seeks to acquire a regulated interest in Australian property, land, or assets. This obligation arises automatically under the Foreign Acquisitions and Takeovers Act 1975 (Cth) and is not dependent on visa duration, intention to reside, or investment purpose.

Under the legislation, a foreign person includes non-citizens, temporary visa holders, foreign corporations, and entities controlled by foreign individuals. These persons must obtain approval before acquiring residential real estate, certain commercial land, agricultural land, or interests above prescribed thresholds. Failure to obtain approval renders the acquisition unlawful and exposes the purchaser to compulsory divestment orders, civil penalties, and criminal sanctions.

FIRB Approval and Residential Property Acquisitions

Residential property acquisitions are one of the most tightly regulated categories under FIRB legislation.

New Residential Property

Foreign persons may generally obtain approval to acquire:

• Newly constructed dwellings
• Off-the-plan apartments

Approvals are commonly granted subject to resale, occupancy, or development conditions.

Established Residential Property

Acquisition of established dwellings is generally prohibited unless:

• The buyer is a temporary resident
• The property is used as a principal place of residence
• The property is sold upon cessation of residency

Failure to comply may result in forced sale, regardless of whether the purchase was connected to using grant to buy apartment or other assistance schemes.

FIRB Approval Process: Legal Sequence

The FIRB approval process must occur before acquisition of the relevant interest.

Legally required steps include:

• Determining whether approval is mandatory
• Lodging an application in the approved form
• Paying the prescribed statutory fee
• Awaiting a formal decision

Entering into an unconditional contract without approval may itself constitute a breach.

Statutory Timeframes for FIRB Decisions

Decision periods are set by legislation and generally range from 30 to 90 days, depending on transaction complexity.

The Treasurer may:

• Approve the acquisition
• Impose conditions
• Prohibit the acquisition
• Extend the statutory review period

Timeframes are suspended where further information is requested.

FIRB Application Fees and Legal Effect

Application fees are imposed by regulation and vary according to:

• Asset category
• Transaction value
• Investor classification

Fees are non-refundable and payable regardless of outcome.

FIRB Thresholds and Automatic Approval Triggers

Some acquisitions require FIRB approval regardless of value, particularly in residential land.

Thresholds differ based on:

• Asset type
• Investor nationality
• Nature of control acquired

Incorrect reliance on thresholds is a common compliance error.

Exemptions and Limited Statutory Exceptions

Exemptions are narrowly defined and include:

• Certain acquisitions by permanent residents
• Low-value interests below statutory thresholds
• Internal restructures meeting strict criteria

Exemptions must be confirmed legally; assumptions carry risk.

Legal Consequences of Non-Compliance

Failure to obtain FIRB approval where required may result in:

• Civil penalties
• Criminal offences
• Mandatory divestment
• Ongoing monitoring orders

Liability may arise even where non-compliance was inadvertent.

FIRB Approval Compared With ACCC Approval

FIRB approval regulates foreign investment control. ACCC approval regulates competition and market concentration.

They are separate legal regimes and may both apply to a single transaction.

FIRB Approval Within Australia’s Foreign Investment Regime

The FIRB framework prioritises legal certainty and enforceability over transactional flexibility. It reflects a deliberate legislative choice to anchor compliance obligations at the federal level.

Foreign investors are expected to assess approval requirements proactively, not retrospectively.

FAQs: FIRB Approval

Before addressing common questions, it is critical to note that FIRB obligations arise automatically under statute.

What is FIRB approval?

A legal authorisation required for certain foreign acquisitions under Australian law.

Is FIRB approval required before signing a contract?

Approval must be obtained before acquiring the interest. Conditional contracts may still trigger obligations.

Can approval be obtained after purchase?

No. Retrospective approval is not permitted.

Are FIRB conditions enforceable?

Yes. Breach of conditions may result in penalties or divestment.

Is FIRB approval permanent?

No. Approval applies only to the approved transaction.

Conclusion

FIRB approval is a substantive legal requirement, not an administrative step. It imposes obligations before acquisition and continues to regulate conduct after approval is granted.

Early legal analysis—particularly with support from LegalFinda—is essential to determine applicability, structure transactions lawfully, and prevent enforcement action that can negate the commercial value of the investment.