One only needs to look at some photos of Sydney, Melbourne or Brisbane’s skyline to see that Australia has become a very attractive investment option for investors from all over the world.
Traditionally, benefits and incentives have made living overseas and investing in Australian property a good idea. However, the release of the 2017-2018 Australian Federal Budget is going to change this.
There have always been rules, of course. But these new regulations are a bit stricter. Here are some of the major changes you should keep in mind if you’re thinking of buying a home in Australia:
1. FIRB Approval on Residential Purchases
The Foreign Investment Review Board is the body responsible for managing how foreign money gets spent inside Australia. If you’re choosing to buy residential or commercial property, then you will have to present your case to the FIRB for approval. For foreigners to qualify to buy these properties, the home has to never have been lived in before, or have never had any previous owners. Foreign investors are only allowed to buy new properties. One workaround for this rule is buying brand new apartments directly from a developer. This type of purchase does not require any FIRB approval.
2. The 50 percent Foreign Ownership Cap
To try and calm down the domestic market, restrictions have been put in place limiting the amount of dwellings that can be owned by foreigners in one development. Essentially, no developer can sell more than 50 percent of the units he or she owns in one development to foreign investors.
3. Annual Vacancy Charge on Empty Residential Properties
As an attempt to prevent the formation of “ghost town” apartment buildings—large developments where no one lives—there will be a vacancy charge on unused apartments. Owners will be subjected to this fee when their property goes unoccupied for more than six months out of a year, or if the property is off the rental market for the same amount of time. This has been in response to the real estate boom in some of the larger cities in Australia; the formation of these ghost towns can have potentially negative effects on the local market. No one wants to live near one, so surrounding property values suffer.
4. Fee Increase for Those Applying to Purchase Residential Properties
There has always been an application fee for foreigners looking to buy property in Australia. However, as of July 2017, that fee has been increased by 10 percent. Anyone applying to buy residential property valued at $10 million or less will be subject to the fee. Check with the FIRB to find out the exact fees you would have to pay when applying to buy property in Australia.
5. Streamline Processes and Increasing Opportunities
Although many of the changes that have happened over the last year or so have been designed to curb foreign influence, some effort has been made to try and streamline the process and facilitate foreign entry into the real estate market. For example, the 50 percent rule has caused some problems for developers. If they sell a property before it’s completed, then it’s marked as “established,” meaning it can’t be sold to foreigners. But an exemption has been created so that a properties like these could be resold in the event things went wrong at the settlement.
The information and links provided on this website are for general information only and should not be taken as constituting professional advice. This information does not take into account the financial situation or particular needs of individual readers. Before making any decisions about matters discussed on this website, you should consider whether it is suitable for you in light of your own circumstances, and seek appropriate advice.