Buying property in Australia
Australia has become the next big thing in terms of property – sun, sand and stability (of investments), what more could you want? Australian properties have enjoyed consistent capital growth over the last 100 years, with property prices doubling roughly every 7 to 10 years. Before you delve into your dream home, bear these tips and tricks in mind.
Budget and plan– Before you begin, make sure you have researched, planned and budgeted for your property purchase in Australia. You may have a location in mind, but we recommend talking to an estate agent. They can offer you some local advice that can help you select an affordable area with great returns. Making sure you can afford the property is also important. Australian banks won’t lend to you if you can’t prove that you can afford the debt, so ensure you have a realistic budget in mind.
Get organised – Most likely you will need a team of professionals to help you along the way such as conveyancer, mortgage broker and potentially an accountant and buyer’s agent.
Mortgage time – A mortgage is essential but make sure you obtain pre-approval for foreign investors. However, the lending criteria for non-residents can be very complex and, for foreign investors at least, there are less than a handful of lenders who are lending in this space.
Confirm you qualify – If you’re a non-resident (or a temporary visa holder) you’re legally required to get permission from the Foreign Investment Review Board (FIRB) to buy property in Australia. Citizens of australia, permanent residents and New Zealand citizens don’t require FIRB approval.
Find a property – Finally the fun part (in our opinion). Searching for your dream home in Australia. If you can, ideally you would visit the properties yourself, but a buyer’s agent is also a good option if this is not possible. If you are not using a buyer’s agent, we suggest using comparable sales to value the property.
Negotiate – As a general rule of thumb, Australian properties sell up to 10% less than the listed price, so always negotiate the price down. This varies depending on the market, location and type of property. Properties in the suburbs for example, often sell for more than they are advertised. We recommend you ask for a contract before signing, and ask your solicitor to look at it, and add any additional conditions if necessary. For example, a common one is, “subject to FIRB approval” which allows you to cancel the contract in the unlikely event that you don’t get approval from the Australian government. Note, each Australian state has its own laws, so get your solicitor to help.
Let’s talk money – Once you’ve found a property to buy, you will often need to pay a deposit. We recommend a specialist currency specialist to ensure you don’t get hit by the hidden fees that banks often like to charge. You can exchange your contract after your loan has been formally approved and your solicitor gives you the go ahead. The amount of the deposit is negotiable and differs between the states.
Seek FIRB approval – It’s recommended you allow 30 days for a FIRB decision. It’s vital that you get your lawyer to confirm that if, for any reason, your FIRB proposal is rejected, you will not lose your deposit.
Final arrangements – Once you have exchanged the contract, forward a copy to the FIRB for approval. Do a final inspection on your property the day of settlement. This can be completed by your buyers agent if you’ve hired one. The final stage is what is often known as the “settlement” – when the property changes hands and loan is advanced.