The Australian residential property market has become a hotspot for foreign investors looking to buy into a stable market. There are many reasons why Australia continues to be a popular choice for investment, not in the least because of the country’s economic stability. But how do those not living there go about buying property? Here’s everything a prospective buyer should know.

Regulations Surrounding Foreign Investment in Australia

Buying a residential property as an investment comes with its own set of things one needs to keep in mind. It’s not the same as buying a house to live in. But buying property in another country compounds all of that with a new set of laws, rules, and challenges.

This is part of the process when buying property in Australia as well. So it’s better to become well acquainted with these laws right from the start than deal with frustration and costly mistakes later on.

Some governments place few restrictions on foreign investors looking to buy property in their country, but Aussies take a different approach. Regulations that restrict foreign investors from purchasing established properties have been in place since 2015. Non-residents are only allowed to purchase new developments, vacant land, and off-the-plan apartments. This, unfortunately, makes things harder for foreigners looking to buy property in the country, but it protects residents from surging prices.

Along with those regulations, prospective buyers should also know that they need the Foreign Investment Review Board (FIRB) to approve their purchase. Those who don’t comply with this rule can be fined up to AUD $135,000 or face up to 3 years imprisonment.

On top of all that, there are also stamp duty charges and an application fee for foreign investors, starting at AUD $5000. The government has also placed restrictions on foreign investor lending policies; which have led to some major banks stopping or limiting lending opportunities for those living outside Australia.

How to Buy Property in Australia as a Foreigner

Non-residents looking to buy residential property in Australia will, first and foremost, need to obtain approval from the FIRB. Foreigners aren’t restricted in the number of properties they can buy, but they need to apply for approval for each separate property. Applications usually take around a month to be processed by the FIRB.

Next up is calculating how much the entire process is going to cost, outside of the actual purchase. There are a number of additional entry costs involved when buying property in Australia, including:

- loan set up costs

- application fee

- legal fees

- stamp duty

- taxes

- building and pest inspections.

In terms of the mortgage process, there are quite a few instances of red tape to get around. Non-residents do qualify for loans, but the lending criteria are strict, and the rates are high. Banks tend to prefer metro or Category A (CAT A) properties, so applying for other locations can be tougher. It might be a good idea to look at working with a mortgage broker to make the process easier, especially if time is a factor.

5 Tips For Buying Investment Property in Australia

1. Research everything. Buying a home in a different country means adapting to that country’s social customs, rules, and regulations. Many of these aren’t stated outright since they’re seen as “common knowledge” to residents or niche information that few people think of mentioning.

2. Accessing Australian real estate websites can be a challenge, depending on where a person lives. Some websites are blocked for foreigners by the website owners themselves, and some are blocked due to other trivial reasons. Either way, it can be a frustrating thing to deal with. When searching for property listings in Australia, a VPN will help to get around this issue. You can find a NordVPN coupon here.

3. People should make sure their credit history is in order before starting the application process. No one wants to go through the trouble of applying and paying the fee just to have their application denied on a technical point.

4. Think about who will be managing the property. People with little free time or who live far away can consider hiring a property manager. Just keep in mind that this service will be an ongoing cost.

5. Also, think about the other ongoing costs that buying residential property will incur and budget for them as well. This includes things like water rates, maintenance costs, taxes, and insurance.

Conclusion

Buying property in Australia can be a great investment, but it can be a confusing maze to navigate for a foreigner. But put in the time to do things right and don’t let the process become too discouraging. There are plenty of useful resources out there that can help anyone make the decisions that are right for them and their budget.