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Buying Property in Australia
Greater numbers of overseas investors are turning their gaze towards the Australian property market thanks to its strong returns and stability.
As more Australian residents with temporary or permanent visas realize they can qualify for a home loan the real estate market, which has dipped recently, is preparing itself for another boom period, making right now a great time to get involved.
The difference between Australia and other property markets
The Australian Prudential Regulation Authority (APRA) maintains a responsible lending legislation along with economic management policies that keep Australian property relatively low risk. Prices have never fallen more than 20 percent in a single year which is very attractive when compared to property markets in places like the USA.
Some key points that maintain this for Australia include:
- Large numbers of home ownership preventing investors from having too much impact
- The Australian population is growing faster than the number of new dwellings
- Prices have risen with the market’s ability to buy
Investing in Australia
While some countries have restrictive foreign investment laws, government approval for foreign investors is relatively simple in Australia. Both residential and commercial properties are up for grabs during a significant time for development in major cities.
There are specialist mortgage brokers to help overseas investors obtain finance and navigate the consumer protection legislation and legal system (which is based on the UK system). Non-resident lending is far more difficult for a foreign citizen as opposed to a temporary resident but not impossible with the right guidance.
The buying process
Always speak to a local real estate agent to help find an affordable area with high returns. Doing your research is critical, and there are many online resources that can help explain which areas to focus on to maximize your investment.
Australian banks will not lend unless you prove you can afford the debt, and the rules are tighter now more than ever. You will also require:
- A conveyancer or solicitor to handle the legal work and complete searches on the property/complete transfer of ownership
- A mortgage broker, preferably with experience in helping non-residents
- An accountant, not essential but beneficial if you need help structuring your financials and navigating Australian tax legislation
- A buyer’s agent, also not a must but useful to help physically inspect the property and give advice
Foreign Investment Review Board (FIRB)
All non-residents or temporary visa holders are legally required to obtain permission to buy property in Australia from the Foreign Investment Review Board (FIRB). This is not, however, a requirement for Australian permanent residents and New Zealand citizens.
The approval process is relatively simple and can take up to two weeks from the date of application. Fees are dependent on the price of the property.
Settlement
The term “settlement” means the property has changed hands and is often handled by your conveyancer or solicitor along with the bank and mortgage broker.
The lender often keeps the property title, or it can be released to you for a small fee.
Final points to remember
While you could manage the property yourself, a property manager will be the more straightforward choice if you are located overseas. They will act as a sole point of contact and manage tenants, inspections and maintenance/repairs for a small percentage of the rent.
You will also be required to lodge a tax return in Australia each year. A property manager will provide you with all of the necessary information for rent and expenses which can be transferred to an Australian accountant to prepare and submit your tax return.
I hope you enjoyed reading: Buying Property in Australia. For information on Asset Protection or moving your business to Australia, please contact our office HERE. I’ve also added some really great articles for you to read:
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