Thinking of investing in property in Australia, buying a holiday home or perhaps even moving there? It’s a popular place to invest, with a stable property market and consistent growth performance¹.
There are a few important things you need to know as a foreigner buying property in Australia. We’ll cover all of the essentials right here in this handy guide, including the buying process, the different rules for foreigners compared to locals and where to find your dream property.
Crucially, we’ll also look at how to get your money over to Australia, without losing a small fortune in transfer fees and currency conversion costs.
For example, open a free Wise multi-currency account and you can send even very large sums of money to Australia with low fees and the real exchange rate. It’s one of the most reliable, cost-effective ways to send money overseas.
But more on this later. Right now, it’s time to start your overseas property search.
Buying property in Australia
Before you can start scouring the market for your dream property and putting in offers, it can be helpful to have an overview of how the buying process works for non-residents.
There are certain restrictions for foreigners buying property in Australia. Here’s what you need to know in a nutshell²:
You can only buy new buildings or vacant land (and complete construction on it within four years) as a foreigner unless you plan to live in the property you buy.
If you plan to stay in Australia as a temporary resident, you can buy an established dwelling. You can’t then demolish it to build new properties, and you must sell it if you move out of Australia.
If you follow these rules, you’re ready to start the buying process. The first and most crucial step is to apply for approval from the Foreign Investment Review Board (FIRB). All foreign buyers must get approval from the FIRB before they can proceed.
Here’s how it works³:
- Read all the guidance on the FIRB website, to check that you need approval and if there are any further measures you’ll need to take.
- It could also be a good idea at this stage to seek some legal advice from an expert in the Australian property market, to make sure you’re complying with all the relevant rules and regulations.
- Start your application at the Australian Taxation Office (ATO) website.
- You’ll need to provide details including visa documents, passport information, contact details and reference numbers for any previous FIRB applications you’ve made.
- You’ll also need information (address and title details) for the property you wish to buy.
- Sign the declaration and submit your application.
- You’ll also need to pay the application fee, which varies depending on the property purchase price. It ranges from $5,700 — $104,100 AUD⁴.
Once you have FIRB approval, you can then proceed with your purchase. This may include getting a loan from an Australian lender (for which you’ll need proof of FIRB approval). You may also want to seek the services of⁵:
- a conveyancer, known in Western Australia as a settlement agent, to take care of all the legal work.
- a licensed buyer’s agent, who will find and inspect properties for you, if you can’t physically be present. Your agent can also negotiate the deal with the real estate agent on your behalf, as well as giving you valuable independent advice to help with your purchase.
Some foreign buyers also like to have an accountant on the team, to help you structure your financial arrangements in line with Australian tax rules. This can save you from losing money unnecessarily, as well as falling foul of any important regulations.
Locals vs. foreigners
The key difference between buying property as an Australian resident and a foreigner is that the former isn’t required to apply through the FIRB (and pay the application fee).
The aim behind the FIRB process is to encourage foreign buyers to invest in new properties, while reserving existing properties for locals to buy and live in.
Foreign buyers may also face restrictions when it comes to getting a home loan⁶. Many lenders have tighter lending criteria for non-residents, including higher interest rates and lower loan-to-value ratios (LVRs). This could mean that you need a larger deposit. Some lenders will even refuse to accept applications from non-residents or temporary residents, unless they earn their income in Australia itself.
Unfortunately, there may also be extra costs to pay as a foreigner buying property in Australia. One of these is known as the Foreign Citizen Stamp Duty. This is an extra stamp duty levy of up to 8% and depending on the state you buy property in, a 2% land tax surcharge on top of that⁷.
Where to find your dream property
Now that we’ve covered most of the legal hurdles, paperwork and costs, it’s time for the fun part – finding your dream property. Here are some places to start your search:
⁸ — describing itself as ‘Australia’s largest list of properties to buy or rent’, this is a great place to browse available homes and apartments across the country. You can search by area, and enter desired criteria such as min/max price, number of bedrooms and property type. ⁹ – this is a similar property search site to property.com.au, covering all Australian states and with a number of customisable search options. There are even handy extras such as the option to research suburbs in-depth, and to check out home loan options. ¹⁰ – if you’re not sure where to start and you don’t mind paying an extra fee, you can use a buyer’s agent like propertybuyer.com.au to find a property for you. They do all the legwork, finding suitable properties based on your criteria and even viewing them for you. If you set your heart on one, they’ll even negotiate with the seller’s agent to secure you the best possible price.
Getting your money to Australia
You’re nearly there! You’ve followed all the rules for foreign buyers, found your dream property and had an offer accepted. All the legal processes are underway, and the paperwork is being sorted by your conveyancer.
All that’s left to do is actually pay for your purchase. But what’s the best way of getting your money over to Australia? If you’re getting a home loan from an Australian lender, this will be advanced to the seller upon completion (also known as settlement) and the bulk of the purchase price will be covered.
But you may need to send over the deposit (usually around 10%), as well as paying the fees of your conveyancer and anyone else involved in the sale. For example, your buyer’s agent or accountant if you’re using these services.
You can cover these costs using an international bank transfer, but this is likely to incur high costs. You could also lose money through poor exchange rates and currency conversion fees. But there is an alternative, one that could potentially save you a huge chunk of money on your Australian property purchase.
Enter Wise. Depending where you’re sending from, Wise could work out between 5 and 13 times cheaper than using your bank for international payments¹¹.
Fees are low and transparent, so you’ll know exactly what you’re paying upfront. There are no extra costs hidden in the exchange rate either, as you’re guaranteed the mid-market ‘real’ rate with no mark-up added on top.
As you’re likely to be sending a large amount of money, security is naturally going to be a concern. You can rest easy on that score — Wise is reliable, secure and fast. It’s also fully regulated by the relevant financial authorities in each country.
Buying a property in Australia as a foreigner does involve a little extra work compared to buying as a local, and you will need to jump through some hoops to comply with the rules. But it can be well worth it, as you could end up with a fantastic investment or even a new family home if you’re planning to move out there.
After reading this guide, you should have a better idea of the process of buying property in Australia as a non-resident. You’ll know the legal rules and requirements, how to find property and how to pay for it.
But remember – it always pays to take your time and do your homework. Happy house hunting!
Sources checked on 1-October 2020.
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