Can foreigners buy a property in Australia?

November 25, 2016 Australia

Interested in buying a property in Australia as your overseas property investment? From guidelines to requirements, everything you need to know about choosing a property in Australia as your international property investment is here.

What Australia properties can foreign investors buy?

Purchasing a property in Australia | Yazhou PropertyAustralian properties

Purchasing any Australia property for overseas property buying is not allowed unless approved by the Foreign Investment Review Board (FIRB).

The latter doesn’t provide a general approval but an approval for a specific property only.

Experts recommend having a solicitor during FIRB approvals and suggest not committing to any purchase prior to any property approval from FIRB.

In general, foreign citizens are not allowed to buy second-hand properties; however, there are two exceptions to this rule. Foreign buyers may purchase established properties if:

1. Given approval by the FIRB, the second-hand property is headed for re-development and a demolition of the existing property is necessary.
2. Foreign buyers own significant Australian businesses and will use the property to home Australian-based staff.

What properties in Australia are considered new?

Any property in Australia that is not previously sold by any developer and was not occupied by tenants for more than 12 months are both considered new. According to Exfin International, “new dwelling include those that are part of extensively refurbished buildings where the building’s use has undergone a change from non-residential (for example, office or warehouse) to residential.” However, this rule doesn’t include residential properties that have been refurbished or renovated.

Some key notes to remember:
  • No need for FIRB approval if the purchased property from the developer has already received a pre-approval to sell it to foreign buyers.
  • Anyone considering purchasing a property in Australia through an Australian company or trust where a foreigner has significant amount of shares will also require an approval from the FIRB.

FIRB application fees

The Australian Government implemented the FIRB application fees on December 1, 2015. With this, the compliance regarding real estate provisions and penalties are managed by the Australian Tax Office.

Purchasing a property in Australia | Yazhou PropertyFIRB Application Fees | Photo courtesy: Exfin International

Consumers interested in overseas property buying must take note that a separate approval must be made in connection with any possible purchase – including the highest possible price you have to pay for the property.

An implementation of the exemption certificates were also announced by the Australian Government. Exemption certificates remove the acquisition of approval to purchase one unspecified property in an agreed period of time – usually six months.

Choosing a property in Australia

 Selecting a dream property might seem easy for some foreign buyers. Having a list of the important details a foreign property should have is a big help in narrowing down the choices. But as foreign investors with limited time spent in Australia, experts believe that this can be a crucial factor in their decision making and therefore suggest not making any purchase without consulting an expert.

There are professionals who offer their services of assistance and thorough market research during the process of purchasing.

 Other options for foreign buyers when it comes to property finance

 Aside from the usual process of using their own funds in purchasing an Australia property, foreign buyers are given another option when it comes to handling the property finance.

  • Use a foreign currency loan

An interested buyer can use a foreign currency loan, with experts suggesting that they use the currency of the buyer’s income. This way, there is a bigger possibility that it has lower interest rates compared to Australia’s mortgage market. But in an event that the Australian dollar currency decreases, a request of a capital injection may be requested by the lending bank. This is to ensure the ratio of the loan to value doesn’t exceed the agreed maximum amount.

  • Use an Australian dollar loan

Using an Australian dollar loan gives foreign buyers flexibility in the kinds of loans available. One can borrow up to 70% of the property’s value. But as of July 2016, a lot of Australia’s biggest banks have ceased lending loans to foreign investors. Further, lending will be a matter of case-by-case basis because loans from Australian banks will only be available for a number of currencies.

For more information on real estate in Australia, Asia properties and overseas investment guides, visit Yazhou Property. Properties in Asia available for international property investments are also available on Yazhou Property’s Facebook page.


Exfin International