Can Foreigners Buy Property in Australia? A Simple Guide

Understanding the process of buying residential property in Australia as a foreign national

With its attractive landscapes and buoyant economy, Australia is one of the suitable destinations for real estate investment. On top of that, it offers world-class educational institutions, healthcare and career opportunities. These factors are, therefore, enough to make you consider purchasing a dwelling in Australia. But the question is, can foreigners buy property in Australia?

The answer is yes! Foreign nationals can buy property in Australia and enjoy its lavish lifestyle and culture. However, there are some stipulated rules set by the FIRB for those intending to make foreign investments in the country’s real estate sector.

Hence, let's understand the regulations on overseas property investment that you must comply with to acquire Australian property.

How can foreigners buy property in Australia?

To buy a residential property as a non-resident or temporary visa holder, you must abide by the rules laid down by the country’s Foreign Investment Review Board (FIRB). The non-statutory body is responsible for assessing foreign real estate investments and advising the treasury and national administration overseeing the foreign investment policy.

Process of buying a property as a non-native in Australia

As exciting as it can be to hanker for an Australian dream, it is, in fact, not that simple to invest in the country’s real estate as an outsider. The regulation for foreign property investment, obligated by the FIRB, is rigorous. Therefore, as the primary step, you should carefully understand the rules for acquiring a residential property as a non-resident in Australia.

But, before moving on with the registration process, let us first know the types of property you can buy in Australia as a foreign national.

Types of property foreigners can buy in Australia

• Brand new residential dwellings: You can own a property that isn’t yet occupied or sold by the relevant developer.   

• Near-new residential dwellings: According to this condition, you are eligible to buy a dwelling that was previously sold but wasn’t occupied for more than a year in an overall account.

• Vacant residential land: After receiving the FIRB approval for the intended property, you’re mandated to start building a house and conclude it within four years. Additionally, as soon as the construction is complete, you must notify the concerned administrative body in 30 days.

• Buying property as a temporary resident (TR): As per your primary necessity, you can own a dwelling in Australia to stay. However, if you fail to obtain a Permanent Resident visa or Australian citizenship — it’s compulsory to sell the property before you leave the country.

Now that you're aware of the kinds of property you can invest in, here’s the step-by-step process on how foreigners can buy property in Australia.

1. Select a property of your choice in Australia, probably in Melbourne. You may seek guidance from a buyer’s agent.

2. Get familiar with the rules and regulations set by the FIRB on foreigners wanting to purchase a property in Australia. 

3. After that, you need to fill up an online registration form on the Australian Tax Office (ATO) site regarding your property acquisition interest.

4. The form will require you to fill in your personal and property details.

5. You'll be charged a fee during the application process under Australia's Foreign Acquisitions and Takeovers Act 1975 (FATA) or the Act. Remember, the fee will be based on the current market valuation of the property you've chosen. See Fig. 1.0 Fee structure.

6. Further, the FIRB will assess your eligibility for property acquisition as a non-native in Australia. 

7. The process generally takes a month until you're notified about your application status. In case you’re unable to meet certain criteria, your application is rejected.

*RNSA- Reviewable National Security Action

Note: Apart from the application fee as mentioned above, there are other charges that should be paid by foreigners to buy property in Australia.

• Additional stamp duty: As a foreigner purchasing property in Australia, you’re required to pay an additional stamp duty besides the ATO registration fee. The amount ranges from 8% to 10% of the residential property valuation.

• Yearly vacancy charge: You’re required to pay a certain amount every year to the ATO if you leave the property vacant for at least six months annually. The fee will be deducted while filing annual tax returns with the tax collection body.

• Capital gain tax (CGT): You’ll pay a stipulated amount as CGT on the profit you make after selling your investment property. Nevertheless, tax exemptions may be awarded based on the cost you incurred on the property maintenance. The taxation office will include CGT in your annual tax payment report.

Appoint a property conveyancer

Once the FIRB clears your application, you can go ahead and purchase a dwelling property as a foreigner in Australia. However, as a responsible overseas property investor, you must seek guidance from a legitimate property conveyancer or solicitor. 

A conveyancer can help you choose the right property in all terms and guide you through the entire legal process of transferring ownership of a dwelling. In addition, the solicitor will offer essential advice needed to upkeep the national real estate acquisition regulations.

Can non-residents apply for home loans to buy property in Australia?

Yes! You can apply for a mortgage as a foreigner to buy property in Australia. But then again, the first thing you should do is obtain approval from the FIRB. Next, look for a mortgage broker, as they can guide you through the loan acquisition process for overseas real estate investors. 

Bear in mind that lenders in Australia have stringent policies on international loans. Moreover, you’re likely to be asked to pay comparatively higher interest on loans by the lenders — which isn’t the same with Aussies or those with PR status. Furthermore, if you’re unemployed or have no income source — you may be beating the bushes in vain. 

The other limitation set by the FIRB is that you can get an *LVR or Loan-to-Value-Ratio of up to 80%, which seems fair and square. But, higher LVR also means higher interest on repayments, therefore, can be riskier for borrowers considering mortgage loans. Nonetheless, if you’re determined and financially sound — then sure! Pull out all the stops. But make sure you’re well-guided by your broker and have all the necessary information regarding the loan and other relevant aspects.

*LVR is calculated by dividing the sum of the loan amount by the valuation of the property multiplied by 100. (Loan ÷ Property value x 100 = LVR) 

FIRB rules exemption on foreign real estate acquisition

Where foreigners intending to buy property in Australia must comply with the FIRB rules, there are others who can skip the predestined conditions to secure premises of their own. Check whether you fall under the “others” category below. 

• You’re an Australian citizen.

• You have a permanent resident visa.

• You’re a resident of New Zealand.

• You’re married to any of the above individuals and plan on buying a dwelling as joint tenants or in a spousal relationship.

Summary

As an outlander, you will come across restrictions while buying a dwelling in the country. Regardless of that, foreigners can buy property in Australia, provided they follow the FIRB guidelines carefully. If you need a home loan, you must seek clearance from the FIRB. And the same applies to your property ownership interest. Also, remember to seek consultations from a buyer’s agent, mortgage broker, and conveyancer to complete your deal successfully. 

FAQs:

Q1. Can I get a PR if I buy a property in Australia?

No, you can’t get an Australian Permanent Residency status by making a property investment in the country. Rather, invest at least AUD2.5 mln for a Temporary Resident visa (TR) and apply for PR status after three years. 

Q2. What if I don’t buy a property even after receiving clearance from the FIRB?

In that case, you must inform the FIRB about the reasons that may have pushed you into changing your mind.

Q3. What are the best places to invest in residential property as a foreigner in Australia?

To make your living prosperous and worthwhile in Australia as a foreign national, choose a location that’s potentially sound for career and capital growth. So, for that matter, Western Australia, NSW, Queensland, and Victoria are great places to invest in residential property.

Disclaimer: Every information and detail in this article is for general purposes only and shouldn't be considered legal advice on the topic. The content of this article is not to be relied upon and shouldn’t affect your decision in any way. You must seek professional guidance and consultations in relevance before taking any action based on this article.