Investment Property In Australia: Unlike some countries, you typically need to be a permanent resident or citizen to buy property in Australia, and many available home loans also require you to be Australian. However, foreigners can still buy your property needs to be reclassified as an investment and get approval from the government.
With the Aussie property market continuing to rise at a rapid pace, there has never been a better time to invest in Australian property and take advantage of the attractive returns on offer to help build your wealth. However, as more and more overseas investors are jumping into the market, the question arises – can foreigners buy property in Australia? The answer to this question is yes, however, certain conditions must be met to invest in Australian real estate. Let’s take a look at some of the options available to foreign investors looking to invest in Australian property…
How to buy a property in Australia?
Buying property in Australia is sure to interest many investors. There are few more lucrative investments than real estate. But it’s not always easy. Foreign investors must jump through several hoops to acquire an investment property in Australia and even then there are restrictions on what they can buy, how much they can borrow, and how they finance their purchase. In addition, foreign buyers face a hefty stamp duty when purchasing a property from sellers who aren’t Australian citizens or residents.
Firstly, if you’re a foreigner who wishes to buy or invest in a home in Australia, you’ll need to apply to the Foreign Investment Review Board (FIRB), which is responsible for reviewing foreigners who do.
As long as you are approved for an investment property. Here are a few things to take into consideration
- Either a property must be brand new, or one that’s vacant land.
- It’s not legal to convert a single-family home into a short-term rental.
Therefore, when you buy a private residence, you are also required to live in it for at least a couple of years, and then sell it as soon as you no longer reside there.
Australia’s federal government places several additional restrictions on foreign investment. There are restrictions on how much property can be purchased at any one time, which is meant to prevent buyers from cornering Australia’s real estate market and driving up prices for locals. Also, investment properties in Australia must only be for long-term use, rather than short-term rental arrangements.
Fees for foreigners buying property
In most cases, Australians living abroad will have to pay capital gains tax on investment property they buy within Australia. They’ll also need to get approval from Australia’s Foreign Investment Review Board (FIRB) before they buy. That said, it’s a lot easier for foreigners to buy investment property in Australia than in many other countries.
The application fee depends on the price of the property; so this fee can be higher if you buy a property for $1 million, you’d be looking at about $6,000. While a property priced at $3m is going to demand about $38,000. It’s essential to double-check this before purchasing. The Foreign Investment Review Board has some guidance on it.
You will also need to pay Foreign Citizen Stamp Duty, which is a percentage of your usual stamp duty and is a type of transaction fee levied in some regions in Australia. Every state sets its amount of stamp duty, so be sure to double-check that.
Other than these smaller factors, buying a home and applying for a home loan are generally the same regardless of where you’re from.
Can temporary residents buy a property?
It’s been a little over a year since Australia announced changes to foreign investment rules that allow temporary residents to purchase investment properties under certain conditions. If you’re currently overseas and would like to buy an investment property in Australia, you should know a few things.
There are some notable requirements to adhere to when you purchase an investment property in Australia as a temporary resident. For starters, you’ll need approval from state and federal government agencies that oversee tax and foreign investment laws. These regulations differ based on your citizenship and residency status. You’ll also need to find a reputable estate agent to help you identify an appropriate property for your needs and make all relevant tax returns.
If you’re on a visa of limited duration; such as a partnership visa, 457 work visa, temporary skills shortage visa, or student visa, you still need approval from the FIRB. This is because you’re classified as a foreigner and you need to meet the same criteria listed above.
The only time you don’t need FIRB approval to buy a house is if you are a joint tenant with an Australian; to who you are married legally.
Being a Kiwi national is beneficial to you. Not only are Kiwis usually given the same rights as Aussie home buyers. But you’re free from many of the complications faced by other foreigners who want to buy Australian property. The one disadvantage you may face is having to pay the Foreign Citizenship Stamp Duty when buying Australian property from abroad.
Can I get Australian home loans?
No, but you can get foreign investment home loans and buy investment property in Australia. To do so, you’ll need to complete an application with one of these lenders and meet certain requirements.
True, but it’s not that easy. Australian lenders often have requirements, such as the lender being Australian, that the homebuyer must fulfill to use their service. This leads those that lend to foreigners to impose tighter lending criteria such as
- Asking for a higher interest rate than normal
- Needing a larger deposit (around 30-40%)
- Imposing restrictions on foreign income used to pay the loan
- Having to obtain approval from the FIRB.
Still, there are plenty of banking options that can meet your needs. Banks such as HSBC and Citibank can help you secure a home loan.
No. You can only get a home loan if you intend to live in your property; not as an investment property in Australia. You also have to be living there within six months of getting it, or else you’ll have to make repayments anyway.