Foreign Investor

Why invest in Australian Property?

The Australian residential property market is a popular destination for foreign investors. Australia’s economic stability, combined with a property market relatively unaffected by the volatility of speculation, has made the land ‘down under’ a safe choice for overseas investors.

The last 25 years has seen the national median house value rise by 412%, with each of the capital cities recording average annual growth from 5.9% to 8.1%.

Buying residential property in Australia offers very little risk as the continuing demand for housing, fuelled by strong population growth, ensures property prices are supported in general.

See our Investor page for more information

Property Investor | Blaq Property | Off-the-Plan Specialists

SOURCE: Core Logic

The value of the Australian Dollar (AUD) also makes foreign investment attractive to residents of countries whose currency is exchanging at a favourable rate.

See the live value of your currency compared to AUD

Australian property prices range greatly, depending on location and type of property, but as an average, as of the quarter ending 2019…

Australia’s median house price is $809,349 (AUD) and

Australia’s median unit price is $565,024 (AUD) (a unit is on a smaller block of land and also includes townhouses and apartments)

For further perspective on property value in Australia, the ABS average weekly earnings report estimates the average weekly ordinary time earnings for full-time adults in Australia in November 2019 is (pre-tax) $1658.70/$86,252.40 annual.          

Which roughly translates to an average property costing 7 times the average person’s annual income.

While some overseas investors invest in Australian property purely as an investment and for portfolio diversification, others purchase because they plan on moving here one day, they currently have family living or studying here, or they plan on doing so.

Australia has an ever-growing economy and is world-renowned for its high quality of living and unrivalled natural beauty. To learn more about Australia, google ‘living in Australia’ & visit https://www.australia.com/

Here’s what non-residents need to know about investing in Australian property

Non-resident buyers can only purchase new properties such as off-the-plan houses, units and apartments, not established or existing ones.

If you are ‘Temporary Resident’ you can purchase an established property with certain conditions.

If you’re a non-resident foreigner and you want to buy residential property in Australia, you will first need to obtain approval from FIRB (Foreign Investment Review Board)

You can apply for approval online and, while there is no limit to the number of new dwellings you can purchase, you will usually need to apply for approval before each purchase.

Foreign Investor | Blaq Property | Off-the-Plan Specialists

NOTE: Some Developments have applied for an exemption certificate to sell new (or near-new) dwellings in a development to foreign persons.  You do not need to make an individual application to FIRB when purchasing one of these properties.

Blaq Property can assist you in finding a development that offers this exemption.

According to FIRB, a new dwelling must be built on residential land, must not have been previously sold as a dwelling, and must either not have been previously occupied, OR, if the dwelling is part of a development and was sold by the developer of that development, not have been previously occupied for more than 12 months.

If you want to buy vacant land for development, the development must be completed within four years of approval. There is also the option of purchasing an established dwelling for knocking down & rebuilding of more dwellings than what was on the site originally.

Additionally, there are tax implications for investing in Australian property. Any rental income you receive from your investment will need to be declared on an Australian tax return, and you’ll need to pay Capital Gains Tax on any profit you make when selling the property.

The FIRB Application Process

Before you apply for approval to purchase a property, it’s recommended that you obtain expert legal advice to make sure you understand and comply with all the necessary legal requirements. Then, you can follow the steps below to apply for foreign investment approval:

1. Fill out a Residential real estate application on the Australian Taxation Office website.

2. Provide the address and title details of the property you wish to purchase.

If you don’t have a specific property in mind as yet, but know which State or Territory you want to purchase in, you need to apply for residential land (other than established dwellings) exemption certificate to allow you to purchase a single new (or near-new) dwelling or title of vacant residential land within a specified state or territory.

You apply for this exemption within the Residential real estate application.

This certificate will allow a foreign investor to make multiple attempts to acquire residential land (other than an established dwelling) by any method (such as auction, ballot, private offer, expression of interest or tender) without having to seek individual approval for each specific property they are interested in.

The exemption certificate will generally be valid for twelve months from the date of approval and will be subject to standard conditions applicable to a purchase of residential land.

All foreign persons are eligible for residential land (other than established dwellings) exemption certificate. However, no agreements (even conditional agreements) can be entered into before the exemption certificate is given.

Residential land (other than established dwellings) exemption certificates provide a foreign person with approval to purchase one unspecified vacant land title or new (or near-new) dwelling in the state or territory specified and up to the value specified on the exemption certificate.

3. Read and sign the declaration.

4. Submit the application and pay the relevant fee.

PURCHASE PRICE                                         FEE PAYABLE
$1 million or less $5,700
$1 million – $1,999,000 $11,500
$2 million – $2,999,000

 

$23,100
$3 million – $3,999,000 $34,600
For each further $1 million increase $11,600

NOTE: Some Developments have applied for an exemption certificate to sell new (or near-new) dwellings in a development to foreign persons and therefore you do not need to make an individual application to FIRB when purchasing one of these.

This saves you a minimum of $5,700 and means you will not have the hassle of filling out application forms and waiting for approval.

Blaq Property can assist you in finding a development that offers this exemption.

CONTACT US TO SEE IF BUYING AN AUSTRALIAN PROPERTY IS RIGHT FOR YOU!

After the successful purchase of a property:

After completion of the property:

Penalties

Foreign Investor non-residents who purchase property in Australia without first seeking approval from the Foreign Investment Review Board (FIRB) face fines of up to $135,000, three years’ imprisonment, or both.
Companies breaching these rules can be fined up to $675,000, while buyers’ agents and real estate agents who help foreign buyers violate these rules also face stiff penalties.

Stamp Duty/ Land Transfer Duty

When purchasing property in Australia, a tax on property transactions is charged by each State and Territory. Amounts can and do vary between States & Territories with non-residents being required to pay a higher value than residents.
This tax is in the thousands of dollars and is added on top of the property purchase price and payable at land settlement.

Australian Home Loans

You must obtain approval from the FIRB before you can apply for a home loan with an Australian lender.

Australian Banks/Lenders often vary whether they are accepting home loan applications from non-residents at all, OR, if they are, they have many requirements. For example, foreign buyers often need a deposit of at least 40% in order to get mortgage financing.

If you would like assistance applying for an Australian based mortgage loan, please CONTACT Blaq Property.

Transferring cash to Australia for a property purchase

Even if you are able to obtain an Australian-based mortgage loan, you still need to transfer cash to Australia for property deposits, legal, stamp duty & other costs.

Different countries & banks have varying transfer limits that can be sent and received, and Declarations to the respective governments will need to be made.

This will have to be investigated from your end to ensure you comply with your Nation’s laws.

You can either transfer funds direct to the Developer, Builder, Government etc., or you can use the Statutory Trust Account of the Australian Solicitor/Lawyer you engage, and funds can be disbursed from there as required.

You can direct your Solicitor/Lawyer to hold funds in an interest bearing account so that you can earn interest on your monies whilst they are waiting to be disbursed.

NOTE: Australian Trust Accounts are held with an Australian Bank and are heavily Legislated, with large fines and imprisonment as penalties to ensure the security of client funds.

Blaq Property can help you find an Australian Solicitor/Lawyer if you don’t already have one, and we can assist with communications between all parties to ensure all contractual obligations with the land vendor & builder/developer are being met.

Because of transaction limits you should start transferring money to Australia as soon as practicable, as you will need large lump sums readily available, such as the 5 or 10% deposit, progress payments at the 5 different stages of construction (if purchasing on a 2-part Contract) or Settlement at the build’s completion.

CAN A FOREIGN INVESTOR OPEN A BANK ACCOUNT IN AUSTRALIA?

Yes, you can if you’re migrating, studying or working in Australia.

To do so, you will usually require

  • visa with which you will be entering Australia;
  • date you plan on arriving in Australia (sometimes a departure date as well);
  • address of where you will be living in the country;
  • employment and salary details;
  • passport number or another proof of identity;
  • 100 points worth of documentation when you arrive in the country.
Change in Finances | Blaq Property | Off-the-Plan Specialists

Australian banks use the 100 point check, a government-adopted personal identification system. Different pieces of ID that an individual can produce (such as a driver’s license, passport, tenancy agreement, utility account, etc.) are worth a certain number of points.

If you reside in another country and don’t intend to migrate to Australia, you’ll need to speak to a local bank who has international ties with a bank in Australia.

Those already in Australia on a tourist or visitor visa can open an Australian bank account by visiting a local branch and providing your passport.

For a list of Australian Owned Banks & Foreign Subsidiary Banks visit here.

Feeling overwhelmed and confused? Blaq Property is here to assist you with:

  • The FIRB Application or finding a development with an exemption
  • Choosing where to buy
  • Choosing the right property to suit your goals
  • Choosing a Solicitor/Conveyancer
  • Understanding Australian property contracts
  • Finance & banking assistance

To see all the ways we work to make the process stress free and rewarding, download our FREE 8 STEP Off-The-Plan Property Buyers Guide

And when you purchase a property through us, there is no charge for these additional services!

To find out more contact us below.

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