Can a foreigner buy property in Australia?

Yes, Australia has been an attractive destination for property investors for years, however, the purchase procedure for non-residents is not as straightforward and requires the approval of the Foreign Investment Review Board. 

Let’s take a closer look at how to buy property in Australia if you are not a resident.

How to Buy Property in Australia as a Non-Resident? 

Foreigners can purchase an investment property in the country, however, the same rules do not apply as they do to Australian residents. 

For one thing, non-residents must get approval from the Foreign Investment Review Board (FIRB) which regulates foreign property purchases. 

Additionally, the property must meet certain conditions.

As a foreign investor, you can only purchase:

  • New property that hasn’t been occupied or sold as a dwelling before.
  • Vacant land on which you must build a property within four years after you get your FIRB approval. You must notify the FIRB within 30 days after the building is complete.

In other words, you can’t purchase an established dwelling as a non-resident. 

There are three exceptions to this rule, though. Hence a foreigner can buy an established dwelling if:

  • They plan on tearing down the existing construction, replacing it and adding more dwellings on the land, thereby increasing the housing stock in Australia. This is not the most cost-effective option though as the cost of demolition alone can go up to $40k. Plus you must complete the entire development within 4 years.
  • You are a temporary Australian resident. This way you can buy residential property to live in but if you don’t get Australian citizenship or permanent residency, you will have to sell the house when you leave the country.
  • You invest in commercial property. The FIRB is not as strict regarding commercial properties, although you will still have to get approved. Keep in mind that if you want to invest in commercial property, you need to get it valued first.

How Does the FIRB Application Process Work?

All non-residents must get approval from the FIRB before they purchase a property or acquire an interest in a property in the country. According to the FIRB, interest includes but is not limited to:

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You don’t need to apply for approval from the FIRB if

  • The signing of an unconditional contract for purchasing a dwelling or a share in the dwelling
  • An option that gives you the right to buy a property at a set price at some time in the future
  • Increasing your share of ownership in a dwelling that you or another foreign individual already has an interest in.

Once you are familiar with when you need approval from the FIRB and other legal requirements, the application procedure is pretty simple.

  • You are an Australian resident (even if you reside overseas)
  • A permanent Australia visa holder
  • A New Zealand resident
  • A foreigner buying property as a joint tenant with a spouse who is one of the above.

Here is how you apply for approval when buying property in Australia as a foreigner:

  • Go to the website of the Australian Taxation Office.
  • Open the Residential real estate application form.
  • Fill out the form with the required personal information and details about the dwelling.
  • Sign the form, pay the fee and submit it.

There is a 30-day waiting period for the decision to be made and another 10 days for the applicant to get notified. Note that if you wish to purchase more than one property on the Australian real estate market, you must submit separate application forms and get approval for each.

Fees for foreigners buying property in Australia 

The fees you will be charged when applying for approval at the FIRB vary according to the value of the property you intend to buy. 

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Here is a quick overview of the applicable charges. 

You must apply for a FIRB approval before you submit a loan application with a lender. 

Failure to do so or violation of any rules on foreign investment can lead up to a $157,000 fine or up to 3 years of prison time. 

Bear in mind that these are not the only fees you will have to pay when buying a house in Australia.

Other costs include:

  • Foreign Stamp Duty. This is usually 8% in addition to the standard stamp duty you pay. The Stamp Duty charge varies by state and the value of the  property—for instance in NSW it is between $10 and $1,089,000 and in Victoria stamp duty on property ranges from $350 to ​​$110,000+.
  • An annual vacancy charge levied by the ATO if the property is vacant for at least six months each year.

Note: You must also file income from the investment property (such as rental income) on your annual tax return and pay Capital Gains Tax if you decide to sell the land in the future. 

Can a foreigner buy property in Australia and get permanent residency?

In short, no. You cannot get the status of Permanent Resident of Australia if you purchase a property. You can get temporary residence if you invest at least $2.5 million in Australia and apply for a permanent residence after three years, provided you fulfill the criteria for getting an Investor stream visa.

Can Foreigners Get a Mortgage in Australia?

Foreigners are eligible to get Australian home loans, but they will be assessed by stricter lending criteria than their Australian counterparts. 

For starters, some lenders won’t approve a home loan for temporary residents who don’t have a source of income in Australia.

Furthermore, you should prepare to make higher monthly repayments because the interest rates for foreign residents tend to be higher than the ones offered to Aussies. 

And lastly, you will get a higher LVR than the standard, which means you will need to provide a larger deposit of about 30 to 40% of the property’s value. 

To maximise your chances of getting a home loan as a foreigner in Australia, talk to a mortgage broker or check out the terms and conditions of international banks operating in the country. 

Buying Property in Australia as a Foreigner: Some Final Tips

Do research

Get familiar with the Australian housing market before you invest money here. House prices have been going up, but many predict the housing market to go down in 2023 so make sure you look into the latest data and statistics. 

Hire a conveyancer 

It is the conveyancer’s job to make the entire process easier for you, from adding a ‘subject to’ clause in your purchase contract to advising on all legal requirements. 

Get pre-approved for a loan 

Getting pre-approved for a home loan is not the same as being approved, but it can help you get an offer accepted on the property you choose faster than a buyer who has not even applied for a mortgage. 

Enlist the services of a buyer’s agent

Finding the right kind of investment property is not easy especially if you are overseas. A buyer’s agent can help you locate and negotiate the best deal on a property that promises capital growth. 

Final Words

So, is it hard to buy a house in Australia if you are not a resident? No, but it is a complicated procedure and there are a lot of restrictions. However, you should not let this stop you. There are possibilities for a huge return on investment on the Australian housing market as long as you comply with legal requirements. This is why consulting a property expert, such as a mortgage broker or conveyancer is of the essence when investing in property in Australia.

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1. Can temporary residents buy property in Australia?

Yes, you can buy a property in Australia if you are not a permanent resident, but you will still have to get FIRB approval and face the same strict criteria when getting approved for a home loan. Also, you will have to sell the home when you leave the country. 

2. Can you buy property in Australia on a tourist visa?

Yes, if you are a short-term visa holder you are able to purchase a house in Australia, but the same rules apply—you need approval from the FIRB and the home must not be an established dwelling. 

3. Can a non-resident buy a house in Australia?

Yes, non-residents can buy an investment property as long as it’s a new building or vacant land and they get permission from the Foreign Investment Review Board.

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

No, buying a property as a temporary or non-resident does not automatically entitle you to citizenship in the country. 

5. Can a foreigner buy commercial property in Australia?

Yes, non-residents can purchase a commercial property. They still must get approved by the FIRB but the criteria are not as strict.