NEW HOUSE RULES EXPLAINED
We unravel the legalities about buying
property Down Under
Through the thick and thin of the past year, Australia remains a popular property-investment location. CHRISTOPHER DONNOLLEY explains how the Australian government makes it difficult for non-resident buyers
NON AUSTRALIANS CAN BUY PROPERTY in Australia as investments. Foreign property purchases are regulated and limitations apply, such as requiring buyers to apply for approval through the Foreign Investment Review Board (FIRB) before buying residential real estate.
The Australian government gives precedence to property investment that stimulates job creation, the FIRB says at its website: “The Government’s policy is to channel foreign investment into new dwellings as this creates additional jobs in the construction industry and helps support economic growth.
“It can also increase government revenues, (through) stamp duties and other taxes, and from the overall higher economic growth that flows from additional investment
As such, it’s much easier for foreign investors to buy new buildings or vacant land (provided a new construction takes place). This route must still be approved by the FIRB, but there's much less scrutiny. There are generally no conditions attached when purchasing a new dwelling, but a vacant lot can only be bought if a dwelling is built on it within four years; it cannot be held indefinitely if undeveloped
It’s a different story with established dwellings (i.e, ones that aren’t new). Foreign investors can’t get approval to buy established dwellings, except in the following circumstances:
You can buy the home to live in as a temporary Australian resident, but it must be sold when you leave, unless you become a permanent residents or citizen. You can also buy an established dwelling to demolish and erect more dwellings on the same site. The foreign-investment objective is to encourage more house construction — that is, you build more dwellings than were originally there.
Before you apply for approval to buy an investment property, you should seek expert legal advice to make sure you understand and comply with all the legal requirements. Then you can start the foreign investment application process by visiting the IR and Australian Tax Office websites
According to the latest FIRB Annual Report, mainland Chinese real-estate investment into Australia in 2018-19 was A$6.1 billion (about HK$32.8 billion), a 50 percent fall compared with 2017-18 and the lowest since 2012-13. At the same time, Hong Kong investment in Australian real estate more than tripled, from A$2.8 billion (about HK$15 billion) in 2017-18 to A$9.3 billion in 2018-19 (more than HK$50 billion). Singapore investment rose from A$7.8 billion to A$9.8 billion, while from Japan it rose from A$2.2 billion to A$3.8 billion.
Meanwhile, Juwai.com’s Top 10 countries for Chinese property buyers for 2019, released in June, had Thailand and Australia maintaining first and second place respectively from the previously year, noting that “Australia ranks second because buyers are attracted by its large Chinese population, quality of life, high-quality education, and proximity.
Melbourne continues to be more popular than Sydney
They were followed in descending order by Japan, US, Canada, Malaysia, UK, UAE, Vietnam and the Philippines.