Real property

Ownership of real property

Each Australian state and territory has a comprehensive system for the registration of ownership and other interests in real property (being land and the improvements located on the land). While the registration systems vary slightly, in every case the register provides a definitive record of the relevant real property, including its boundaries, the owner.

These requests provide buyers of real property in Australia with a very high level of certainty as to the real property they are buying and any existing third-party interests in that real property. Once the transfer of the land to the buyer is registered, the buyer then has control over the creation of any new private sector interests in the real property.

The interest in real property that is most commonly bought and sold in Australia (other than in the Australian Capital Territory) is “freehold title”, which gives the registered owner permanent ownership. Long-term leasehold interests (which are limited in time, for example, 99 years) are also transacted, but this is less common.

Foreign Investment Review Board

Certain investments by foreign persons in Australia require approval from the Federal Treasurer. Approval is applied for through the Foreign Investment Review Board (FIRB), an advisory body that makes recommendations to the Federal Treasurer in respect to proposed foreign investments, in accordance with the Foreign Acquisitions and Takeovers Act 1975 (Cth) and accompanying regulations.

A foreign person generally means an individual who does not ordinarily reside in Australia. The definition extends to companies or trusts where a foreign person or foreign government holds a substantial interest.

Obtaining FIRB approval requires the payment of an application fee and the provision of detailed information about the proposed transaction, including structuring, the commercial rationale for the investment, and source of funds. FIRB will consider whether to approve the transaction with regards to the overall question of whether the transaction is in the “national interest” or not. The test is not defined in legislation, but generally includes considering national security, competition and economic impact factors relating to the transaction.

Buyer/seller contract

There are a number of methods for buying and selling real property, for example, auction, private sale, or tender. Whichever method applies, once the seller and the buyer agree terms, they sign a written contract of sale, although in the case of an auction or sale by tender the ability for the buyer to negotiate terms may be limited.

Contracts of sale detail the commercial agreement between the parties, including the price, the deposit to be paid when the contract is signed (typically 5%-10% of the price), any conditions precedent (such as FIRB approval, where the buyer requires this), vendor warranties and other agreed commercial terms, as well as setting out the legal obligations of each party leading up to “settlement” (or completion) of the contract.

Settlement of a contract of sale, at its simplest, involves the buyer paying the contract price to the seller (less any deposit paid when the contract was signed), and the seller transferring its interest in the land to the buyer by way of a signed transfer of land document to register itself as the new owner at the relevant land registry.

While historically settlement of land acquisitions required the passing of a paper certificate of title from the seller to the buyer, certificates of title across Australia have largely been digitised.

Duties and taxes

Stamp duty is a tax imposed by all Australian states and territories on certain instruments and transactions. The relevant stamp duty laws vary across each of Australia’s jurisdictions. Differences include which instruments and transactions are dutiable, what duty rate applies, who is liable to pay the duty, and when the duty must be paid.

All states and territories require duty to be paid on the sale of freehold land, and while there are some exemptions these are unlikely to apply to the purchase of Australian real property by non-residents.

The applicable stamp duty rate is either a fixed amount (usually because a concession applies) or calculated on a sliding scale, with the duty rate increasing as the transaction value increases.

A duty surcharge is payable in relation to the acquisition of real property by a foreign person, in all Australian jurisdictions, other than the Northern Territory. The surcharge rate and the criteria for the application of the surcharge duty varies across each of the relevant jurisdictions.

Land tax is a state-based tax payable in relation to property owned by an entity in the relevant state, with limited exemptions. A party’s principal place of residence is usually exempt from land tax. In some jurisdictions additional land tax can be payable in respect of property owned by foreign persons or property that is vacant.

Rates are a form of tax that are levied by the local council of the area in which the real property is located.

Buyers are able to obtain details of the amounts of rates and land tax that are levied on real property before signing a contract of sale.

Other taxes on land sales or revenue derived from land include capital gains tax, income tax and goods and services tax.

Investors in real property should always seek specialist tax advice before entering into any transaction.


The structure applied to a real property transaction will depend on the nature and size of the transaction, as well as the outcomes desired by the parties involved in the transaction, including the legal and taxation implications.

When investing in real property in Australia, investors usually choose between ownership through a corporation, whereby the corporation is registered as the owner of the real property for the benefit of its shareholders, or ownership by way of units in a trust, where the trustee is registered as the owner of the real property for the benefit of the unit holders. In either case, liability is limited to the assets of the company or the trust and does not extend to the shareholders or unit holders.

A common form of trust that foreign investors use to hold real property in Australia is a Managed Investment Trust, as this has tax concessions for foreign investors that other structures do not always provide.


In Australia, real property (including part of the relevant land or building) can be leased for a limited period, usually a specified number of years. By granting the lease, the owner (the landlord) gives the person taking the lease (the tenant) the right to occupy and use the relevant area (the premises) for the agreed term.

The landlord and the tenant negotiate and then sign a written lease document that sets out all the terms of the occupancy, including the rent and other amounts the tenant must pay (usually monthly), the fixed term of the lease, the boundaries of the premises, the condition in which the landlord will provide the premises to the tenant and the responsibilities for repairs and maintenance of the premises during the term.

Provided certain procedural steps are taken (such as obtaining the consent of any mortgagee and, where applicable, registering the lease at the relevant land registry), the tenant has certainty that their right to occupy the premises under the lease will be enforceable against anyone else who has or acquires an interest in the land.

Most states and territories have legislation to provide certain protection for tenants of retail premises that override any agreement between the landlord and the tenant. Protections typically include a minimum acceptable term for retail leases, restrictions on how rent is varied, and a prohibition on the inclusion of certain onerous terms and conditions on tenants.