Thinking of Investing in Property in Australia? Here’s Your Guide to Buying Properties in Australia as a Foreigner

Are you considering investing in property in Australia or even moving there? Australia is a popular place for property investment, with a stable market and consistent growth performance¹. However, there are a few important things you need to know as a foreigner buying property in Australia. In this guide, we will cover all the essentials, including the buying process, the rules for foreigners, and where to find your dream property.

The Buying Process for Foreigners in Australia

Before you start searching for your dream property and making offers, it’s essential to understand how the buying process works for non-residents. There are certain restrictions for foreigners buying property in Australia. Here’s a summary of what you need to know²:

1. You can only buy new buildings or vacant land as a foreigner, unless you plan to live in the property you buy and complete construction on it within four years.

2. If you plan to stay in Australia as a temporary resident, you can buy an established dwelling. However, you can’t demolish it to build new properties, and you must sell it if you move out of Australia.

Once you understand these rules, you can proceed with the buying process. The first step is to apply for approval from the Foreign Investment Review Board (FIRB). All foreign buyers must obtain approval from the FIRB before proceeding³. Here’s how it works:

1. Read all the guidance on the FIRB website to determine if you need approval and if there are any additional measures you need to take. It’s also a good idea to seek legal advice from an expert in the Australian property market to ensure compliance with all relevant rules and regulations.

2. Start your application on the Australian Taxation Office (ATO) website. You’ll need to provide details such as visa documents, passport information, contact details, and reference numbers for any previous FIRB applications you’ve made. You’ll also need information about the property you wish to buy, including address and title details.

3. Sign the declaration and submit your application. You’ll also need to pay the application fee, which varies depending on the property purchase price, ranging from $5,700 – $104,100 AUD⁴.

After obtaining FIRB approval, you can proceed with your purchase, which may involve getting a loan from an Australian lender. It’s important to provide proof of FIRB approval when applying for a loan. You may also want to consider hiring a conveyancer or settlement agent to handle the legal work, a licensed buyer’s agent to assist with property search and negotiation, and an accountant to help with financial arrangements and tax compliance⁵.

Locals vs. Foreigners: Key Differences

One key difference between buying property as an Australian resident and as a foreigner is that Australian residents are not required to apply through the FIRB or pay the application fee. The FIRB process aims to encourage foreign buyers to invest in new properties while reserving existing properties for locals.

Foreign buyers may also face restrictions when it comes to getting a home loan⁶. Many lenders have stricter lending criteria for non-residents, including higher interest rates and lower loan-to-value ratios (LVRs). This may require a larger deposit, and some lenders may refuse applications from non-residents or temporary residents who do not earn their income in Australia.

Additionally, foreign buyers may encounter extra costs, such as the Foreign Citizen Stamp Duty, which is an additional stamp duty levy of up to 8% and a 2% land tax surcharge depending on the state where the property is purchased⁷.

Where to Find Your Dream Property in Australia

Now that we’ve covered the legal requirements, paperwork, and costs, it’s time to start searching for your dream property. Here are some places to begin your search:

1. Property.com.au: Australia’s largest list of properties to buy or rent. This website allows you to browse available homes and apartments across the country. You can search by area, price range, number of bedrooms, and property type.

2. Realestate.com.au: Another property search site that covers all Australian states. It offers various search options, including the ability to research suburbs in-depth and explore home loan options.

3. Propertybuyer.com.au: If you’re unsure where to start and don’t mind paying an extra fee, you can use a buyer’s agent like propertybuyer.com.au. They will do the legwork for you, finding suitable properties based on your criteria and even viewing them on your behalf. They can also negotiate with the seller’s agent to secure the best possible price.

Getting Your Money to Australia

Once you’ve found your dream property and had an offer accepted, you’ll need to pay for your purchase. To cover costs such as the deposit, conveyancer fees, and other expenses, you may consider an international bank transfer. However, this can be costly due to high fees, poor exchange rates, and currency conversion costs.

Fortunately, there’s an alternative that can save you a significant amount of money on your Australian property purchase. Wise offers a cost-effective solution for sending money to Australia. By opening a free Wise multi-currency account, you can send large sums of money to Australia with low fees and the real exchange rate. Wise is a reliable and secure option, fully regulated by the relevant financial authorities.

Conclusion

Buying property in Australia as a foreigner involves some additional steps and requirements compared to buying as a local. However, with careful planning and compliance with the rules, it can be a worthwhile investment or even a new home if you plan to move to Australia. By following the buying process, understanding the differences for foreigners, and utilizing the right resources, you can navigate the Australian property market with confidence. So, start your property search, and happy house hunting!

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Sources checked on 1-October 2020.