Top considerations for buying a property in Sydney

Sydney, Australia. (Image by Walkerssk from Pixabay)

One of the most popular places to look for investment property in Australia is Sydney. An exciting culture, a thriving job market for young professionals, and loads of fun things to do make this a destination that’s worth checking out if you’re ready to invest in property abroad.

Take note, however, that your ability to invest in real estate throughout the country will be based on several factors, such as the type of property that you’re planning on purchasing, and the type of resident status that you hold. Therefore, planning in advance is necessary so you’ll know what your options really are.

Also see: Make paying for your overseas property easier with OFX

To help you along, here’s a brief outline of some of the top considerations for investing in real estate in Australia, including in Sydney.

What properties are available for purchase in Sydney?

Can foreigners buy property in Australia? Sure, but there are some restrictions in place with regard to the types of properties that a foreigner can buy.

Depending on the type of real estate that you’d like to invest in, you’ll need to follow certain steps:

Vacant Land and New Dwellings

To invest in vacant land or a new dwelling, start by applying for foreign investment approval from the Foreign Investment Review Board (FIRB).

Whether you’re planning on building a new house or purchasing a new dwelling, you’ll be able to use it for yourself and your family. Or you might decide to rent it out, or you may even choose to resell it.

If you’re planning on buying a new dwelling, it will likely be approved without any conditions.
If you’re hoping to buy vacant land for residential development, your application might be approved if you can complete the construction within four years.

Also see: How to buy property abroad

Established dwellings

Purchasing an established dwelling as a foreigner in Australia is a bit trickier:

If you’re planning on investing in an established dwelling in Australia and you’re a non-resident foreigner, you typically won’t be able to go through with the purchase.
If you’re a temporary resident and you’re hoping to purchase an established dwelling that you’ll use as a holiday home or a rental property, you likely won’t be allowed to do so.
If you’re a temporary resident in Australia and you’d like to purchase a home to live in, you can do so. Just apply to buy an established dwelling that will serve as your place of residence. However, you’ll need to sell that home once your stay in Australia is over, unless you become a citizen or permanent resident.
If you’re a non-resident or temporary resident, and you’re hoping to buy an established dwelling to demolish it and build a new residential home, you can apply for approval to do so. However, you typically need to agree to build a minimum of two homes in place of the one that you’re going to demolish.

Are there any restrictions for foreign property buyers in Sydney?

As mentioned above, foreigners who aim to buy residential properties in Australia, including in Sydney, will likely need to start by applying for what’s known as foreign investment approval from the Foreign Investment Review Board (FIRB).

Also, foreigners will be encouraged to invest in new dwellings, and approval might be based upon whether or not the investment could help boost the housing stock.

Seek approval first

First, apply for approval to buy real estate in Sydney. Do this before you take an interest in any particular property.

To apply for foreign investment approval, you can use the Australian Taxation Office’s foreign investment application form. Keep in mind that you’ll need to pay the necessary fee upon submission.

Exemptions

In some cases, such as the ones listed below, you don’t need to apply for approval before investing in real estate in Sydney:

If you’re a citizen of New Zealand and you’re the only purchaser
If you hold a permanent resident visa in Australia and you’re the only purchaser
If you’re buying real estate as a joint tenant along with your spouse, provided that your spouse is a citizen or permanent resident visa holder of Australia or a citizen of New Zealand
If you inherited real estate from someone’s will
If you acquired the real estate through a court order
If you’re purchasing a new dwelling from a developer that can provide you with a copy of an exemption certificate

Annual vacancy fee

Any foreigner who buys residential real estate in Sydney, or anywhere else in Australia, will be required to pay an annual vacancy fee if the house isn’t rented out or occupied for more than six months out of the year.

How to budget to buy property in Sydney

With the help of professionals, like an accountant, mortgage broker, and conveyancer, you’ll be able to figure out how much house you can afford. However, it’s wise to include an additional 5% to cover additional expenses that will come with investing in real estate in Sydney.

In addition to purchase price, consider other expenses, such as the following, when coming up with your budget for overseas property investments:

Agents fees
FIRB fees
Legal costs
Stamp duty
Loan fees
Property inspection costs
Property taxes
Property insurance costs

Use OFX to make payments on your property

Once a property is now yours, it’s time to celebrate. But it’s also time to figure out the best ways to save money whenever you need to make payments on that property, such as your monthly mortgage payment or your tax and insurance payments.

If you’re converting your home currency into Australian dollars, using OFX’s handy currency charts can help take the guesswork out of how much you’ll need to pay. On top of that, you can use OFX to make easy and secure international transfers online.

The best part is that you’ll be able to save money by using OFX because you won’t have to pay the high margins and fees that typically come with bank transfers. All of those savings will add up, making it easier to pay off your property.

With OFX, you can get bank beating rates on global money transfers.

GET STARTED

Sydney real estate awaits!

Foreign buyers of Australian property in Sydney need to follow quite a few rules. But, once you get the hang of things, you’ll quickly realize that it’s not so bad. And all of the planning and effort is certainly worthwhile, as you’ll be making a wise investment that will give you access to the best that Sydney has to offer.

AustralianTimes.co.uk is a proud partner with OFX on The Currency Zone. To stay on top of global currency events and movements, sign up with OFX to hear from their currency experts with OFX daily or weekly market commentary.

IMPORTANT: The contents of this blog do not constitute financial advice and are provided for general information purposes only without taking into account the investment objectives, financial situation and particular needs of any particular person. UKForex Limited (trading as “OFX”) and its affiliates make no recommendation as to the merits of any financial strategy or product referred to in the blog. OFX makes no warranty, express or implied, concerning the suitability, completeness, quality or exactness of the information and models provided in this blog.