Features of buying a home in Australia

Recommendation points

• The procedure for registration of Australian real estate in ownership
• Real estate purchase in Australia: primary sector object
• Additional costs when buying a home on the primary market
• How is the purchase of a home on the secondary market
• Additional costs when buying a second home
• Communal payments
• So when to buy

The difficult situation with the acquisition of real estate in Russia is forcing many of its citizens to look for lucrative offers abroad. Someone is attracted by the European simplicity of registration of transactions, someone is not indifferent to the low cost of housing, typical for a number of Asian countries, and still others are simply happy to have the opportunity to live in a new place. Over the past few years, the real estate market has carefully created the image of a state that can offer you all the above advantages – Australia. Is this really so – we will find out in our new article.

Australia is an amazing state that occupies several islands and an entire continent. On all sides, this country is surrounded by the waters of the world’s oceans, and on a large territory you will find the most diverse climate, which, however, will be invariably warm. Australia is a real resort, freezing temperatures simply do not happen here. True, out of habit you can get confused here, because by our standards, winter in Australia comes in summer, and summer in winter..

Here’s what Australia has to offer for people wondering how to buy a home on these distant shores?

Firstly, Australia is a very economically comfortable country with a consistently high standard of living. There is practically no inflation, but property prices are growing rapidly and steadily – investing in Australian real estate can be done with complete peace of mind. Moreover, rental housing in Australia is quite expensive, so the purchased house or apartment will pay off in this way in 10-15 years.

Secondly, Australia is a great place not only for recreation, but also for work, study, and in general – for life. Diplomas of Australian universities are quoted all over the world, it is quite possible for visitors to find a good job here, the main thing is to be fluent in Australian English, and a multi-year visa will allow you to spend as much time in Australia as you wish, all that is required is to renew it once a year.

Thirdly, buying real estate in Australia, as you will see below, is absolutely safe and takes place with a minimum of formalities – this can be said about a very rare country. The laws on the acquisition and registration of real estate are simple and understandable here, moreover, they have not changed for several decades, which guarantees the stability of any legally significant transaction.

The fourth advantage of purchasing real estate here is the surprisingly low interest rates (1-3% per annum), at which Australian banks provide loans to foreign citizens for the purchase of housing. Moreover, in order to obtain a mortgage loan, you will need to submit to the bank a passport and an agreement on the purchase of a real estate object, which will contain information about the paid first installment (30-40% of the cost of housing). A minimum of formalities. Often nothing else is required from you. Therefore, you should think about whether you can still get a loan and afford a slightly more spacious home?

The procedure for registration of Australian real estate in ownership

In accordance with Australian law, any foreign citizen has the right to freely purchase housing in the primary sector and the secondary sector in his own name..

It should be noted that foreign citizens are entitled to purchase the following real estate in Australia:

1. Housing at the stage of construction.In this case, the first installment is paid before the start of construction, and the subsequent payment is made by agreement with the construction organization..
2. Ready (already built) house, apartment or townhouse.That is, already built real estate, which has not yet been commissioned.
3. Old non-residential property.Such housing is necessarily subject to demolition, as well as the subsequent erection of a new building. Moreover, an amount exceeding half of the value of the old non-residential real estate should be spent on the construction of a new property. During the renovation of the building, living in it is prohibited.
4. Land plot intended for building.When buying a land plot, the buyer must present a plan of the future residential building. In addition, construction work on this object should not be delayed more than one year from the date of purchase of the site..
5. Residential housing.The main feature of this purchase is compliance with the deadlines – it is necessary to purchase a property 12 months before the expiration of the visa. It should be noted that in accordance with Australian law, the ownership of real estate by a foreign citizen does not give him the right to obtain a visa or residence permit.

After the buyer has decided on the choice of the property, he needs to obtain a building permit by submitting an application (form R3 form) to the Foreign Investment Review Board (hereinafter FIRB).

The submitted application will be considered by the council within a month, and the decision on its refusal or satisfaction will be sent directly to the applicant.

Certain categories of citizens are entitled to purchase real estate in the secondary sector without permission from the FIRB, for example, foreign students studying at Australian universities. These persons are eligible to purchase a “secondary home”, but the property must be located near the educational institution and its value must not exceed 300 thousand AUD (Australian dollars). In addition, the transaction is considered legal only if there is a valid student visa at the time of its conclusion, for a period of at least 12 months. According to the law, after purchasing a property, a foreign student cannot live in another place, and in the event of a visa expiration or relocation, the property must be sold.

In practice, developers independently deal with issues of obtaining permission to sell real estate to foreigners. Thus, the procedure for registering a sale and purchase transaction is greatly simplified..

According to Australian law, only half of the apartments in the building under construction can be sold to foreign citizens. This rule also applies to low-rise construction – only 50% of houses on the territory of new residential buildings are for sale.

Real estate purchase in Australia: primary sector object

As you know, you can purchase real estate in Australia in two ways:

1. Obtain a visa and purchase a property.
2. Buy real estate “in absentia” (remotely conclude a purchase and sale agreement).

Let’s dwell on the more common, second option. First of all, the buyer needs to select several properties of interest on the website of the construction company. The buyer then makes a written or verbal purchase offer. And, if this offer is accepted, in response, the developer company sends the buyer a contract to conclude a deal, which must be signed and sent back..

In addition, the buyer must transfer 1% of the value of the property to the account of the developer, and after some time another 9% of the total value of the property. Paying a 10% deposit is a mandatory attribute of buying a “primary property” in Australia. This amount is paid by bank payment or cash, and also serves as a guarantee that the selected object will be removed from sale (approximately for 2-3 weeks).

Thus, if the transaction is terminated at the buyer’s initiative, the deposit is fully returned to him. If the transaction continues, this amount will be credited to the total purchase price. It should be noted that while the “primary object” is under construction, the buyer can transfer the right to own this property, paying 2-3% of the total cost of the object to the state treasury.

As a general rule, you should entrust an experienced and licensed professional to buy a property in Australia, namely a lawyer working in the Australian state where you have decided to acquire the “primary property”.

In practice, real estate developers work directly with lawyers and therefore give them full rights to conduct a transaction. Such a partnership is aimed at accelerating the process of preparing and processing the necessary documentation..

After the apartment is put into operation, the developer notifies the buyer about the completion of construction, therefore, he is obliged to pay the remaining 90% of the cost of the object (within 1-3 months). Failure to fulfill this obligation entails the recognition of the contract as invalid, while the previously made deposit is not returned.

As a rule, the closing day of the deal is set for the final settlement. However, negotiations with the seller can be aimed at agreeing a partial payment of the payment..

At the end of the transaction, the homeowner is handed a copy of the purchase and sale agreement, which fully confirms his right to own the purchased property.

If you prefer to personally inspect the apartments that interest you, then for this you need to apply for a visa and fly to Australia, after transferring 1% of the value of the property to the account of the developer.

This option for concluding a deal practically does not differ from that described above, except that the buyer can independently study the property they like and personally familiarize themselves with all the documents.

Few buyers know that real estate services can significantly save time spent on choosing a property. Realtors are looking for real estate that meets the client’s requirements, organize an inspection of the objects they like, help with the execution of a purchase and sale transaction.

If the buyer does not purchase any real estate during a viewing tour drawn up by a real estate agency, then such an organization must set a minimum payment for the services provided in advance. Some agencies, as compensation for an effective inspection of real estate, offer their clients to reimburse transportation costs or a gift, for example, a sightseeing trip.

Services provided by real estate organizations cost the buyer on average 1.5-2% of the value of the property. To conclude a contract with a real estate agency, the buyer needs only one identity document. If the property is issued on credit, the buyer will need a full package of documents.

In fact, in order to obtain a loan, a foreign citizen is obliged to submit to a credit institution: an identity card, information on income, a contract for the purchase of a property and a document confirming the payment of a 10 percent deposit. Mortgages in Australia are made for up to 30 years, and the rate does not exceed 8-9% per annum.

Additional costs when buying a home on the primary market

The amount of additional costs when buying “primary housing” directly depends on the degree of readiness of the object. Accordingly, the purchase of real estate at the construction stage is accompanied by the payment of a tax of 1% of the value of the object. If the property has already been built and put into operation, this tax may increase to 2.5%. The mandatory registration fee is 0.2-0.5% of the total cost of housing. In addition, the payment of stamp (stamp duties) can replenish the “piggy bank of additional expenses” by 3-5% of the value of the property.

In general, the additional costs associated with the purchase of a home in the primary sector in Australia can range from 5 to 9% of the value of the property. But do not forget about paying for the services of a lawyer, a real estate company, construction inspection and other organizations..

How is the purchase of a home on the secondary market

As in the case of buying a primary home, to confirm the seriousness of their intentions and interest in purchasing a property, the buyer must pay a small deposit. However, it must be transferred to the real estate agency (the amount of such a deposit is approximately 1 thousand AUD). At this stage, the buyer will not be hindered by the ability to bargain, since the seller can make concessions and significantly reduce the price.

Immediately after the offer to buy, as well as in the process of acquiring primary real estate, it is advisable for the parties to the transaction to conclude a preliminary agreement, or the so-called “notice of sale”, containing the details of the parties, information about their representatives (if any), the address of the property, its cost, terms of sale and other conditions.

The notice of sale is sent by the real estate agent to both parties to the transaction, as well as their representatives. As a rule, such notification is made orally..

This stage is also characterized by a technical and legal check of the condition of the property. The drafting and verification of documents, as well as control over the legal side of the transaction, is carried out by the real estate agent and lawyers – from the side of the buyer and seller.

The day of signing the contract is considered “zero”. From this moment, within four days, the buyer has the right to waive obligations, but he will have to pay 0.25% of the value of the property specified in the contract.

Within 7-14 days from the date of signing the contract, the buyer has the right to examine the property for any hidden defects in it. To implement such a procedure, the buyer must invite an independent inspector, who, based on the research carried out, will make an appropriate conclusion. The cost of this specialist’s services is approximately 300-400 AUD.

On the basis of the above document, the buyer has the right to demand a reduction in the price of the property, eliminate defects, or completely abandon the contract, while losing nothing. It is important to meet deadlines and not be late in filing claims against the seller of real estate.

Additional costs when buying a second home

In addition to the cost of the purchased home, the buyer needs to pay some expenses, the amount of which directly depends on the state where the object is located, the amount of the transaction and other factors..

In fact, government taxes levied on the purchase of a primary property are not very different from taxes on secondary housing. Except that the second case must include the costs of legal services, drafting and translation of an agreement, obtaining a loan and services of a real estate agent.

Communal payments

The average monthly utility bills in Australia are 200-360 AUD (per 3 people in a family). The cost of such payments depends on the type and area of ​​housing..

Perhaps the cost of utilities is one of the few disadvantages of living on the Australian mainland. Here they are even more expensive than in Europe.

So when to buy

According to the forecasts of Australian economists, the value of real estate in the country by 2014 may decrease by 20%!

Note that since 2010, real estate prices in the country fell by 6%. According to experts, the already overpriced property in Australia fully justifies the sharp decline in prices. Experts are confident that this decline will continue until 2014.

According to world statistics on real estate prices, Australia is one of the top positions in this list. Home prices in Australia are 36% higher than real property prices, according to official economic report data.

The sharp decline in real estate sales intensified in mid-July 2012, despite experts’ forecasts that a sharp decline in interest rates on credit programs will stir up interest among buyers.

If you rely on the example of cities in Australia such as Elwood, Balaklava or St Kild, where the average property value is more than $ 500,000, then by 2014 housing prices in these cities will not exceed $ 400,000.

Summing up, we note that in general – Australia is a fairly good place to buy real estate.

After the decline in prices, which, according to experts, will end in a year or two, the value of real estate will go up again, so 2014–2015 will be the best time to buy your own “summer house” in Australia. If you, of course, have “extra” two or three hundred thousand dollars. But even if not, it doesn’t matter. Australian banks are always ready to provide foreigners with a truly profitable mortgage loan.