Property developers working with foreign capital may face Foreign Investment Review Board (FIRB) approval requirements that could add 0.3-1.5% to project costs and 2-4 months to development timelines. Application fees typically range from $14,700 to $3,514,800 depending on property type and value, while foreign investors acquiring 20% or more interests trigger mandatory approval regardless of investment size for residential projects. Commercial developments face monetary thresholds of $339 million, or $1.464 billion for Free Trade Agreement countries. The May 2024 regulatory reforms created a dual-track system where low-risk applications may process within 30 days, whilst complex or sensitive projects could face 3-6 month reviews with increasingly onerous compliance conditions that are worth understanding before committing capital.
This comprehensive guide covers what developers may need to know about FIRB requirements, costs, timelines, and feasibility implications when structuring foreign-funded property developments across Australia.
When Developers Need FIRB Approval
Understanding when foreign investment approval is required represents the first critical step in feasibility planning for developers working with offshore capital.
Foreign Person Definitions and Thresholds
Foreign persons under Australian law typically include individuals who are not ordinarily resident in Australia—meaning they must be both a citizen or permanent resident and physically present in Australia for 200 or more days in the preceding 12 months. Corporations with 20% or more foreign ownership may also be considered foreign persons, whilst foreign government investors (entities with 20% or more government ownership) are subject to stricter rules under the national interest framework.
For residential land acquisitions, all foreign persons must obtain approval regardless of value—this threshold-free requirement represents the most developer-relevant consideration. Commercial transactions follow monetary thresholds: standard commercial acquisitions require approval above $339 million for the 2025 calendar year (indexed annually on 1 January), whilst Free Trade Agreement countries benefit from a $1.464 billion threshold. Sensitive land and agribusinesses trigger at $73 million.
Critically, national security actions operate at a $0 threshold, meaning all values require approval for national security businesses, national security land, and most foreign government investor actions.
Development-Specific Approval Triggers
Foreign investors acquiring 20% or more interest in a development project typically trigger FIRB requirements, creating structural considerations for joint ventures. In scenarios where a Chinese institutional investor holds 40% equity in a joint venture with a 60% Australian developer partner, the foreign ownership threshold is exceeded and approval becomes mandatory.
Vacant residential land acquisitions for development purposes require FIRB approval at all values, with a standard 4-year development timeline condition attached. Developers must provide evidence of construction completion within 30 days of finishing, cannot sell or transfer the property until construction is complete (restricting exit flexibility and affecting financing options), and may face disposal requirements if conditions are breached.
A significant policy change took effect in April 2025: redevelopment of established dwellings now requires creation of 20 or more additional dwellings, increased from the previous requirement for any additional dwelling. This threshold change fundamentally affects small-scale redevelopment feasibility for foreign-funded projects. Projects proposing to create 11 new units on an established dwelling site, for instance, would be rejected under the new policy, potentially resulting in hundreds of thousands of dollars in lost fees and forcing restructure with an Australian majority partner.
Build-to-Rent Special Treatment
Build-to-rent developments receive concessional FIRB treatment at commercial land rates instead of residential rates, effective from December 2023. This fee treatment could reduce application costs from $796,500 (residential) to $14,700 (commercial) for a $10 million acquisition—representing a potential 98% fee reduction that may significantly improve project feasibility.
To qualify for BTR treatment, projects typically require a minimum 50 dwellings, 5-year minimum lease terms, 10% affordable housing component (meaning approximately 18 units for a 180-unit project), and a 15-year compliance period with quarterly reporting on affordable housing compliance. Whilst the 15-year compliance commitment adds approximately $300,000 in total ongoing costs, the upfront fee savings often remain economically positive for large-scale projects.
Complete Cost Breakdown for Development Feasibility
Accurate cost modelling of FIRB-related expenses proves essential for realistic pro formas and project viability assessment.
Application Fees by Property Value and Type
Application fees follow tiered structures based on consideration value and property classification. For new dwellings and vacant residential land (1 July 2025 to 30 June 2026 rates):
- Under $1 million: $14,700
- $1 million to under $2 million: $29,500
- $2 million to under $3 million: $44,200
- $3 million to under $4 million: $59,000
- $4 million to under $5 million: $73,700
- $5 million to under $10 million: $169,200
- $10 million to under $50 million: $253,800
- $50 million to under $100 million: $507,500
- $100 million and above: $1,119,100
Established dwelling fees tripled from 9 April 2024, with current rates ranging from $42,300 minimum (under $1 million) to $3,514,800 maximum for properties over $40 million. This tripling aimed to encourage foreign investment in new housing developments rather than existing stock, though the impact on developers acquiring established dwellings for redevelopment purposes creates feasibility challenges.
Commercial land and business fees range from $4,200 (up to $50 million) to $1,119,100 (over $2 billion), whilst agricultural land follows a similar structure with fees from $14,700 to $1,119,100 across value bands.
Professional Advisor Costs
Legal and tax advisory costs vary significantly by transaction complexity. Simple or routine applications may incur $5,000-$15,000 in legal fees, whilst standard commercial development applications typically range from $15,000-$35,000. Complex or sensitive applications could require $35,000-$100,000+ in legal costs, and major institutional or infrastructure deals may demand $100,000-$500,000+ in professional fees.
Accounting and tax advisor costs range from $10,000-$50,000 for initial tax structuring, $5,000-$20,000 annually for ongoing compliance, and $50,000-$150,000+ for complex fund structures. Since March 2025, FIRB requires detailed tax submissions upfront through an enhanced Tax Checklist, potentially increasing initial professional costs substantially for development projects.
State Stamp Duty and Land Tax Surcharges
Whilst FIRB approval operates at the federal level, state-imposed surcharges on foreign purchasers create dramatic cost variations that fundamentally affect development feasibility depending on location.
Foreign purchaser stamp duty surcharges (as of January 2025):
- New South Wales: 9%
- Victoria: 8%
- Queensland: 8%
- Tasmania: 8%
- South Australia: 7%
- Western Australia: 7%
- Australian Capital Territory: 0%
- Northern Territory: 0%
Foreign owner land tax surcharges (annual):
- New South Wales: 5%
- Victoria: 4%
- Queensland: 3%
- Tasmania: 2%
- Australian Capital Territory: 0.75%
- South Australia: 0%
- Western Australia: 0%
- Northern Territory: 0%
On a $20 million land acquisition in NSW, the foreign purchaser stamp duty surcharge adds $1.8 million upfront, whilst the foreign owner land tax surcharge adds $1 million annually. Combined with FIRB application fees, total first-year foreign investment costs could reach $2 million+ on a $20 million site—critical figures for feasibility modelling. In contrast, the same acquisition in the ACT would incur only $14,700 in FIRB fees with no state surcharges, demonstrating how geographic site selection may dramatically impact project economics.
Vacancy Fees and Holding Costs
Foreign persons who own residential properties purchased after 9 May 2017 are required to pay an annual vacancy fee if their dwelling is not residentially occupied or genuinely available for rent (for a term of at least 30 days) for 183 days or more in a 12-month period.
The vacancy fee equals double the original FIRB application fee (doubled from April 2024). On a $5 million established dwelling with a $169,200 FIRB fee, the annual vacancy fee reaches $338,400—representing a major holding cost risk for unsold development inventory. This six-fold increase compared to pre-2024 rates aims to encourage foreign investors to make properties available for rental, but creates significant financial exposure for developers holding completed but unsold units.
Total Cost Examples by Development Size
Small development ($5 million land value, foreign developer):
- Application fee: $14,700
- Legal fees: $12,000
- Tax advice: $8,000
- Annual compliance: $8,000
- Total first year: $42,700
- Ongoing annual: $8,000
Medium development ($25 million land value, foreign equity partner):
- Application fee: $14,700
- Legal fees: $28,000
- Tax structuring: $35,000
- Annual compliance: $18,000
- Total first year: $95,700
- Ongoing annual: $18,000
Large mixed-use ($100 million+, complex structure):
- Application fee: $59,000
- Legal fees: $85,000
- Tax/structuring: $120,000
- Annual compliance: $45,000
- Total first year: $309,000
- Ongoing annual: $45,000
These figures exclude state surcharges, which could add $1.8 million+ in NSW for a $20 million acquisition, fundamentally changing the economics of foreign-funded developments.
Timeline Impact on Holding Costs and Project Scheduling
Understanding realistic FIRB processing timelines proves critical for accurate feasibility modelling and critical path management.
Statutory Versus Actual Processing Times
The statutory timeline is 30 days from fee payment, with Treasurer power to extend up to 90 days. However, actual 2024 processing times vary considerably by application complexity and risk profile.
Low-risk applications may process in 2-4 weeks under the new streamlined approach, with a target of 50% of applications processed within 30 days from January 2025. Standard commercial development applications showed median processing times of 34-41 days in Q3-Q4 2024, whilst complex or sensitive applications require 2-6 months. National security-related applications could take 3-6+ months, with application preparation adding 3-6 weeks before lodgement.
For a large masterplanned community development valued at $180 million with a 40% Chinese institutional investor, processing time reached 147 days due to national security review requirements—pushing the project timeline back 5 months and adding $1,187,500 in total costs including holding costs.
Factors Affecting Timeline
Incomplete applications cause the most significant delays, representing a major preventable cause cited across government guidance. Other factors include:
- National security considerations (adding 60-90 days for defence-adjacent sites or critical infrastructure)
- Tax complexity requiring additional ATO consultation
- Government agency consultations with ACCC or other regulators
- Political sensitivity of the transaction
- FIRB workload volume and resource constraints
- Election periods (potentially adding 1-2 months for sensitive applications)
The next federal election is due by May 2025, potentially creating processing delays for applications lodged in early 2025.
Holding Cost Calculations
A 60-day FIRB delay on a $30 million development could generate substantial holding costs:
- Land holding costs: $200,000 per month ($20 million land at 8% annually equals $133,333 monthly in interest and finance costs)
- Construction facility commitment fees: $25,000 per month (1% on $50 million undrawn facility)
- Total delay cost: $450,000 for a 2-month delay
This demonstrates why developers should build 90-120 day timeline buffers into project schedules and negotiate favourable conditional contract terms that allow extension if FIRB processing exceeds reasonable expectations.
Critical Path Integration Strategies
Developers might consider several approaches to manage FIRB timeline risk:
- Engaging with Treasury for pre-lodgement discussions on projects over $50 million to clarify information requirements
- Preparing complete applications with all supporting documentation before lodgement to avoid information request delays
- Structuring conditional contracts with extension provisions tied to FIRB processing
- Coordinating FIRB timing with senior debt and equity financing, as financial close becomes impossible until all approvals are received
- Building conservative timeline assumptions into feasibility models (optimistic 30-40 days, base case 60-75 days, conservative 90-120 days)
FIRB Approval Process Step-by-Step for Developers
The application process follows a structured pathway from pre-application preparation through ongoing compliance obligations.
Pre-Application Preparation
Before lodgement, developers should:
- Determine if the transaction requires approval (residential land at any value, commercial above thresholds, or national security considerations at $0 threshold)
- Identify all foreign persons with 20%+ interests in the acquisition structure
- Gather required documentation including corporate structure charts, source of funds evidence, detailed project plans and timelines, proposed development mix and dwelling counts, and tax structuring information
- Consider engaging advisors for complex transactions, particularly those involving national security considerations or foreign government investors
For projects over $50 million, pre-lodgement discussions with Treasury may help clarify information requirements and reduce processing delays by ensuring complete applications.
Lodgement Through Online Portal
Applications are lodged through the online portal at foreigninvestment.gov.au, requiring a myGovID for access. The fee payment triggers the statutory timeline commencement, meaning applications are not considered lodged until fees are paid in full.
Applicants should ensure all required fields are completed and supporting documents attached, as information requests pause the assessment clock, potentially extending processing times significantly.
Assessment Period and Government Consultations
During the assessment period, Treasury reviews the application against the national interest test, considering:
- National security implications (particularly relevant for defence-adjacent land, critical infrastructure, or technology sectors)
- Competition impacts requiring ACCC consultation
- Tax implications requiring ATO consultation
- Economic benefits including job creation, capital investment, and technology transfer
- Character and financial standing of the investor
The May 2024 reforms created a dual-track system where low-risk investments receive streamlined processing whilst high-risk investments face strengthened scrutiny. Low-risk factors include repeat investors with strong compliance records, passive investors without control or influence, non-sensitive sectors (manufacturing, professional services, commercial real estate, new housing), and clear ownership structures. High-risk factors include critical infrastructure, critical minerals, technology sectors, access to sensitive data, foreign government investors, and proximity to sensitive government facilities.
Possible Outcomes
Applications may result in:
- Approval without conditions: Less common for commercial developments, more typical for straightforward residential purchases
- Conditional approval: The most common outcome for development projects, with standard tax conditions and project-specific requirements
- Rejection: Rare but possible for national security concerns or when the investment is contrary to national interest
- Withdrawal: Applicants may withdraw if proposed conditions make the investment unviable
The official approval rate exceeds 97%, but this figure doesn’t capture withdrawals due to unfavorable conditions. In Q3 2024 alone, 32 commercial proposals were withdrawn, suggesting a hidden rejection rate not reflected in official statistics.
Compliance Obligations
Approved applicants must:
- Register on the Register of Foreign Ownership of Residential Land within 30 days of acquisition (residential land only)
- Submit annual compliance reports confirming adherence to conditions
- Maintain records demonstrating tax condition compliance, potentially including audited financial statements
- Notify Treasury of any material changes to ownership structure, corporate control, or project plans
- Provide evidence of development completion within prescribed timeframes (typically 4 years for vacant land)
Non-compliance may result in civil penalties up to $825 million for the most severe breaches, criminal penalties reaching 10 years imprisonment and $49.5 million for corporations, or divestment orders requiring forced sale of the property.
Navigating Conditions and Compliance Requirements
Conditional approvals represent the norm for development projects, with conditions designed to protect national interest whilst allowing the investment to proceed.
Standard Tax Conditions
Five standard tax conditions typically apply to most commercial approvals:
- Tax compliance: The investor must comply with all Australian taxation obligations
- Tax transparency: The investor must provide information to the ATO as required
- Transfer pricing: Arrangements with related parties must be at arm’s length
- Integrity measures: The investor must not engage in tax avoidance schemes
- Financial reporting: Annual audited financial statements may be required
These conditions add 50-150% to base compliance costs, with annual compliance for complex tax conditions reaching $45,000+ for large developments.
Development-Specific Conditions
For vacant land acquisitions, standard conditions typically include:
- 4-year construction completion requirement: Development must commence within a reasonable timeframe and complete within 4 years
- Evidence requirements: Detailed progress reports and completion certificates must be submitted
- Disposal restrictions: The property cannot be sold or transferred until construction is complete, restricting exit flexibility
- Notification requirements: Material changes to project scope, timing, or ownership must be reported to Treasury
For redevelopment of established dwellings, projects must now create 20 or more additional dwellings to qualify for approval, with evidence required demonstrating genuine housing stock increase.
Build-to-Rent Compliance
BTR projects receiving concessional fee treatment face specific ongoing obligations:
- Minimum 50 dwellings required for the life of the project
- 10% affordable housing component with rents at or below specified levels (typically 74.9% of market rent)
- 5-year minimum lease terms offered to all residents
- 15-year compliance period with detailed record-keeping requirements
- Quarterly reporting on affordable housing compliance, vacancy rates, and rental income
Whilst BTR compliance costs may reach $300,000 over 15 years, the upfront fee savings of $600,000-$1,000,000+ on large projects typically justify the ongoing administrative burden.
Consequences of Non-Compliance
Enhanced enforcement in 2024 demonstrated Treasury’s willingness to act: Treasury conducted 79 site visits (nearly doubled from 43 in 2023), introduced “Non-Compliance Detection Letters” requiring comprehensive reports on suspected breaches, and increased formal investigations and audits.
A notable example: the Northern Minerals divestment order in June 2024 forced Chinese-linked investors to divest their 10.4% stake in the rare earth producer on national security grounds—only the second public divestment order issued. This action signals zero tolerance for non-compliance, particularly regarding critical minerals, national security sectors, and Chinese government-linked capital in the current geopolitical environment.
Structuring Strategies to Optimise FIRB Feasibility
Strategic structuring may reduce FIRB costs and timeline risks whilst maintaining access to foreign capital.
Maximising Build-to-Rent Treatment
For projects that can meet BTR criteria, the fee savings prove substantial:
- A $10 million acquisition: fees reduce from $253,800 (residential) to $14,700 (commercial)—saving $239,100 (94% reduction)
- A $35 million acquisition: fees reduce from $1,075,200 to $14,700—saving $1,060,500 (98.6% reduction)
To qualify for BTR treatment, developers should ensure projects include:
- Minimum 50 dwellings (plan for at least 55-60 to provide buffer for design changes)
- 10% affordable housing allocation (5 units for 50-dwelling project, 18 units for 180-dwelling project)
- Clear rental management structure demonstrating genuine BTR operation rather than build-to-sell
- Long-term hold strategy consistent with 15-year compliance period
Australian Majority Structures
Structuring with foreign ownership below 20% individual (or 40% aggregate) thresholds may avoid FIRB approval requirements entirely. For example:
- Australian entity with 60% local ownership and 15% each to two foreign investors
- Australian-controlled joint venture with foreign investors holding minority stakes below triggering thresholds
- Staged foreign capital introduction where initial acquisition uses Australian capital, with foreign investment introduced after development approval reduces regulatory risk
This approach requires careful legal structuring to ensure thresholds aren’t exceeded through related party aggregation rules.
Developer Exemption Certificates
For subdivision or apartment projects selling to foreign buyers, developer exemption certificates provide streamlined bulk approval. The upfront fee for 1 July 2025 to 30 June 2026 is $65,200, providing:
- Streamlined approval for multiple individual sales to foreign buyers
- 6-month reconciliation reporting based on actual sales
- Reduced per-transaction costs when selling to multiple foreign purchasers
The certificate breaks even after approximately 2-3 foreign sales compared to individual approval fees, making it economically attractive for projects with anticipated foreign buyer interest exceeding 5-10% of total units.
White-List Country Investors
Investors from Free Trade Agreement countries (United States, United Kingdom, Canada, New Zealand, Japan, South Korea, Chile, Singapore) benefit from higher monetary thresholds for commercial investments ($1.464 billion versus $339 million for other countries). Developers seeking to minimise FIRB requirements might prioritise capital raising from these jurisdictions for commercial projects approaching threshold levels.
State-by-State Cost Implications for Development Feasibility
Geographic site selection may dramatically impact total foreign investment costs due to varying state surcharges.
Total First-Year Cost Comparison
For a $20 million land acquisition by a foreign-funded development entity, total first-year costs vary significantly:
New South Wales (highest):
- FIRB fee: $253,800
- Foreign purchaser stamp duty (9%): $1,800,000
- Foreign owner land tax (5%): $1,000,000
- Total: $3,053,800 (15.3% of land value)
Victoria:
- FIRB fee: $253,800
- Foreign purchaser stamp duty (8%): $1,600,000
- Foreign owner land tax (4%): $800,000
- Total: $2,653,800 (13.3% of land value)
Queensland:
- FIRB fee: $253,800
- Foreign purchaser stamp duty (8%): $1,600,000
- Foreign owner land tax (3%): $600,000
- Total: $2,453,800 (12.3% of land value)
Australian Capital Territory (lowest):
- FIRB fee: $253,800
- Foreign purchaser stamp duty: $0
- Foreign owner land tax (0.75%): $150,000
- Total: $403,800 (2.0% of land value)
Northern Territory (lowest):
- FIRB fee: $253,800
- Foreign purchaser stamp duty: $0
- Foreign owner land tax: $0
- Total: $253,800 (1.3% of land value)
The $2.8 million difference in first-year costs between NSW and NT on a $20 million site represents a fundamental feasibility consideration that might influence geographic site selection for foreign-funded developments.
State BTR Concessions
Victoria offers additional incentives for BTR developments, including a 50% land tax reduction for qualifying projects. This Victorian concession, combined with federal BTR fee treatment, creates particularly favourable conditions for foreign-funded BTR projects in Melbourne compared to Sydney or Brisbane.
Risk Assessment and Feasibility Modelling
Probability-weighted scenario analysis helps developers understand potential FIRB impact ranges rather than relying on single-point estimates.
High-Risk Factors Requiring Conservative Planning
Projects involving the following factors should model conservative timelines (120-180 days) and costs (150-200% of expected):
- National security land or businesses: Defence-adjacent sites, critical infrastructure, data centres
- Critical minerals or resources: Lithium, rare earths, or other minerals on the critical minerals list
- Technology sectors: Software, telecommunications, or data processing businesses
- Chinese government-linked investors: Heightened scrutiny in 2024-25 geopolitical environment
- Media and telecommunications: Broadcasting, telecommunications infrastructure
- Ports, airports, energy infrastructure: Assets with national security implications
Whilst official rejection rates remain low (97%+ approval rate), the 32 commercial proposals withdrawn in Q3 2024 alone suggest that unfavourable conditions or prolonged processing may make projects unviable even without formal rejection.
Probability-Weighted Scenario Analysis
Developers might model FIRB impact using probabilistic scenarios:
Scenario 1 – Approved on time, standard conditions (60% probability):
- Timeline: 60-75 days
- Costs: Base case fees + standard legal/advisory
- Holding costs: 2.5 months at calculated rate
Scenario 2 – Approved with delays, standard conditions (30% probability):
- Timeline: 90-120 days
- Costs: Base case fees + 25% additional advisory
- Holding costs: 4 months at calculated rate
Scenario 3 – Approved with delays, onerous conditions (8% probability):
- Timeline: 120-180 days
- Costs: Base case fees + 50% additional advisory + ongoing compliance premium
- Holding costs: 6 months at calculated rate
Scenario 4 – Rejected or withdrawn (2% probability):
- Timeline: 120+ days before decision
- Costs: Full application fees + full advisory costs + holding costs + deal restructure costs
- Project may be abandoned
Calculate net present value impact of delays and costs across scenarios, weighting by probability, to determine if the project meets hurdle rates under conservative assumptions.
Timeline Modelling Recommendations
Model three timeline scenarios for critical path analysis:
Optimistic (30% probability): 30-40 days
- Used for projects with repeat investors, clear low-risk profile, complete applications
Base case (50% probability): 60-75 days
- Standard commercial development with foreign equity partner, no obvious red flags
Conservative (20% probability): 90-120 days
- Used for projects with Chinese capital, national security considerations, or election year timing
Add 30-60 days for applications during election years, and 60-90 days for sensitive sectors or national security reviews.
Cost Budgeting Approach
Calculate FIRB budget using:
Base case:
- FIRB application fees (actual tier from fee schedule)
- Legal and advisory fees at market range for transaction complexity
- Ongoing compliance costs for 3-5 years (present value)
Contingency:
- 50% increase for complex conditions possibility
- 60-day delay holding costs calculated specifically for the project
- Bridge financing costs if needed to cover delay period
Total FIRB budget = Base case + Contingency
This typically represents 0.3-0.8% of land value for standard commercial projects, or 0.5-1.5% for complex or sensitive projects. When including state surcharges, total foreign investment costs may reach 2-15% of land value depending on location and structure.
Recent Regulatory Changes Affecting Developers
Understanding recent and upcoming policy changes helps developers anticipate requirements and structure transactions appropriately.
April 2025 Established Dwelling Ban and Redevelopment Threshold
From 1 April 2025 through 31 March 2027, foreign persons are temporarily banned from purchasing established dwellings in Australia unless specific exceptions apply. For developers, the most relevant exception involves redevelopment that genuinely increases housing stock—but the threshold now requires creation of 20 or more additional dwellings.
This change fundamentally affects small-scale redevelopment feasibility. A boutique 12-unit development on an established dwelling site that would have qualified pre-April 2025 now faces rejection, potentially losing $267,000 in FIRB fees and professional costs whilst requiring project restructure with Australian majority ownership.
Tripled Residential Fees
Application fees for established dwellings tripled on 9 April 2024, with minimum fees rising from $14,100 to $42,300 and maximum fees reaching $3,514,800 for properties over $40 million. This tripling aimed to discourage foreign investment in existing housing stock whilst channelling capital toward new developments.
For developers, the question remains whether acquisitions of established dwellings for genuine redevelopment purposes incur the tripled fees. Legal interpretation varies, and developers should seek clarification for specific projects involving established dwelling redevelopment.
Build-to-Rent Concessional Treatment
Effective from 14 December 2023, BTR developments receive commercial land fee treatment regardless of underlying land type. Further clarification in March 2025 confirmed that qualifying BTR projects with minimum 50 dwellings pay commercial rates ($4,200 to $1,119,100) rather than residential rates that could exceed $3.5 million for large acquisitions.
This represents potentially the most significant FIRB policy change for developers in recent years, creating strong incentives for large-scale rental housing projects with long-term hold strategies.
May 2024 Dual-Track Reforms
The May 2024 reforms introduced a streamlined approach for low-risk investments targeting 50% of applications for 30-day processing from January 2025. Simultaneously, high-risk investments face strengthened scrutiny with longer timelines and more onerous conditions.
Low-risk characteristics include:
- Repeat investors with strong compliance records
- Passive investors without board representation or operational control
- Non-sensitive sectors (commercial real estate, new housing, manufacturing)
- Clear, non-complex ownership structures
High-risk characteristics warranting enhanced scrutiny:
- Critical infrastructure acquisitions
- Critical minerals sector investments
- Technology sector with sensitive data access
- Foreign government investors
- Proximity to sensitive government facilities
Enhanced Enforcement and Compliance Monitoring
Treasury’s compliance activities intensified dramatically in 2024, with site visits nearly doubling from 43 in 2023 to 79 in 2024. The introduction of “Non-Compliance Detection Letters” requires comprehensive reporting on suspected breaches, whilst formal investigations and audits increased across the board.
Criminal penalties reach 10 years imprisonment and $49.5 million for corporations, whilst civil penalties can reach $825 million for the most severe breaches. Penalty unit values increased to $330 in 2024 (indexed every three years).
The June 2024 Northern Minerals divestment order represents only the second public divestment order issued, forcing Chinese-linked investors to divest their 10.4% stake in the rare earth producer on national security grounds. This action demonstrates Treasury’s willingness to use enforcement powers for investments deemed contrary to national interest, particularly in critical minerals and where foreign government links exist.
Integrating FIRB into Development Feasibility Analysis
Successful developers incorporate FIRB requirements into project planning from initial site identification through to final settlements.
Key Feasibility Planning Takeaways
When evaluating foreign-funded development opportunities, developers should:
- Budget 0.3-1.5% of land value for FIRB-related costs (fees, advisors, compliance), recognising this excludes state surcharges that may add 2-15% depending on location
- Add 90-120 day timeline buffers to critical path schedules, with conservative 180-day buffers for high-risk transactions
- Engage professional advisors before signing contracts, as conditional contract structures may be necessary to manage FIRB timeline and approval risk
- Consider BTR treatment for projects with 50+ dwellings and long-term hold strategies, given potential 94-98% fee savings
- Model state surcharge variations when selecting development sites, as the $2.8 million difference between NSW and NT on a $20 million acquisition fundamentally affects returns
- Structure ownership carefully to avoid triggering thresholds unnecessarily, whilst maintaining access to required foreign capital
When FIRB Requirements May Kill Feasibility
Certain scenarios may make FIRB approval prohibitively expensive or uncertain:
- Small-scale redevelopment under 20 dwellings: The April 2025 threshold change makes these projects ineligible for foreign capital participation
- National security rejections: Sites adjacent to defence facilities or involving critical infrastructure may face outright rejection or conditions making projects unviable
- Marginal projects in high-surcharge states: Developments with tight margins in NSW or Victoria may become uneconomic when state surcharges add 13-15% to land costs
- Short-timeline development opportunities: Projects requiring rapid commencement cannot accommodate 90-180 day FIRB processing periods
- Highly leveraged structures: Holding cost impacts of 2-6 month delays may exceed returns for projects with minimal equity buffers
Leveraging Development Feasibility Software
Development feasibility software like Feasly enables developers to model FIRB impact scenarios with precision, testing different ownership structures, state locations, and timeline assumptions to understand how foreign investment requirements affect project returns. By integrating FIRB costs, state surcharges, and holding cost implications into comprehensive pro formas, developers can make informed decisions about foreign capital participation and structure transactions to optimise feasibility whilst maintaining compliance.
Understanding FIRB requirements from a feasibility perspective—not merely a compliance exercise—helps developers structure foreign-funded projects for success whilst navigating Australia’s evolving foreign investment framework.
Frequently Asked Questions
Do Australian citizens or permanent residents need FIRB approval?
Australian citizens and permanent residents who are ordinarily resident in Australia (physically present 200+ days in the preceding 12 months) typically do not require FIRB approval for property acquisitions. However, if they’re acquiring property through a foreign-controlled entity (20%+ foreign ownership), approval may be required.
How long does FIRB approval typically take for development projects?
Standard commercial development applications show median processing times of 34-41 days in 2024, though this can extend to 2-6 months for complex projects. Developers should budget 90-120 days in feasibility planning to account for potential delays, with 180+ days for high-risk transactions involving national security considerations.
Can FIRB approval be obtained before signing a purchase contract?
Conditional contracts are common practice, allowing foreign investors to apply for FIRB approval subject to receiving no objection notification. This structure protects both parties from proceeding with transactions that may ultimately be rejected or receive unfavourable conditions.
What happens if FIRB approval is rejected after fees are paid?
Application fees are generally not refunded if applications are rejected or if the purchase doesn’t proceed. This represents a significant sunk cost risk, reinforcing the importance of pre-application assessment and engagement with professional advisors for marginal or high-risk transactions.
Are there penalties for proceeding without FIRB approval when required?
Yes, severe penalties apply for non-compliance. Civil penalties can reach $825 million for the most serious breaches, whilst criminal penalties include up to 10 years imprisonment and $49.5 million in corporate fines. Treasury may also issue divestment orders requiring forced sale of the property.
How do FIRB requirements interact with construction financing?
Mortgagee interests over residential land require FIRB approval, though exemptions exist for pure security purposes. Timing coordination proves critical, as financial close cannot occur until all FIRB approvals are received. Developers should ensure construction finance commitments account for FIRB processing timelines to avoid commitment fee exposure during delays.
Further Resources
For additional guidance on property development finance and feasibility:
- Treasury Foreign Investment Division guidance notes
- ATO foreign investment resources and application portal
- FIRB annual reports and statistics
- Professional advisor databases for FIRB specialists in major capital cities
This guide is current as of November 2025. Foreign investment regulations may change, and developers should consult qualified legal and tax advisors for project-specific guidance on FIRB requirements and compliance obligations.