Case Study: Applying for the FIRB Commercial Scale Exception

Since 1 April 2025, foreign persons have been generally banned from purchasing established dwellings in Australia, with narrow exceptions. One of the less-discussed pathways is the exception under Section G of FIRB Guidance Note 6 for acquisitions that support the availability of housing on a commercial scale — covering things like Build to Rent developments, retirement villages, aged care facilities, and student accommodation. We set out how that exception works, and what “commercial scale” means in practice, in Part 1 of this series: Australia FIRB: Can Foreign Buyers Purchase Established Dwellings Under the Commercial Scale Exception?

Brightstone Legal recently acted for a foreign-controlled Australian developer in a large-scale urban renewal acquisition, involving more than 90 individual property titles across multiple strata schemes with a combined value exceeding $300 million. The FIRB application for that transaction was structured around the commercial scale exception. This article looks at what that experience reveals about the practical demands of a Section G application — particularly for strata acquisitions — from fee planning through to the conditions of approval.

1. Why Strata Acquisitions Present Particular Complexity

Acquisitions of established dwellings within strata schemes sit at an intersection of foreign investment law that is not always straightforward to navigate. Several issues arise that do not appear in single-title established dwelling acquisitions.

Multiple titles, multiple actions

Each lot within a strata scheme is a separate legal title, and each acquisition is a separate action for FIRB purposes. An acquisition of 90-plus strata lots is therefore, technically, 90-plus separate foreign investment actions — each of which would, absent any aggregation or exception, attract its own established dwelling application fee.

The fee implications of this are significant. The established dwelling fee schedule starts at $45,300 for acquisitions of $1 million or less and rises steeply with consideration. Across a large strata acquisition, the aggregate fee liability calculated on a title-by-title basis could be very substantial.

The Fees Guidance Note (GN10) provides some relief through the single agreement rule: where multiple actions are taken under a single agreement, fees are calculated on the aggregate consideration for each kind of action rather than title by title. Whether multiple strata lot acquisitions constitute a ‘single agreement’ turns on factors including whether the contracts are inter-conditional, whether the titles are geographically contiguous, and whether the parties are connected. In a large strata acquisition involving multiple vendors and multiple contracts, this analysis requires care.

The fee waiver available to Section G applicants

Importantly, applicants who qualify for the Section G commercial scale exception — or who may qualify for any other exception to the established dwelling ban — are eligible to apply for a fee waiver that reduces the application fee to the commercial land rate.

The commercial land fee schedule is significantly lower than the established dwelling schedule. Commercial land fees start at $15,100 for acquisitions of $50 million or less, rising to a maximum of $1,205,200 for acquisitions above $2 billion. By contrast, established dwelling fees start at $45,300 for acquisitions of $1 million or less and cap at $3,615,600 — a materially steeper structure at every tier.

For a large-scale acquisition involving established dwellings across multiple strata lots, the difference between paying established dwelling rates and commercial land rates can be very substantial. Applicants who qualify for the Section G exception should include a fee waiver request in their application from the outset. The waiver is not automatic — it is assessed on a case-by-case basis alongside the substantive application — but it is a recognised and available form of relief that the Guidance Notes expressly contemplate.

The concessional fee treatment does not change the legal character of the land or the applicable monetary threshold. It affects only the fee payable. But in large scale transactions such as these, it represents a material cost saving.

2. How to Approach the Application

The most important practical observation about Section G applications is that they are assessed by Treasury on a case-by-case basis, and the quality and persuasiveness of the submission is therefore the primary lever available to the applicant.

Unlike standard residential land applications — which are processed by the ATO against relatively clear criteria — Section G commercial scale applications are submitted to Treasury and assessed on the particular facts. Treasury has a wide discretion, and the outcome will depend significantly on how well the applicant makes the case that the acquisition meets the commercial scale threshold.

Engaging Treasury early

The Guidance Note recommends that foreign persons who seek to purchase established dwellings on commercial scale grounds contact Treasury regarding the submission process before lodging their application. This is not merely a procedural formality. Early engagement with Treasury allows applicants to understand what information Treasury will require, to clarify any structural or characterisation questions before the formal clock starts running, and to identify any concerns Treasury may have at the outset.

For complex transactions — and particularly for strata acquisitions involving numerous titles, multiple contracts, and layered ownership structures — this early engagement can be decisive. It shapes the submission strategy, reduces the risk of requisitions during the assessment period, and can materially affect the timeline.

The submission itself

A Section G application needs to demonstrate, clearly and with supporting evidence, that the proposed acquisition meets the commercial scale test. The submission should address:

The nature and scale of the existing housing use across the acquired dwellings — including the number of dwellings, the management structure, the occupancy arrangements, and the commercial character of the operation;
The identity and structure of the foreign investor, including the corporate and ownership structure and the basis on which the entity is a ‘foreign person’ under the FATA;
The proposed use of the dwellings following acquisition, and how that use supports the availability of housing supply on a commercial scale;
The consistency of the acquisition with Australia’s foreign investment policy, which prioritises housing supply for Australians; and
A fee waiver request to commercial land rates, supported by the basis on which the Section G exception is claimed.

In this transaction, the submission required careful attention to the strata-specific issues: the legal character of each title, the operation of the strata schemes across the sites, and the way in which the aggregate acquisition supported the commercial scale housing argument. The submission was structured to present a coherent and well-evidenced commercial narrative across all titles — not a collection of individual title-by-title justifications.

3. Treasury Requisitions and Timing

Even with a well-prepared initial application, Section G applications will often attract Treasury requisitions — requests for further information issued during the assessment period. This is not unusual; it reflects the discretionary and fact-specific nature of the assessment.

Common requisition topics include: the detailed corporate and ownership structure of the purchaser group; evidence of the commercial character of the existing housing operation; the development or investment intentions for the acquired dwellings; and financial information about the acquisition and the investor.

Each requisition response extends the effective assessment timeline. Under the FATA, the Treasurer has 30 days from lodgement and payment of the correct fee to make a decision. The Treasurer may extend this period by a further 90 days by written notice, and by a further 90 days by interim order. In practice, the timeline for complex Section G applications is driven by the requisition process, not by the statutory periods.

The practical implication is that applicants need to build genuine time for the FIRB process into their transaction schedules. A Section G application is not a 30-day formality. It is a substantive regulatory engagement that, for large and complex transactions, may run for considerably longer. Contract conditions, financing arrangements, and commercial timelines all need to accommodate this reality.

4. Conditions of Approval

If a Section G application is approved, the Treasurer has broad power to impose any conditions considered necessary to protect the national interest. Unlike the Section F redevelopment pathway — where the conditions are relatively standard (construction within four years, evidence of completion, no disposal before construction complete) — the conditions under Section G are more bespoke and will depend on the particular investment.

For acquisitions involving ongoing housing operations (such as aged care, Build to Rent, or student accommodation), conditions are likely to address the continuation of that use, reporting and compliance obligations, and what happens if the investor proposes to change the use of the dwellings. For urban renewal acquisitions with a residential component, conditions may address pre-development obligations and the timeline for the proposed redevelopment.

Understanding what conditions are likely to be imposed — and structuring the acquisition documents to accommodate them — is an important part of FIRB planning for Section G applications. Conditions imposed by FIRB approval need to be reflected in the contractual arrangements, the financing structure, and the ongoing compliance obligations of the foreign investor after completion.

Key Observations for Developers and Institutional Investors

The commercial scale exception under Section G of Guidance Note 6 is a genuine and meaningful pathway for foreign investors in the right circumstances. But it is not a simple one. The key observations from the recent experience are:

Section G is not the same as Section F. The commercial scale exception is not about increasing housing supply. It is about supporting the availability of housing on an existing commercial basis. Framing the application correctly is the first and most important step. (See Part 1 of this series: Australia FIRB: Can Foreign Buyers Purchase Established Homes Under the Commercial Scale Exception? for the full distinction.)
Strata acquisitions require specific analysis. The multi-title, multi-vendor character of a strata acquisition creates complexity around foreign person status, action identification, single agreement analysis, and fee calculation that does not arise in standard established dwelling transactions.
The fee waiver is available but not automatic. Applicants who qualify for the Section G exception should apply for concessional commercial land fee treatment from the outset. The saving can be very significant on a large acquisition — but it requires the request to be made and the case to be made out.
Early Treasury engagement matters. Section G applications are assessed by Treasury on a discretionary basis. Early engagement allows the submission to be structured in the way Treasury needs to see it, reducing the risk of requisitions and delay.
Timing is genuinely uncertain. FIRB approval for a Section G application is not on a predictable clock. Requisitions can extend the process materially. Transaction documents and financing arrangements need to be structured to accommodate this.
Conditions of approval require forward planning. The conditions imposed on a Section G approval are bespoke and may impose ongoing obligations on the investor. Understanding what those conditions are likely to be — before settlement, not after — is essential.

How Brightstone Legal Can Help

Brightstone Legal advises developers, funds and foreign investors on FIRB approvals for complex property acquisitions across Australia, including large strata transactions, urban renewal projects, and institutional housing investments.

Our experience in major acquisitions — and with Section G applications more broadly — gives us a detailed understanding of what Treasury is looking for, how to structure the submission, how to manage the requisition process, and how to integrate FIRB approval into the broader transaction framework.

If you are considering an acquisition of established dwellings and need to understand whether the commercial scale exception may be available, contact our property and foreign investment team. The earlier specialist advice is engaged, the more effectively the FIRB strategy can be built into the deal from the outset.

Disclaimer: This article draws on Brightstone Legal’s experience advising on complex FIRB matters and is intended for general informational purposes only. Details of specific client transactions have been anonymised to preserve confidentiality. This article does not constitute legal advice. FIRB rules are complex and fact specific. For advice tailored to your circumstances, please contact our property lawyers at Brightstone Legal.

Sources: Foreign Acquisitions and Takeovers Act 1975 (Cth); FIRB Guidance Note 6 — Residential Land (Version 4, 12 December 2025); FIRB Guidance Note 10 — Fees (Version 9, 12 December 2025); Foreign Acquisitions and Takeovers Fees Imposition Regulations 2020.