During the Sydney property boom overseas or foreign buyers were the talk of the town. But who are they and, if you’re based outside of Australia, what are the actual rules and regulations around buying real estate here? We take a look.
WHAT DO FOREIGN BUYERS IN AUSTRALIA LOOK LIKE?
There’s a false perception that overseas buyers are a homogenous group, driving market demand at the premium end of the Australian property market. In reality, there’s a broad diversity of foreigner buyers looking at Australia, and particularly Sydney, as the ideal location to purchase.
- Investors: Plenty of foreign nationals see Australia – especially our major capital cities like Sydney – as the ideal place to build their international investment portfolio, given our stable institutions and economy. Some of these buyers plan to move here or already have family here, but others don’t. Some have big budgets; others are looking at lower price ranges.
- Temporary residents: Temporary residents often come under the unbrella of foreign buyers. They include workers and families on skilled visas, or those studying on student visas or bridging visas.
- Globetrotters: Dual citizens have the freedom to travel between Australia and their other home country unencumbered by visa restrictions. They may decide to purchase property in Australia to rent while overseas, for example.
- Expats: Australians living abroad often decide market conditions at home – or favourable exchange rates – make Australian property a sound investment. These buyers are active across all price points and many end up living in the property they buy once returning home.
PURCHASING PROPERTY IN AUSTRALIA AS A FOREIGN BUYER
For buyers with an Australian passport or permanent residency, there are few regulatory hoops to jump through. You can usually purchase Australian property just as local buyers would.
You should just make sure you take into account any tax implications both in Australia and where you live.
For non-resident foreign buyers, it’s a different story. The regulations are quite exacting and the Australian government’s Foreign Investment Review Board (FIRB) will enforce strict regulations around any purchase you make.
In fact, between 2015 and the end of 2018, the ATO forced over 300 foreign owners to sell their properties because they were in breach of foreign ownership laws.
WHAT YOU NEED TO DO AS A NON-RESIDENT FOREIGN BUYER
If you’re a non-resident foreign buyer, the first step you’ll need to take generally involves applying for ‘foreign investment approval’. This must be done before you make a purchase.
Under the current laws, foreign non-residents are usually limited to purchasing new housing stock and vacant land. There are some exceptions, such as if you’re purchasing an established property to redevelop it and increase the amount of housing stock.
This policy is intended to stimulate economic growth in Australia, with the idea being that foreign investment leading to more construction jobs.
OTHER FACTORS YOU NEED TO CONSIDER AS A FOREIGN NON-RESIDENT
There are some other key factors you should also consider as a foreign non-resident buyer, including:
- New dwellings on existing land: Overseas buyers aren’t allowed to purchase new homes on land that had a previous dwelling. They also can’t buy vacant land which once had a dwelling on it.
- Vacant land timeline: Foreign buyers who purchase vacant land must have constructed a property on that land within four years of the board’s approval.
- Multiple dwellings on previously occupied land: Despite this, an overseas buyer can purchase previously occupied land if they propose to build multiple homes on it.
- Vacancy Fee: A vacancy fee will be payable each year if the property is not occupied or genuinely available on the rental market for at least six months in a 12 month period.
Depending on where in Australia you intend to purchase as a foreign non-resident buyer you may subject to State-specific laws on land tax, stamp or transfer duty and more.
For instance, if you intend to buy property here in Sydney you’re likely to be subject to an additional 8% surcharge on transfer duty when buying real estate.
RULES FOR TEMPORARY RESIDENTS
If you’re a temporary Australian resident, such as a skilled visa holder or student visa holder or bridging visa holder you’ll face slightly different regulations to other non-resident buyers.
You’ll still have to apply for approval to purchase Australian real estate. However, you can purchase just one existing dwelling, so long as you intend to live in it yourself. The only proviso is that you need to sell any property you own within three months of leaving the country.
You can’t purchase an existing dwelling as an investment property but you can buy as many new or off-the-plan investment properties as you like.
UNDERSTANDING FOREIGN BUYERS
The Goldman Brothers team are proud to be of Sydney Sotheby’s International Realty.
One of Sotheby’s major draw cards is that it is a truly international luxury property brand. In 2018, it sold around $112 billion of property around the globe – with US$1.4 Billion in sales through our unique global referral network.
This means that when we market a property for our vendors, we have the opportunity to tap into that network and to take advantage of the instant brand recognition that the Sotheby’s brand brings around the world.
It also means we have plenty of experience in helping overseas buyers purchase property in Sydney’s Eastern Suburbs.
At The Goldman Brothers, we can deliver a unique and bespoke service to all overseas buyers.
Contact The Goldman Brothers for advice about buying and selling property in Sydney’s Eastern Suburbs.
- Posted by Sydney Sotheby's Realty North
- On June 6, 2019
- 0 Comment