Buying a House in Australia as a Foreigner

Buying a House in Australia as a Foreigner

Perhaps one of the first questions that those new to the “land down under” ask, is can I buy a house in Australia as a foreigner?

The short answer to this is yes, you certainly can.

Foreign and temporary residents and even short-term visa holders are allowed to buy investment properties and residential real estate in Australia under certain conditions.

Long-term residents, foreign investors, and even parents of students are all eager to invest in Australia.

And why would you not want to own your little piece of heaven in Australia?

A land of wonder and beauty with the kind of laidback lifestyle most of us can only dream of.

Australia offers an excellent quality of life, job opportunities, economic stability, a world-class healthcare and educational system, a plethora of outdoor activities and the all-important endless hours of sunshine.

These are the top reasons why so many ex-pats have and still want to make the move, and why they aspire to buy a home in the country.

Very often the second question asked is how?

How does the process work for those buying a house in Australia as a foreigner?

Our article breaks down the processes and highlights some key considerations to take into account.

NOTE: Our article concentrates on providing information to individuals who want to own a residential home in Australia, not for property developers, or large companies and corporations.

First Steps

Houses in Australia

What are the first steps to move to Australia? Image credit: Unsplash

Moving to start a new life in Australia is exciting and scary at the same time.

It does not matter where you buy a home, whether it be in the UK, Australia, or anywhere else in the world, it is always going to be a huge financial investment.

For most of us, it is the largest investment we ever make in our lives, so it has to be conducted properly and of course legally.

Plus, if you are staying in Australia for the foreseeable future, owning your own home at some point in your journey will assist you to settle and feel part of the country.

Just as in the UK, in Australia, local housing markets can be affected in many ways.

Factors such as market conditions, interest rates, location and budget are all major considerations (even more so in a foreign country) when planning to buy your property.

Fortunately, the Australian property market has a history of being strong and stable. Billions of dollars are made in Australian real estate annually from transactions involving foreign purchasers.

Understanding the local market conditions will help you make informed investment decisions and limit risk.

As the foreign purchasing system can be complicated, it is imperative to conduct thorough research, seek professional advice, and carefully evaluate the potential risks and rewards.

Forewarned is forearmed as they say, and once you have thoroughly investigated all your options, you can make informed decisions and maximize the potential rewards of your property investment in Australia.

Hire a Property Lawyer

As property laws in Australia for foreigners can be somewhat complex, especially as the law can change from territory to territory, it is vital that you hire a lawyer.

Seeking advice from legal experts, and financial advisors specialising in international investments can provide valuable insights and guidance.

As such large sums of money are involved, it also gives you that all-important peace of mind.

Depending on where you are going to be conducting your search for a home in Australia there are some very reputable Property Lawyers to choose from across the country.

Here are a few to consider. 

Use a Local Estate Agent

Estate Agent Australia

You will need to contact a local estate agent when moving to Australia. Image credit: Pixabay

Local estate agents are another excellent source of information for prospective buyers.

They will have in-depth knowledge of your chosen area, including property values, neighbourhood dynamics, amenities, schools, and transportation links.

Their expertise can help you find the right property that meets your needs and preferences.

Using a local estate agent when buying a home in an unfamiliar country can also help streamline the process, minimize risks, and ensure a successful outcome.

Some of the top real estate agents in Australia include:

What can Foreigners Buy in Australia?

Unfortunately, for foreigners, it is not a simple case of finding a home and making an offer.

Australia has policies and conditions in place to protect the best interests of its citizens.

There are limitations as to what non-residents can legally buy. Non-residents can purchase:

New Build Homes: It is permissible to purchase a new build property that has not been previously occupied.

This is by far the best and easiest way to own a home in Australia for ex-pats. But you can only buy one property.

Established Dwellings: Buying established dwellings is typically not allowed for foreigners.

However, it may be approved in the instance where the existing property is purchased for redevelopment.

Joint Purchase: Foreigners buying property jointly with either an Australian citizen, a permanent Australian visa holder or a New Zealand citizen will not have to apply for FIRB approval before the property purchase.

Vacant Land: The purchase of vacant land is approved by the FIRB subject to a property being constructed within four years of the approval date. Once construction has been completed, proof must be sent to the FIRB within 30 days.

Non-Residents – Gaining FIRB Approval

Though purchasing a home as a non-resident in Australia is achievable, there is a legal route to follow.

The Australian government positively encourages foreigners to invest in the property market.

However, it has implemented a policy limiting the types of properties it can acquire to avoid direct competition with its permanent residents.

Before you can begin your property journey, you must obtain permission from the government before you can enter into a binding contract or make a purchase.

Temporary visa holders must seek approval from the Foreign Investment Review Board (FIRB), unless an exemption applies.

FIRB reviews and assesses all foreign investment proposals in Australia.

You only need to submit the FIRB application forms after you have decided on a property.

But it is always a good idea to start understanding whether you qualify for FIRB approval early on in the process so there will not be any delays later.

FIRB Exemptions:

There are certain situations that mean you do not need approval from the FIRB:

  • Exemptions apply to Australian citizens. They do not require foreign investment approval to buy residential real estate, regardless of their residency status.
  • New Zealand citizens and holders of Australian permanent residency visas are also exempt from seeking approval for residential property purchases.
  • If the property developer already holds a FIRB exemption certificate for the new property that you would like to invest in.
  • If you are staying in Australia, have applied for permanent residency, and have a bridging visa while the application is finalised.

Start the Approval Process

Approval Process

There are two ways to start the approval process. Image credit: Pexels

There are two ways to gain approval, create an application directly or use the assistance of a conveyancer or solicitor. The latter is preferable.

FIRB applicants can download the relevant forms and set up an online access portal via the Australian Government website. 

Following the submission of your application, you must allow approximately 30 days for the approval process to be completed to find out whether or not your request was successful.

Once you have approval, you are then free to apply for a home loan and then purchase your home.

Fees need to be paid to FIRB and they differ depending on the property price.

You can find out more about the costs associated with FIRB approval.

Do not try and buy a home without prior approval from the Australian Government. This is strictly against the law incurring exceptionally large fines if not adhered to.

Submit Your Application

Once you have found a suitable property you are ready to submit your application.

All cases are reviewed individually to ensure the application is in Australia’s national interest.

You will need to provide your personal information as identification:

  • Legal name
  • Property address
  • Passport
  • Visa details

For those intending to build a home, there will be further evidence and documentation required.

For a more in-depth explanation of what you need to include in your application visit the link here to the Australian Foreign Investment submission page.

Sorting Your Finances

Sort Your finances

You will need to ensure your finances are in order when buying a home in Australia. Image credit: Unsplash

You may need to get financial help to purchase your home.

Similar to the UK, you need to get pre-approval or (mortgage in principle) from your chosen lender.

It will give you an idea of how much you can afford to spend on a property and prevent any delays later on in the process.

Being a foreigner in Australia makes getting a home loan (or mortgage) quite a challenge, but not an impossibility.

Factors such as cross-border complexities, exchange rate fluctuations, and visa status can be perceived as higher risk by lenders.

Many lenders who are willing to work with foreigners, charge higher interest rates and a lower loan-to-value ratio (LVR). This means you may need to provide a larger deposit to secure a home loan.

Bearing all this in mind, while traditional banks may have stricter lending criteria for foreigners, there are alternative lending options available to foreigners.

A good mortgage broker can help you find lenders who have experience working with immigrants.

Some non-bank lenders or specialist mortgage brokers may be more willing to work with foreigners and offer more flexible terms.

Peer-to-peer lending platforms are another option. They can streamline process for obtaining private loans.

These platforms connect borrowers with investors who are willing to lend money in exchange for interest.

Some popular peer-to-peer lending platforms in Australia include SocietyOne and Harmoney.

Australian Taxes on Foreign Purchasers

In addition to the property price itself, you must also factor in charges such as foreign citizen stamp duty, FIRB approval fees, property inspection costs, and possibly other taxes.

This includes stamp duty on the property purchase, income tax on any rental income generated from the property, and capital gains tax should the property be sold in the future.

The exact amount and type of tax can vary depending on the state or territory where the property is located.

It is essential to consult with an Australian tax specialist to understand the full scope of potential tax liabilities and any available deductions or benefits.

Looking for Your Australian Home

Home in Australia

There are some wonderful homes to choose from in Australia. Image credit: Envato Elements

This is the good part!

From bustling urban centres to serene coastal towns, Australia offers a diverse range of property investment opportunities.

You may already know exactly where in this vast country you want to settle.

Perhaps you do not, either way, you should still do plenty of research and consider your requirements.

Narrow your search to a few locations and compare things like price, amenities, and commute times.

Check out what has already sold in the area. This will give you a feel for the local market.

As new properties are the best option for foreigners, pop into your nearest estate agent and ask if there are any new developments ready to view or any being constructed locally.

They can help you find properties that meet your criteria and guide you through the negotiation process.

Always negotiate your offer at a lower price than advertised. It is not unusual for sellers to drop prices by as much as 10% on the listed price.

The great thing about homes in Australia is the space both inside and outside that they provide.

New builds homes are modern and generally come with integrated white goods.

While some may not have private swimming pools, often there are communal pools shared by the residents.

Outside space mostly comes with a BBQ (barbie) area and space for outdoor seating.

Many expats rent for a while until they are sure they want to stay in Australia before committing to a purchase and in time, apply for residency and then citizenship.

By this time, you are free to find alternative accommodation without any kind of restrictions at all.

The Buying Process in Easy Steps

Here is a step-by-step guide to buying a home in Australia.

  1. Hire the services of a professional solicitor or conveyancer and an accountant.
  2. Get your home loan approval in place
  3. Investigate and apply for FIRB approval
  4. Wait for the FIRB approval to be granted
  5. Conduct your search for a suitable property
  6. Negotiate the asking price
  7. Obtain written/formal approval for your mortgage/loan
  8. Exchange contracts and pay the first deposit payment
  9. Agree on a settlement date (or completion date)
  10. Move in!

One typical difference between buying a home in Australia versus the UK is the timing.

The process is extremely fast. Long chains and months of waiting are the norm before we Brits get to exchange, in Australia it is generally around 6 weeks.

To Conclude

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As discussed earlier, while buying a house in Australia as a foreigner may seem daunting at first, it need not be a barrier to your homeownership dream.

With proper planning, support, and expertise, it is entirely possible to purchase your very own piece of Australian real estate and enjoy the benefits of property ownership in no time at all.

If you want to discuss your move with one of our international relocation experts don’t hesitate to get in touch with White & Company today.

We offer weekly Removals to Australia. This includes, full load consignments that take your belongings direct from point A to B, part loads that are delivered shortly after your arrival and storage solutions.

Our dedicated partners in Australia will ensure all the relevant paperwork and customs clearance is processed correctly. They will arrange the unloading and unpacking of your household goods.

For further information on shipping goods to Australia contact our international office on 01489 854175.

Alternatively, fill out a quick quote form and a member of our team will get in touch shortly.

NOTE: While the information contained in our article is correct at the time of publishing, the property market is subject to change at any time.

Be sure to keep up to date with any changes so that you remain legally compliant with Australian rules and regulations.

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