Foreign Investment Board Declined Buyer Application

I am currently in the process of selling my property to buyers (not PR's) - they have their finance approved however needed approval from the Foreign Investment Board as they are not permanent residents. Apparently their application was declined because they are not allowed to purchase an established home, but they allowed to buy new - is this true?

Any way around this ?
The buyer was suggesting to pay for the demolition and buy it as a vacant lot - but I don't know if this would be possible..

 

Yes this is normal. I don't know about the vacant land.

 

Thanks for that..but Im confused..
It says... Non-resident foreign persons are generally prohibited from purchasing established dwellings in Australia.
But then...Temporary residents will normally be allowed to purchase only one established dwelling to live in as their residence (home) in Australia.

Whats the difference?

 

It means once they go, they gotta sell.

 

Wa

Wait never mind. i got it now. Thanks

 

So technically a temporary resident should be able to purchase a property?

 

I believe so yes.

 

It is a crime. They can seek approval but it seems declined. If resident they should seek legal advice but may be obliged to sell if they leave.

Temp residents alone cant buy unless approved without risks of forced sale
Residential real estate - temporary residents [GN2] | Foreign Investment Review Board

 

Have a look at the foreign take overs and acquisitions act which is the legislation for this area.
very complex. I refuse to advise on it now.

 

All good Terry, been directed to some good material.
Thanks for the responses everybody

 

Just an update on the situation, they have yet to apply to the FIRB. However they are asking for the offer & acceptance contract to change to buy the property as a proposed lot, with the condition that they will demolish the property upon settlement. Their broker is saying I just need to list that property will be bought as a vacant lot and demolished upon purchase on the O&A - surely the FIRB would want evidence that the property is already a vacant lot. Is this true that I just need to change the O&A, or is this more complex?

Their broker is saying proposed lots are purchased all the time, but i'd imagine it's a different story for Australian buyers

 

They can’t buy an established house without approval - even if they intend to demolish.

So you sign the contract and demolish the house.
The contract does not settle.
You are left with a vacant block, plus the costs of demolition.
Sounds risky.

 

I think they want to put on the contract, to demolish post settlement so I wont incur the costs. Their saying their lawyer says its okay, but sounds dodgy to me

 

If it turns out to be not allowed by FIRB, can the lawyers advise who has the liability? Or should this be vetted as part of the presettlement process?

 

What about the tax consequences of you doing that!

 

Their broker gives legal advice? All is fine

 

Then the contract is for an established house, which needs Govt approval.
Don’t be surprised if you have trouble when it comes to settling.