Buying Property In Australia
Purchasing Property in Australia
Australia is known for its excellent quality of life, thriving economy, beaches, culturally alive cities and incomparable wildlife. All of these reasons and many more make Australia an attractive place for foreigners to consider buying their next property. And close geographical proximity to other desirable locations, such as Singapore and New Zealand, make Australia an in-demand locale for foreign investors.
Australian real estate in major cities like Sydney and Melbourne is booming, and mortgage lending is protected by the Australian Prudential Regulation Authority (APRA) to ensure that even temporary residents receive the same fair treatment from lenders as any Australian citizen.
This page will provide specific details into the process of buying property in Australia as a non-resident or foreign-based buyer.
Can Foreigners Buy Property in Australia?
While Australian property is accessible to all kinds of buyers, from a permanent resident to a student visa holder, different rules and restrictions apply for various real estate and purchasers. One of the first steps when thinking about buying property in Australia is to understand the regulations set forth by Australia’s Foreign Investment Review Board (FIRB).
The FIRB is the government agency responsible for protecting and stewarding the interests of both vacant land and established dwellings in Australian territories. FIRB approval is needed for expats to purchase property in Australia and move forward with home loan proceedings. The following sections offer insights into specific parts of the property buying process as a foreigner.
The Australian Property Buying Process for Foreigners
The Australian property market represents a vast and varied landscape. However, every type of property may not be immediately available to every buyer, as there are laws in place governing what non-residents can and cannot apply to purchase.
If you are looking to buy an Australian home as an investment property, there are separate rules applicable to land investments and those relating to business investments.
FIRB approval for any purchase is mandatory unless you become an Australian citizen, not just a permanent resident. At times, restrictions may apply to the types of property that foreigners on a temporary visa can access. Temporary visa holders might be limited to the purchase or lease of new dwellings only, contingent on guidelines affecting transfer of established dwellings in their territory.
A “new dwelling” is typically classified as one that has never been lived in before or has been occupied after its initial sale for less than 12 months in total. The great news here is that Australia offers a New or Near-New Dwelling Exemption guideline that may allow an Australian vendor to sell property to a non-resident without the non-resident having to file for their own FIRB approval.
A great place to start collecting what you will need to complete your FIRB application is the FIRB checklist. There is an application fee associated with every FIRB application that depends on the transaction/area, which can be accessed through the FIRB portal.
Foreign buyers looking to purchase property in Australia will benefit greatly from, and in many cases be required to retain, the services of an Australian real estate professional. They are referred to the buyer’s agent, and this person will conduct in-person research to help you make an educated decision about where you want to live, what you can afford, and any other factors associated with your property purchase.
A buyer’s agent provides invaluable Australian market insight for non-resident buyers and is generally authorized to bid on your behalf at home auctions or other public sales. They can also help you understand fair property prices and any tax exemptions you may qualify for as a foreign buyer.
You will want to look for buyer’s agents in and around the areas where you are interested in living. Bear in mind that populous places like New South Wales (NSW) are likely to have far more buyer’s agencies to choose from than less densely populated regions like Western Australia. Even if your desired location is fairly remote, it is smart to search any nearby capital cities and major cultural thoroughfares like Canberra and Sydney to get a sense of what is available.
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Non-resident home buyers in Australia face just as many options when it comes to securing a mortgage as they do when deciding between a new home in Melbourne or an established dwelling in rural Victoria.
House prices vary widely depending on factors like proximity to capital cities, housing demand in the desired area and even which Australian bank you choose to work with. Borrowers need to be aware of interest rates and understand that a higher interest rate may apply to their Australian home loan based on their credit score, financial history in their home country and employment status.
Before any contract of sale is signed on an Australian property, your buyer’s agent will usually help connect you with a suitable mortgage broker. The total amount that you will pay each month toward your property will be a combination of a fraction of the purchase price and the predetermined interest rate. Also included in that contract of sale and mortgage document will be a figuring of two kinds of tax you are likely to owe on your Australian property: capital gains tax and stamp duty.
The capital gains tax refers to the money you will owe the Australian government on any sale of assets that occurred during the acquisition of your Australian property. For instance, if you sell your home in the Maldives to help pay for your Australian home, whatever you make off that Maldives home will be considered a “capital gain” and subject to reporting to the Australian Taxation Office as part of your annual income tax.
Stamp duty, also known as “transfer duty” or simply “duty,” will be due upon the transfer of the property from one owner to the next. Stamp duty varies from territory to territory, and prospective buyers should check with the local government to find out what taxes and exemptions may apply.
Obtaining a professional to help you inspect new properties is nearly always essential. In Australia, this is handled by a conveyancer, also known as a solicitor. Even if you are already in-country to inspect potential homes, these professionals are a wise addition to your team, as they are more well-versed in what to look for when it comes to evaluating Australian properties.
Conveyancers generally work in conjunction with builders, architects and surveyors to obtain factual information during inspections of Australian homes. These professionals are more aware of details like where and how the weather or climate conditions may affect property and where to look for issues in a property.
A conveyancer can help you build in any disclaimer needed for your contract of sale. For example, if your conveyancer has visited a property for you and discovered that the home’s dire need for a new roof is diminishing its property value, you can potentially negotiate the cost of that repair into your contract of sale or place a disclaimer within the document that mandates the repair.
Likewise, as contracts are typically exchanged between buyer and seller ahead of FIRB considerations, most home sale contracts will contain the standard “subject to FIRB approval” disclaimer. Keep in mind that FIRB approval typically works on a 30-day turnaround.
Conveyancers are also useful for buyers who need to have legal paperwork drawn up regarding a property, subdivide land or update easement information. At a bare minimum, it is highly advisable for non-resident buyers to consult with a conveyancer for basic legal advice before making any formal offers on Australian properties.
Auction sales are far more common in Australia than in other parts of the world. If you are already an Australian resident, the rules for auction bidding are fairly straightforward and require pre-registration. Non-residents can designate an Australian resident, including their buyer’s agent, to bid on their behalf if they plan to have the title or deed certificate of the property transferred over later and where adequate legal trust is in place.
Always make sure to have all financial specifics and designations set forth in a formal contract before allowing any buyer’s agent or other Australian resident to bid on your behalf. Remember that a preferential pecking order is in place for established dwellings in Australia, and Australian citizens are generally given wider options — while holders of a temporary visa or another non-resident visa are not at the highest points on that ladder.
This may mean obtaining an established dwelling is somewhat more difficult for non-residents. And if you are interested in an established residential property that you plan to use for redevelopment, you will still need a FIRB approval. However, if you can show on paper that your redevelopment plans will benefit and enhance Australian housing stock, those approvals can be made fairly quickly.
Official offers on Australia properties should be made through a formal entity, such as your conveyancer’s office, directly from your buyer’s agent, or through the Australian bank that will be responsible for your mortgage. Take the time to ensure that you have a 10% required deposit ready and that your mortgage terms have been approved and set before making a formal offer. You can expect most problem-free sales to finalize in two weeks or less.
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Buying Australian Property Comes With Immigration Requirements
While some Australian home buyers investing at the top end of the real estate pyramid may gain “elite residency” by virtue of their large investment, most everyone else will still need to navigate Australia’s multi-tier visa system to become permanent residents.
All visas in Australia are handled through the Department of Home Affairs. The type of visa available or best suited to your needs might be factored against your employment, field of study, age and overall investment in the Australian economy. Although New Zealand is its own country and remains separate from Australia in governance and citizenship, there is a special NZeTA that can be applied for only by New Zealand citizens.
Permanent residency in Australia can be obtained through a number of visa streams. Permanent resident visas are commonly obtained through employment or workstream avenues, joining family members or life partners already set up in Australia, or through business investments of a significant size.
Relocate Advisors Are Here to Help With Questions About Australia
Relocate is an independent platform for global migration that allows expats considering Australia as their future home to browse qualified Advisors in Australia and submit specific questions to get answers. Whether you plan to settle in Queensland or put down roots in Perth, you can learn all you need to know about buying property in Australia by digging deeper and connecting with qualified Advisors on Relocate.
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