FIRB Rejection Reasons: Why Applications Fail and How to Avoid Them

Getting your Foreign Investment Review Board (FIRB) application rejected can be a costly setback—both financially and emotionally. With application fees ranging from $14,700 to over $3.5 million depending on property value, and the risk of delays to your settlement timeline, understanding why FIRB applications fail is critical for any foreign buyer investing in Australian property.

The good news? The vast majority of FIRB applications are approved. However, certain mistakes and circumstances can lead to rejection or significant delays. This comprehensive guide explains the most common reasons FIRB applications fail and provides actionable strategies to avoid them.

Understanding FIRB's Role and Decision Framework

The Foreign Investment Review Board doesn't actually make the final decision on your application—the Australian Treasurer does. FIRB reviews your application and advises the Treasurer on whether your investment aligns with Australia's national interest and complies with foreign investment policy.

When assessing applications, FIRB considers:

• Whether the investment genuinely increases Australia's housing supply
• Compliance with property type restrictions (new vs established dwellings)
• Your visa status and eligibility
• The accuracy and completeness of your application
• National security considerations (rare for residential property)

Current Policy Change: From 1 April 2025 to 31 March 2027, foreign persons are banned from purchasing established dwellings in Australia, with very limited exceptions. This temporary ban significantly restricts what foreign buyers can purchase.

Top 10 Reasons FIRB Applications Are Rejected

1. Applying to Purchase an Established Dwelling (Post-April 2025)

Why it fails: The Australian Government implemented a two-year ban on foreign purchases of established dwellings effective 1 April 2025. Unless you qualify for a very limited exception, any application to purchase an existing property will be rejected.

Exceptions that may still be approved:

• Redevelopment projects creating 20 or more additional dwellings (increased from just 1 dwelling pre-April 2025)
• Build-to-rent developments on a commercial scale
• Properties to house Australian-based employees under specific conditions
• PALM scheme worker accommodation

How to avoid: Focus on new dwellings, off-the-plan properties, or vacant land. If you're considering a redevelopment project, ensure it will create at least 20 new dwellings to meet the increased threshold.

2. Incorrect Visa Status Classification

Why it fails: FIRB has different rules for different visa categories. Misunderstanding your visa status or failing to disclose it accurately leads to applications being processed under the wrong framework—and potentially rejected.

Common mistakes:

• Claiming temporary resident status when your visa doesn't qualify
• Not disclosing that you hold multiple visas
• Applying as a temporary resident when you're a bridging visa holder without a pending permanent residency application

How to avoid: Clearly understand your visa category:

• Temporary residents: Must hold a temporary visa allowing continuous stay of 12+ months OR hold a bridging visa with a pending permanent residency application
• Foreign non-residents: Anyone not ordinarily resident in Australia
• Australian permanent residents/citizens: Exempt from FIRB requirements

Provide complete visa documentation with your application, including visa grant number, visa type, and expiry date.

3. Property Doesn't Qualify as "New"

Why it fails: Foreign buyers can generally only purchase "new" dwellings. FIRB's definition of "new" is stricter than you might think. A property that appears new may not meet FIRB's criteria.

What qualifies as "new":

• Never been previously sold or occupied as a residence
• Sold by a developer with a New Dwelling Exemption Certificate
• Substantially renovated established dwellings where renovation costs exceed 50% of the property's market value (rare approval)

What doesn't qualify:

• Knock-down rebuilds on existing dwelling sites (the single replacement dwelling isn't considered to increase housing stock)
• Properties occupied for more than 12 months, even if never formally sold
• Properties where a previous owner demolished an existing dwelling and built a single replacement

How to avoid:

• Request confirmation from the developer that they hold a valid New Dwelling Exemption Certificate
• For off-the-plan purchases, ensure you're buying directly from the developer
• Verify the property has never been occupied or sold

4. Incomplete or Inaccurate Application Information

Why it fails: FIRB applications require precise details. Even minor errors in names, addresses, or property details can cause your application to be rejected or put on hold indefinitely.

Critical errors that cause problems:

• Misspelled names (must match passport exactly)
• Incorrect property address or title details
• Wrong purchase price or property value
• Missing visa documentation
• Incomplete corporate structure information (for company purchases)
• Failure to disclose all purchasers in joint purchases

How to avoid:

• Double-check all information against source documents
• Use your full legal name exactly as it appears on your passport
• Verify the property address with the title search
• If purchasing through a company, provide complete shareholder and director information
• For joint purchases, ensure all parties are properly disclosed with correct ownership percentages (joint tenants vs tenants in common)

Important note: Changes to key details after approval is granted may require a new FIRB application. For example, changing from sole purchase to joint purchase, or correcting the property address.

5. Failing to Meet Development Conditions for Vacant Land

Why it fails: When foreign buyers purchase vacant residential land, FIRB imposes strict development conditions. Failure to demonstrate you can meet these conditions—or having a track record of not meeting them—leads to rejection.

Standard conditions for vacant land:

• Construction must commence within a specified timeframe (typically within 24 months of purchase)
• Construction must be completed within 4 years of FIRB approval
• Property cannot be sold until construction is complete
• Must notify FIRB within 30 days of completion with evidence

Red flags that trigger rejection:

• Previous non-compliance with FIRB conditions
• Lack of detailed development plans or timeline
• Insufficient evidence of financial capacity to complete development
• Attempting to purchase multiple vacant blocks without demonstrating capacity

How to avoid:

• Prepare a detailed development plan including timeline and budget
• Provide evidence of sufficient funds or pre-approved construction finance
• If you have previous FIRB approvals, ensure you're fully compliant with all conditions
• Only apply for vacant land if you genuinely intend to develop within the required timeframe

2025 Crackdown: The Australian Government has committed $8.9 million to audit foreign investors who received vacant land approvals but haven't complied with development conditions. Non-compliance is being actively targeted.

6. Joint Purchase Structure Violations

Why it fails: Joint purchases with Australian citizens or permanent residents have special exemptions—but only under specific conditions. Misunderstanding these rules is a common cause of rejection.

The spouse exemption: Foreign persons purchasing jointly with an Australian citizen/permanent resident spouse as joint tenants for their primary residence may be exempt from FIRB approval—but this doesn't help with the established dwelling ban.

Common mistakes:

• Claiming the spouse exemption when purchasing as tenants in common (not joint tenants)
• Claiming the exemption for investment properties (only applies to primary residence)
• Claiming the exemption when not in a spousal/de facto relationship
• Not understanding that the exemption doesn't override the established dwelling ban

How to avoid:

• Understand the difference between joint tenants and tenants in common
• Only claim exemptions for purchases with a spouse/de facto partner
• Recognize that even with an Australian spouse, you cannot purchase established dwellings under the 2025-2027 ban
• When in doubt, apply for FIRB approval rather than risk non-compliance

7. Attempting to Circumvent Restrictions

Why it fails: Using Australian citizens or permanent residents as "front buyers" to circumvent FIRB restrictions is illegal and will result in rejection, penalties, and potential criminal prosecution.

Arrangements that trigger rejection:

• Australian citizens purchasing "on behalf of" foreign family members
• Trust structures designed to hide foreign ownership
• Nominee or bare trust arrangements
• Loan structures that give foreign persons effective ownership

Consequences beyond rejection:

• Civil penalties up to 25% of the property's market value
• Criminal penalties including up to 10 years imprisonment
• Forced divestment of the property
• Permanent damage to future FIRB applications

How to avoid:

• Never attempt to use Australian citizens as nominee buyers
• Disclose all beneficial owners in trust structures
• Ensure all parties with genuine ownership interests are disclosed
• Seek professional legal advice for complex ownership structures

8. Missing or Late Application

Why it fails: FIRB approval must be obtained before you exchange contracts or complete settlement. Applying after purchase, or applying too late to receive approval before settlement, creates serious legal problems.

Critical timing mistakes:

• Signing a contract without a FIRB approval clause
• Applying after already exchanging contracts
• Not allowing sufficient time for the 30-day (or longer) assessment period
• Assuming approval is automatic or immediate

How to avoid:

• Apply for FIRB approval before signing any purchase contracts
• Include a condition precedent in your contract: "Subject to FIRB approval"
• Allow 60-90 days minimum between application and planned settlement
• Apply for an Exemption Certificate if you plan to bid at multiple auctions

Settlement timeline planning:

• Standard processing: 30 calendar days (can be extended)
• Complex applications: 60-90+ days
• National security reviews: 3-6+ months (very rare for residential property)

9. Non-Compliance with Previous FIRB Conditions

Why it fails: FIRB checks your compliance history. If you've previously failed to meet FIRB conditions, future applications face heightened scrutiny and potential rejection.

Tracked non-compliance issues:

• Not selling a property after leaving Australia (temporary resident requirement)
• Missing the construction deadline on vacant land
• Failing to submit annual vacancy fee returns
• Not reporting completion of construction within 30 days
• Breaching occupancy requirements (e.g., renting out a property approved for owner-occupation only)

How to avoid:

• Comply with all conditions on existing FIRB approvals
• Submit annual vacancy fee returns on time (even if the fee is zero)
• Report construction completion promptly with required evidence
• Sell properties as required when circumstances change
• Maintain records of compliance for all FIRB-approved properties

10. Property Doesn't Support Housing Supply Goals

Why it fails: FIRB's fundamental objective is ensuring foreign investment adds to Australia's housing supply or serves a genuine business purpose. Applications that don't align with this objective face rejection.

Scenarios that raise red flags:

• Purchasing property that will remain vacant
• Redevelopment that doesn't substantially increase housing stock
• Projects perceived as land banking
• Investments seen as speculation rather than genuine development
• Multiple property applications without clear purpose

How to avoid:

• Clearly articulate how your investment increases housing supply
• For redevelopments, ensure you're creating meaningful additional dwellings (minimum 20 under 2025 rules)
• Demonstrate genuine intent to occupy (temporary residents) or rent out (investors) the property
• Avoid applying for multiple properties unless you have a clear development strategy

Additional Factors That Can Complicate Applications

Foreign Government Investor Status

If you're considered a "foreign government investor" (FGI)—meaning 20% or more of your investment entity is owned by a foreign government—you face more stringent requirements and lower thresholds. Even residential property applications from FGIs receive extra scrutiny.

Incorrect Application Type

Using the wrong application form or applying for the wrong approval type causes delays and potential rejection:

• No Objection Notification: For a specific property you've identified
• Exemption Certificate: Valid for 12 months to bid on multiple properties within specified parameters

Choose the right application type for your situation.

National Security Considerations

While rare for residential property, acquisitions near defense installations, critical infrastructure, or by buyers with connections to foreign governments may trigger national security reviews. These take significantly longer and face higher rejection rates.

The Application Process: Getting It Right

Before You Apply

1. Verify your eligibility: Confirm your visa status and what property types you can purchase
2. Choose qualifying property: Ensure it's a new dwelling, off-the-plan, or vacant land (not an established dwelling)
3. Gather documentation:
   • Valid passport
   • Visa grant notice and details
   • Property contract or details
   • Corporate documents (if applicable)
   • Development plans (for vacant land)

Submitting Your Application

1. Use the online portal: Apply via the Australian Taxation Office's online Foreign Investment Portal
2. Pay the correct fee: Fees are based on property value and are non-refundable even if rejected
3. Include all required information: Incomplete applications are put on hold
4. Maintain accuracy: Every detail must be precise and verifiable

After Submission

1. Monitor for requests: FIRB may request additional information—respond promptly
2. Track your timeline: Standard processing is 30 days but can be extended
3. Don't proceed without approval: Wait for written approval before settlement
4. Comply with conditions: Read and understand all conditions imposed on your approval

What to Do If Your Application Is Rejected

If your FIRB application is rejected:

1. Understand why: Review the rejection letter carefully for stated reasons
2. Application fees are not refunded: The fee is non-refundable regardless of outcome
3. Assess your options:
   • Address the issues and reapply
   • Choose a different property that qualifies
   • Seek professional advice on appeal options (very limited)
4. Contract implications: If your contract includes a FIRB approval condition, you can generally withdraw without penalty

Important: For competitive bids, if you're unsuccessful in bidding, you may be eligible for a 75% refund of your application fee (introduced in May 2024).

Best Practices for FIRB Success

Work with Professionals

Engage advisors who understand FIRB requirements:

• Migration agents (for visa status clarification)
• Conveyancers or property lawyers experienced with foreign buyers
• Property developers familiar with FIRB exemption certificates

Be Proactive

• Apply early—don't wait until you've found the perfect property if you plan to bid at auctions
• Consider an Exemption Certificate if you'll be looking at multiple properties
• Research the April 2025 established dwelling ban thoroughly

Communicate Clearly

• Provide more detail rather than less
• Explain any complex circumstances upfront
• Be transparent about your intentions for the property

Stay Compliant

• Meet all conditions on any existing FIRB approvals
• File annual vacancy fee returns on time
• Keep records of compliance activities
• Report changes in circumstances promptly

Updated Fees and Penalties (2024-2025)

Application fees for residential property:

• Under $1 million: $14,700
• $1-2 million: $29,300
• $2-3 million: $43,900
• $3-4 million: $58,600
• $4-5 million: $73,200
• Over $10 million: $146,700+

Established dwelling fees (if exceptions apply): Tripled in April 2024, with fees three times the standard rates above.

Penalties for non-compliance:

• Civil penalties: Up to 25% of property value
• Criminal penalties: Up to $49.5 million for corporations or 10 years imprisonment for individuals
• Forced divestment orders
• Annual vacancy fees: Double the FIRB application fee if property vacant >183 days/year

Key Takeaways

FIRB rejection is avoidable in most cases. The most common reasons for rejection are:

1. Attempting to purchase established dwellings during the 2025-2027 ban period
2. Misunderstanding property qualifications and visa requirements
3. Submitting incomplete or inaccurate applications
4. Poor compliance history with previous FIRB conditions
5. Not demonstrating how the investment increases housing supply

By understanding these common pitfalls and following best practices, you significantly increase your chances of FIRB approval.

Need Help Calculating Your Total Investment Costs?

Understanding FIRB requirements is just one part of buying Australian property as a foreign investor. You also need to account for application fees, stamp duty, foreign buyer surcharges, and other costs.

Use our free FIRB calculator to get instant cost estimates and eligibility guidance for your Australian property purchase.

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Frequently Asked Questions

Can I appeal a FIRB rejection?

There is no formal appeal process for FIRB decisions. However, you may be able to address the issues that caused rejection and submit a new application. In very limited circumstances, you might seek judicial review, but this is rare and complex.

How long does FIRB approval take?

Standard processing is 30 calendar days from when your complete application and fee are received. However, this can be extended, especially for complex applications or those requiring additional information. Budget 60-90 days to be safe.

If my FIRB application is rejected, do I get my fee back?

No. FIRB application fees are non-refundable, regardless of whether your application is approved or rejected. However, if you're unsuccessful in a competitive bid, you may be eligible for a 75% refund of the application fee.

Can temporary residents buy established dwellings for their own residence?

No, not under the current rules. From 1 April 2025 to 31 March 2027, foreign persons (including temporary residents) are banned from purchasing established dwellings, with very limited exceptions. Temporary residents can apply to purchase new dwellings, off-the-plan properties, or vacant land.

What happens if I buy property without FIRB approval?

Purchasing property without required FIRB approval is a serious breach of Australian law. Consequences include civil penalties up to 25% of the property's value, criminal penalties including imprisonment, and orders forcing you to sell the property. Never proceed without approval.

Do Australian expats living overseas need FIRB approval?

No. Australian citizens do not need FIRB approval to purchase property in Australia, regardless of where they currently live. However, they may still face foreign buyer stamp duty surcharges in some states if they're not residents for state tax purposes at the time of purchase.

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Last updated: December 2024. FIRB policies and fees are subject to change. Always check the official FIRB website or consult with a qualified professional for the most current information.