Australia Property Buying Guide
The property purchasing process in Australia is a very simple proceedure, however, there are some differences that you should be aware of as a foreigner investing in property in Australia.
Firstly, it is quite difficult for foreigners to get approval to i nvest in a residential development that is already compeleted unless you purchase as a registered foreign company or a foreign national who is resident in Australia for more than 12 months. It is much easier for a foreigner to invest in a property which is " off the plans" i.e. that is yet to be developed.
You must also ensure that the developer of the property has sought permission from the FIRB to sell the property to foreign investors. In general no more than 50% of a development can be sold to foreign investors. If the developer has not got this approval then you are obligated to apply for it yourself through the FIRB.
There are two ways you can go about purchasing a property in Australia. The first is to find the property and sign a contract that is conditional on gaining approval from the FIRB. The second is to seek the prior approval of the FIRB and then find your dream property. Approval will generally take 30 days to complete, although in most cases it is done in 20. It should be noted that the FIRB are not there to make life difficult for foreign investors. The FIRB is in place to channel foreign investment into increasing the supply of new housing in Australia.
Once approval from the FIRB has been sought and obtained, you are free to continue on the purchase of your property in Australia. However, there are some purchasing costs to be aware of. As a general rule of thumb investors should allow:
Legal fees: AUD $1,200
Loan Application and settlement fees: AUD$500 to $800
Property and Loan Stamp Duty ( This varies from state to state )
Also do not forget about the exchange rate variations that can add up significantly.
Once you have purchased your property there are also some ongoing costs you should be aware of such as council rate taxes, insurance costs, land taxes etc. Many of these vary from state to state and you should contact your local council to find out what these are. In addition, if you want to rent out your property through a property management company you will need to allow around 7.5% of the income gained for their fees and charges. In addition you will also be liable for income tax based on the income earned.
Mortgaging property in Australia
Property finance for overseas investors is readily available in Australia from a variety of banks and non-bank lenders. In general, the interest rates and types of accounts are the same for foreign investors as are available for local borrowers. The key difference is the amount that they will lend to overseas borrowers as a percentage of the value of the security. In general you will be able to recieve a 70% mortgage. Please note that all loans do need to be supported by a minimum requirement of proof of income.