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Property investments tips for foreign investors looking to invest in Australia

Published on December 1st, 2020
  Written by 
Bill Tsouvalas
Bill Tsouvalas is the managing director and a key company spokesperson at Savvy. As a personal finance expert, he often shares his insights on a range of topics, being featured on leading news outlets including News Corp publications such as the Daily Telegraph and Herald Sun, Fairfax Media publications such as the Australian Financial Review, the Seven Network and more. Bill has over 15 years of experience working in the finance industry and founded Savvy in 2010 with a vision to provide affordable and accessible finance options to all Australians. He has built Savvy from a small asset finance brokerage into a financial comparison website which now attracts close to 2 million Aussies per year and was included in the BRW’s Fast 100 in 2015 as one of the fastest-growing companies in the country. He’s passionate about helping Australians make financially savvy decisions and reviews content across the brand to ensure its accuracy. You can follow Bill on LinkedIn.
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Over the past few years foreign investment in Australia has grown. According to the Australian Bureau of statistics (ABS), the level of foreign investment increased from $153.3 billion (5%) to $3,192.4 billion at the end of 2016. There has also been a sturdy rise of both the private and non-residential buildings that were approved sitting at 18,863 in September alone. Investment in real estate also remained strong with investment approvals at $97 billion. When it comes to property investments it all depends on where you would like to invest, and knowing right time. Here are a few things you need to know to make investing less of a hassle for you.

Hot property regions

The places that have been attracting most international property buyers are Melbourne, Sydney, and Victoria. Melbourne appears to be the most popular. This could be due to it being ranked number one by the Economist Intelligence Unit’s liveability survey in terms of having good infrastructure, education, culture and environment.

You can only purchase “new homes”

What this means is that as a non-residential foreign investor you only have access to purchasing property that has not been occupied, or has only been occupied for no longer than 12 months. This pertains to newly completed property, off the plan property, house, land or a newly developed property that is being sold by the developer. The government’s aim in doing this is to channel foreign investments into new dwellings which will create additional jobs in the construction industry and encourage economic growth within the country. To complete this step, you will first have to secure a foreign investment approval.

Fees and taxes to be aware of

Stay in the loop when it comes to additional fees and state laws. There are expenses when it comes to purchasing your property:

Stamp duty is one of the largest property fees you need to be aware of. This differs from state to state as each have their own laws on stamp duty. Your stamp duty will also be based on the property value as well as the location. The average cost of stamp duty can cost you tens of thousands of dollars. This means 1% up to 5% can be deductible from the purchase price. Let’s presume you buy property in New South Wales for $300,000 the stamp duty will be $8,990. With other things such as your mortgage registration and transfer fees it can raise the total government fees you will be paying to $9,268. The higher in price the more stamp duty you will pay. If crunching numbers is not your thing you can use the Stamp Duty Calculator Au app from the Goole Play store.

Foreign Investment Review Board (FIRB) Fees

The FIRB fees basically mean that for each application made to purchase property international investors will have to pay a fee. Fees for residential land applications are determined by the price for the acquisition of the interest. If you decide to purchase residential land as joint tenants a single fee will apply. Properties ranging from $1 million or less can attract a fee of up to $5000. A $2 million property will attract a $10,000. With each million from here forth an additional $10,000 is added.

Rates and taxes

Your property will be subjugated to annual land taxes, which is general 1% the land value, and local council rates for local services such as garbage collection. There would also be additional costs linked to maintenance of your building. As an investor you need to keep yourself constantly updated for possible things that can be out of your control such as interest rates, currency, exchange rates and loans.

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This guide provides general information and does not consider your individual needs, finances or objectives. We do not make any recommendation or suggestion about which product is best for you based on your specific situation and we do not compare all companies in the market, or all products offered by all companies. It’s always important to consider whether professional financial, legal or taxation advice is appropriate for you before choosing or purchasing a financial product.

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