officially the Commonwealth of Australia, is a country in the
Southern Hemisphere comprising the mainland of the Australian continent,
the island of Tasmania and numerous smaller islands in the Indian and
The ability of a foreign national to make the purchase of
property in Australia requires governmental permission.
Before a foreign national can commence seriously the pursuit of real
estate to purchase in Australia, he or she must seek and obtain
permission to purchase real estate from the Foreign Investment Review
Whatever type of property a person is seeking
to purchase residential or investment property, it is important to start
the approval process with the Foreign Investment Review Board early.
Indeed, most people apply for approval from the Board at least ninety
days prior to launching a more concentrated search for property in
When it comes to a foreign national investing
in residential or commercial property in
Australia, getting approval
from the Foreign Investment Review Board really is the most cumbersome
part of the entire process. Once this approval has been obtained from
the governing Board, the process of satisfying the legal requirements to
purchase and own real estate in Australia surprisingly is rather
Finding a Property:
Australia is sold
either through what is known as a conventional channel or through
auctions. In considering the conventional course of purchasing property
in Australia, when a foreign national identifies a property that he/she
is interested in buying, he/she need only make an offer to the seller.
Be informed about the
services offered by estate agents, solicitors, conveyancers, loan
providers and mortgage brokers. Shop around as much as you can for the
best deal and quality of service.
The initial offer can be verbal or in writing. Once received by the
seller, the seller will either accept or reject the offer that has been
made. In many instances, if the offer is not at the price the seller has
set for the property, the seller may make a counter offer. In any event,
if an offer (or counter offer) is accepted, a Contract for Sale will
then be drafted.
If you plan to get a
building report, building inspections range from $250 to more than
$2000, depending on the property size.
After the acceptance of the final agreed
offer, the buyer is obliged to make what is known as a holding deposit.
Generally speaking, the holding deposit is 10% of the total price agreed
upon for the sale of the property in question. During the period of time
in which the Contract for Sale is being prepared and drafted, a buyer or
seller maintain the ability to back out of the transaction. If this
occurs, more often than not, the buyer is entitled to a refund of the
entire holding deposit.
Once the terms and conditions of the Contract
for Sale fully are hammered out, the parties to the sale will sign the
sale agreement. The Contract for Sale sets forth all of the conditions,
restrictions and requirements that must be satisfied in advance of the
ultimate and final sale and conveyance of the property. The primary
conditions generally are the buyer obtaining financing and the seller
making certain that there are no encumbrances on the real estate that
would preclude its transfer to a new owner.
Australian states, once the Contract
for Sale is made and the deposit paid by the buyer it becomes
irrevocable. In other words, the buyer can't get his/her deposit money
back. However, in some Australian states there is a ten day "cooling off
period" following the execution of a contract for sale. Within this time
period, if the seller decides to back out of the contract, he/she can do
so without losing the security deposit. There may be some financial
penalty to backing out of the deal, but the majority of the initial
deposit will be refunded.
At this stage, the parties merely wait for
the final wrap up of the obligations under the contract for sale that
each party assumes pursuant to that agreement.
The seller obtains appropriate financing in
most instances and the buyer makes
certain that the property is in proper for sale both physically and
During the buying and
selling process you may come across several types of contracts such as
loan agreements, authorities to sell, authority to act as mortgage
broker on your behalf, contract notes and contracts of sale of real
Refuse to be hurried
into a decision; you will be paying off your loan for decades to come
and you will want to make sure you have chosen the right property.
Take your time, READ
EVERYTHING before you sign it, and make sure you fully understand its
contents including all terms, conditions and fine print. Ask questions
about anything unclear. If the explanation provided is still not enough,
ask for professional legal advice.
Although using a solicitor is not a legal requirement in order to buy a
property in Australia, it certainly is worth the peace of mind knowing
that you have covered all aspects of the legalities involved.
If you employ a solicitor, conveyancer or estate agent for performing
the legal transfer of ownership, the fees are between $600 and $800 for
an average priced home; alternatively, you can purchase a do-it-yourself
You can consider raising finance on your existing property in the UK to
cover the whole cost of your Australian purchase. This can be a good
idea if the interest rate in Australia is a lot higher than it is here
in the UK as you will pay a lot less in monthly repayments
You can consider taking out a mortgage
against the property from a local bank in
Australia. This can be a wise
option especially if the interest rate is lower than our current UK
interest rate. Most Australian mortgage lenders will require up to 30%
deposit on mortgages. However, you will need to give some thought to how
you will service your mortgage payments each month especially if you are
not living or earning in that country as you may well lose out on
exchanging money each time to cover monthly expenses.
Some Builders and developers may well offer
their own mortgage facilities on their properties for sale. This can be
beneficial to both parties depending on the logistics of the mortgage or
loan facility. Always check and compare with the two options above
before making your final
establishment fees; Australian
lenders usually charge a one-off establishment fee on
new home loans; the fees range between $600 and $1000.
If you are looking to borrow more than 80% of the value of the property,
your lender will most likely require you take out mortgage insurance.
NB: this insurance covers the lender, not the buyer, in case of payment
default. You would do well to consider an income protection plan as
Stamp duty is charged in all states on the loan amount and the price of
the property. Stamp duty may vary due to the location and price of the
property, but can add up to 5% to your overall expenses.
When deciding upon how much you can afford to spend on a property, you
should keep in mind not only the deposit, the loan amount (even if it is
a 100% loan) or the interest rate, but also:legal fees, loan establishment
fees, mortgage insurance, stamp duty, property
When added to the
required deposit, all these expenses can amount to a fairly sizeable
sum, and most borrowers are shocked at the financial commitment
required. On a mortgage loan of $300,000, expect to pay approximately
$15,000 in fees. With mortgage insurance, this could rise to about