The Australian property market is open to non-resident buyers, which includes all foreign citizens who reside outside Australia, and those who reside in Australia but do not hold a permanent visa or Australian Residency/Citizenship.
At RFS, we can assist foreign citizens in purchasing Australian property. Here we provide you with some concise information about the issues and practicalities of buying Australian property as a non-resident. There are certain restrictions and rules, and a very wide range of circumstances that apply. It is strongly recommended this information be used in conjunction with tailored professional advice. For more information or a recommendation on who to speak to, contact RFS using our contact form today.
- No purchase of Australian property can be made without approval from the Foreign Investment Review Board (FIRB), and this approval is made in respect of a specific property, meaning you cannot obtain general or 'in principle' approval. Finding the property you wish to buy before lodging an application is important, as you will need to provide the FIRB an address of your desired property. Remember to make no commitment regarding its purchase until you have clarity about the FIRB rules that apply to you, and have been granted your approval.
- Non-residents cannot normally purchase established (i.e. second-hand) properties, however can apply to purchase vacant land (subject to construction conditions) and new dwellings (i.e. a property that has not been previously sold by the developer and has not been previously occupied for more than 12 months). Foreign companies with a substantial Australian business can acquire established dwellings for the purpose of providing housing for their Australian-based staff. However this opportunity is subject to a condition whereby the company must sell the property if it is expected to remain vacant for six months or more. Eligibility for this approval will depend upon the scope of the company's operations and assets in Australia.
- You do not need FIRB approval if you purchase a new dwelling whereby the developer has already been granted pre-approval to sell to foreign buyers. If you are in any doubt, always contact the FIRB to confirm.
- Rules for purchasing property become more complicated when non-residents wish to purchase property in partnership with an Australian citizen or permanent resident. We suggest you review the FIRB guidelines and frequently asked questions on their website, for more guidance.
- When purchasing property in Australia it is important you understand the tax treatment of the property, particularly as this may have a bearing on how the property is best financed. Speaking with a tax advisor is a good start.
- When selecting a property in Australia as a foreign citizen, it is often difficult to know what to look for. Have a look at the RFS Tip Sheets in our Resources section for some guidance on "What to look for when buying your home" in addition to the costs you need to consider (e.g. mortgage registration fees, stamp duty).
- The rules for the purchase of residential property are different to those that apply to commercial (e.g. officer, retail, industrial) property. Refer to the FIRB website for further guidance.
Arranging Your Finances
There are a few options available to you when arranging finance to purchase your desired property. The first option is to arrange a foreign currency loan (usually in the currency in which you earn your income) or alternatively you can arrange an Australian dollar denominated loan. Typically, the loan-to-valuation ratio is higher when using the Australian dollar. This is because under a foreign currency loan, contingencies have to be put in place to combat any reduction in the Australian dollar, against the currency in which the loan is made.
When arranging property finance in Australia, it is easier to talk to an Australian Finance Broker and use a lender based in Australia. Using a branch of an Australian bank based overseas is perfectly satisfactory, however may prove to be more costly to you given their finance products may not be competitive in the Australian market and money transfers through the bank to Australia will involve conversions – often at the most competitive rates.
You do not have to limit yourself to the big four Australian banks. At RFS, we have access to over 20 Lenders in Australia, to help you find the right finance product to suit your goal. Arranging the finance for your Australian property does not have to be an arduous process – particularly when you rely upon our professional advice.