AUShoppingHub Conjures Up the Australian Property Ghost
Australian legislation allows non-residents to freely purchase new properties, but there are restrictions for foreigners in the secondary real estate market. For the conclusion of the contract of sale and personal presence of the owner is not necessary, will be sufficient and notarized power of attorney. It should also be noted that buying a home is not a sufficient basis for obtaining an Australian visa.
Potential Property Buyers In Australia Can Be Divided Into Three Categories:
- Non-resident foreign nationals;
- Temporary residents – foreigners who have received a long-term (12 months or more) Australian visa, for example, workers, students;
- Permanent residents – holders of a permanent residence permit or citizenship.
- In Australia, companies in which 15% are owned by non-residents are considered foreign, and they are subject to the same restrictions as for individuals.
Before making a deal, non-residents and temporary residents will have to obtain permission to purchase the selected property at the Foreign Investment Review Board of the FIRB. Consideration of the application takes about 30 days. The permit, which remains valid for 12 months, indicates the specific address of the object.
Australian law allows foreigners to invest in the country’s economy. In real estate, this allows any non-resident to acquire new buildings and housing under construction directly from the developer in any quantity. The purchase procedure proceeds in a simplified scenario, since it is the responsibility of the construction company to issue a permit to the FIRB. Non-residents can also buy land and objects for demolition with the obligation to build a new property. According to the rules of the FIRB, any secondary housing purchased for the purpose of building a new one must be completely dismantled.
Temporary residents, as well as non-residents, can become owners of any number of new buildings and dispose of them at their discretion. They can also buy land for construction or buildings for subsequent reconstruction. For temporary residents, the law also permits the purchase of only one secondary property, which they are not entitled to rent out. This resale property must be sold at the expiration of the visa.
Permanent residents can purchase any property in any quantity.
To purchase commercial real estate worth up to 54 million Australian dollars ($ 47.34 million) do not need to get permission. If the building has historical value, the price threshold is reduced to 5 million Australian dollars ($ 4.38 million). In all other cases, you must obtain FIRB approval.
Travel Around Australia Cost
The country has a developed network of bus and railway lines, but the prices of transport services cannot be called cheap. A ticket from Sydney to Melbourne on a one-way bus costs about AUD 90 ($ 80). A day trip by train from Canberra to Sydney will cost 188 Australian dollars ($ 165), the same will cost and flight. However, foreigners have the opportunity to purchase a special Rail Pass and save considerably: a three-month price will be about $ 500.
There are various types of travel: a five-day ticket for a 1,500 km mileage bus will cost AUD 242 ($ 213), and a 10-day cost for 3,000 km costs 343 AUD ($ 300). Traveling without mileage restrictions will cost more: 506 Australian dollars ($ 444) for ten days, 647 ($ 568) for 21 days.
For self-driving around the country, you can rent a car, but drivers first have to get used to the left-hand traffic. To rent a car, you must provide a passport, international driver’s license for each driver and a credit card. For a fee, you can take a car in one city, and rent it in another.
How to Start The Purchase Process
Preliminary information about prices and offers on the country’s market can be obtained at thematic exhibitions devoted to foreign real estate, in catalogs and even without leaving home – in our section on Australia.
Real estate agents accompany the vast majority of transactions in Australia. This field of activity is subject to mandatory licensing, which in some regions of the country allows realtors to deal with the legal aspect of the issue. Agent services are paid by the seller and do not affect the final cost of the object, but they bring additional benefits to the buyer. The agent has more leverage to negotiate a discount or getting more expensive equipment and finishes, such as a separate air conditioning system for the same money.
For those who buy new buildings, it is important to choose an agency that works with a large number of developers, as this will increase the choice of objects. Developers, as a rule, can offer the buyer only their current offers. It is more expedient to look for such an agency on internet, since Australian agencies, focused on buyers from the domestic market, specialize in secondary housing.
Large developers, through their sales departments or affiliated companies, conclude a conjunction agreement. Medium and small developers often provide exclusive rights to sell their real estate to a single listing agent. This form of cooperation allows the agency, which has received the exclusive right to sell, to conclude agreements with other agencies on the distribution of real estate by small and medium-sized developers.
The experience and reputation of the developer directly affect the quality of construction, and whether the object will be delivered on time.
For those who want to get an investment profit without the cost of visas and air tickets, there is an opportunity to purchase Australian property remotely. It is enough to issue a power of attorney for the agency, which will allow them to purchase property on your behalf (Power of Attorney).
For those who prefer to see their future property with their own eyes, agencies organize special tours. The cost of travel and accommodation is paid by the client, and translation, escort and transport services are provided free of charge. As a rule, inspection of apartment models takes place in specially equipped displays (exhibition samples), which are located in the territory of the object itself or in the office of a construction company. Displays demonstrate the finishing options, types of kitchen sets and household appliances.
For successful investment in real estate, it is necessary to take into account not only the possible rental rate, but also what is the demand for the rental of such real estate and how stable it is. For example, housing near business centers or important traffic interchanges is in demand at any time of the year and in any economic situation. The demand for resort property is subject to seasonal fluctuations, and during periods of crisis it falls a lot.
An important detail of the future acquisition may be parking, since parking fines may be as high as $ 400. As a rule, a large number of infrastructure facilities within the complex (swimming pool, spa, gyms, etc.) can significantly increase the cost of maintaining housing, so you need to immediately determine whether the infrastructure benefits match the purchase goals.
In Australia, there are requirements for living in this complex. This may be a limit on the number of pets, or their size – weight. For example, no more than one pet weighing no more than 28 kg is allowed.
Opening An Account
All cash transactions in Australia are carried out by bank transfer, but it is not necessary to open an account with an Australian bank. Local law allows you to make a direct transfer of money from abroad to a trust account of a real estate agency, a lawyer or a developer. Money is credited to an account in local currency – Australian dollars. Australian developers do not require the provision of documents on the origin of funds.
Anyone who plans to stay in the country, it makes sense not to postpone a trip to the bank for later. For the first six weeks, a foreigner needs only a passport to open an account. After this period, you will have to provide not only documents, but also a valid visa, certificate of employment or study, utility bills…
You can open a current account in some Australian banks remotely before arriving in the country. This greatly facilitates the process of transferring money for foreign citizens, as they can get a stamp from the tax authorities and make a transfer to their accounts in Australia before leaving their country. However, the full activation of the Australian account and transfer from it can be made only after a personal visit to the bank in Australia.
To account for interest accrued to the client, you must obtain the tax service of the Australian tax number of the taxpayer.
Conclusion Of The Contract Of Sale
The process of acquiring Australian real estate can be divided into several stages:
- The offer is a written or oral offer to buy, which is accompanied by a deposit of 500-5000 Australian dollars ($ 434 – $ 4340). When concluding a preliminary contract of sale, these funds will be taken into account. If the buyer changes his mind, then he will fully return his money. However, some developers hold a $ 500 Australian penalty.
- After submitting the application / offer, the seller sends the purchase contract to the potential buyer. A prepared sample of such a contract is a prerequisite for placing the object for sale.
In the case of buying both primary and secondary real estate, two possible developments are possible:
- The buyer signs the contract and the contract exchange takes place, and the property is removed from sale.
According to Australian law, the buyer has the opportunity to cancel the transaction within five (5) working days after signing the contract with a loss of 0.25% of the value of the object.
During these five days, the lawyers of the buyer conduct an examination of the contract and the attached documents. In the case of buying real estate on the secondary market, the technical inspection of the building (including the presence of termites) also passes.
- The buyer receives the draft contract and carries out legal and technical verification of the object. In this case, the object is not removed from sale, and it can be purchased by another buyer, if the first sign the contract and exchange contracts.
An important feature of the Australian market is that only after the exchange of contracts the sale and purchase transaction is considered concluded! Before the exchange of contracts, the seller has the right to sell this object to another bidder, even if you have signed the contract and paid the deposit.
If the buyer plans to apply for permission to the FIRB after the acquisition of real estate, then the contract must reflect the conditions for its termination in the event of a negative public service response. You can specify that the FIRB refusal allows you to terminate the contract without consequences, and the client – to get back all the funds. However, such contracts (conditional contract) have not yet become a common model, and in rare cases, sellers are satisfied.
- The contract of sale with the developer or his agent in the presence of witnesses, who also signed in the contract. As a rule, the developer, his agent and lawyer participate in the transaction, and the buyer and the agent represent the client. At the request of the client, another lawyer is invited to further verify the transaction. The contract specifies the date (settlement day), when the entire amount due to him will go to the seller’s account.
Document Cleanliness Check
A lawyer (solicitor) checks the purity of documents, the rights of the developer to land, the timely payment of taxes and obtaining permits. The entire package of documents for real estate (statements, certificates, etc.) comes complete with a purchase and sale agreement.
The seller must provide the buyer with originals or copies of the following documents:
- Title confirming that the property does not have any burdens;
- Zoning certificate;
- Official permission for construction and detailed construction plan;
- Documents confirming that the building was constructed in accordance with the building regulations of Australia (the presence of a drainage system, etc.).
State Registration Of The Transaction
In the case of a transaction in the secondary real estate market, immediately before state registration, the buyer once again inspects the property. The law prescribes that the object should remain in the same condition as during the inspection at the time of the adoption of the agreement on the sale.
Lawyers and a representative of the bank are engaged in making settlements, exchanging documents and transferring them to state bodies. If the lawyer received from the buyer the right to direct debit for this transaction, the stamp duty will be paid automatically in the process of registration (settlement day).
Stamp duty is better paid in the process of registration (settlement day), which, in turn, is determined by the contract of sale. Usually, it takes at least 42 days from the exchange of contracts to the payment of the stamp duty. When purchasing a primary housing, a stamp duty can be paid within 15 months after signing the purchase agreement or upon registration of the housing built, whichever comes first.
Related costs will be about 1.5-7% of the value of real estate.
Stamp duty (transfer tax): In Queensland starts from 1% in the Australian Capital Territory to 6.5% of the transaction value depending on the state and the value of the object (to calculate, there are special calculators stampduty calculatorsaustralia com au)
Registration fee: Directly registration fee in the state of New South Wales is $ 214
Legal support of the transaction: $ 1,300 – $ 2,200
Realtor commission when purchasing primary real estate: 0.00%
Realtor commission when buying a secondary real estate: 2.1%
There are additional costs when checking and registering documents by a lawyer – from $ 20 to $ 100 per document. The total cost of additional documents can be up to $ 500.
When buying a second home, there are costs for technical inspections of the building by specialized organizations:
- Building structure – $ 300 – $ 700;
- The presence of termites and other insects – $200 – $ 350.
A specific example of the acquisition of real estate without a mortgage:
Apartment in the resort of Gold Coast in a new building, 65 sq. M. m., overlooking the sea.
- The cost of real estate: AUS $ 320,000 ($2,81860)
- Stamp tax: AUD 3200 ($ 2,818)
- Registration and registration of documents: 800 Australian dollars ($ 700)
- Lawyer Services: AUD 1,500 ($ 1,320)
- Total price of the property with all expenses and taxes: AUD 325500 ($ 286700)
Mortgage In Australia
Australia’s largest banks, including National Australia Bank (NAB), Australia and New Zealand Banking (ANZ), Commonwealth Bank of Australia and Westpac Banking Corporation are among the most reliable banks in the world. However, they are reluctant to provide mortgage loans to citizens of specific countries. It is easier for foreign buyers who are residents of Australia (permanent residence or work visa) to get a mortgage in Australia.
Credit conditions in Australia are very profitable, and the review period takes only one week. The loan amount reaches 80% of the estimated value of the property. The usual loan term is from 10 to 30 years with the right of early repayment. The average mortgage rate is 5% -6%.
Comprehensive lending services and banking services of some banks allow you to charge interest on the loan, taking into account the funds currently available in the customer’s current account. For example, if the current mortgage loan debt is $ 100,000, but the client’s personal current account is $ 40,000, the loan interest is calculated to be $ 60,000.
Non-residents of Australia need to prepare an extended set of documents, which is determined individually.
The standard package of documents required for obtaining a loan includes:
- Passports (domestic and foreign);
- Confirmation of the actual address of residence (utility bills for the last 3 months);
- Bank statement with indication of employer income or dividends;
- Certificate from the employer on company letterhead indicating the salary, period and conditions of work (full employment);
- For business owners – documents confirming equity participation in an enterprise;
- Tax declaration or reference NDFL-2;
- Certificate of title to real estate;
- Other documents confirming the ownership of assets and securities;
- Completed bank application form.
It takes one week to review the submitted documents, after which the bank or mortgage fund gives preliminary approval. After the conclusion of the contract of sale, it is necessary to deliver to the bank a complete package of documents for real estate in order to receive final approval. As a rule, this procedure takes several days, after which the funds will be transferred to the seller’s account.
The certificate of ownership of property obtained in the inventory will be stored in the bank until full repayment of the debt.
Features Of The Purchase Of Various Types Of Real Estate
Features Of Buying A New Property
The procedure for buying a new property in Australia can go according to two scenarios: the purchase of housing under construction and the purchase of a finished new building.
The agency informs the client about the upcoming project. As a rule, agents will learn about such projects directly from the mailings of construction companies. At this stage, it is known where the complex will be erected, its general description, preliminary options for arranging apartments and indicative prices. Interested clients fill out an application and make a deposit, which, as a rule, is 5,000 Australian dollars ($ 4,340).
Before the start of sales, the client receives a description of the object with an indication of the schemes of floors, layouts of apartments and their prices, as well as an example of the contract of sale. The buyer can transfer the contract to the lawyer for examination or make a decision on his own.
After that, an appointment for a VIP sale is made. The meeting time depends on the order in which the deposit is made: the first ones to enter into a preliminary agreement are those who previously made a deposit. During the meeting, the client is given about 15 minutes to select an apartment, after which the apartment number is entered into the contract, and the parties affix the contract with signatures.
If at the meeting the client refuses to purchase, then the deposit is returned in full.
Buying A New Building
After making a deposit, the buyer receives a sales contract (Contract for sale) with an application for payment (Sales advice), which he can submit to a lawyer for examination. If the client agrees with the terms of the contract, he signs it and makes additional funds so that the deposit reaches 10% of the value of the selected object.
After placing the deposit in a trust account, by mutual agreement of the parties, the deposit is transferred to the “urgent” investment account for the construction period to accrue large interest. Depending on the conditions offered by the developer, the interest on the deposit is either equally divided or completely paid to the buyer. Upon the expiration of the deposit period, the deposit is returned to the trust account.
Australian law provides the buyer with five working days to withdraw from the transaction after signing the contract, this period is called the cooling-off period. In case of termination of the contract within a five-day period of the deposit is calculated 0.25% of the value of the object. After this period, the transaction is considered irreversible, and the developer has the right to delay the deposit in full.
After putting the object into operation, the day of the apartment inspection is appointed. The client signs the acceptance certificate, after which the full settlement is made. Upon completion of the financial transaction, the property documents are issued to the buyer.
Since the funds are in a trust account, they can only be spent for the intended purpose. Accordingly, the developer cannot use the money before putting the object into operation. If for any reason the construction of the object did not take place, then the funds will be returned to the buyer in full, together with the interest accrued on them in accordance with the terms of the contract.
Foreigners can take real estate and land for long-term lease (life-time lease). If the lease term exceeds 5 years, then FIRB approval is required.
Rental Property In Australia
Australia’s rental market is highly developed. In addition to real estate on the ocean, which is in high demand during the tourist season, there is always a tenant for an apartment in Sydney, Melbourne or Perth. In the segment of long-term hiring, objects near universities, high schools and business centers are of interest. The proximity of road junctions will further strengthen the price. It should be noted the high profitability of local real estate, which pays for itself for 15-20 years.
Upon receipt of income from the rental property for real estate owners are obliged to pay income tax (Income tax). For the 2014/2015 fiscal year, the tax rate will be 0-45% for residents, 32.5-45% for non-residents. The official website of the Australian Tax Service www ato gov au will help to understand and correctly calculate taxes in each case.
Foreign owners are advised to rent housing with the help of licensed real estate agencies that will take all the trouble to find tenants for themselves. Rates for such services vary, and their calculation is based on incoming payments. In Sydney, it will be 6-8%, in Brisbane – 8-10%. Additional costs are paid for advertising and commission at the time of settlement (letting fee), which is on average equal to a weekly payment.
Renting an apartment in new buildings in the Sydney business center will cost $ 600 – $ 1,250 per week, and a townhouse in the suburbs ranges from $ 600 to $ 1,000.
Once you have finalized your purchase of home, apartment or office the next step is to furnish it with comfortable furniture and beautiful homewares. And for it you can simply visit our home page https://www.aushoppinghub.com/ and get the most reliable and trustworthy brands and suppliers like Zanui, Brosa, Interior Secrets, Adairs, Adairs Kids and more!