Australia has long been a popular holiday destination for us Brits, but in recent years we have shown an increasing appetite to buy property ‘down-under’. This might not come as a huge surprise. Let’s face it, they have sun, sea, sand… and a world-class cricket team (allegedly?!)
Sporting loyalties aside – if, like many others, you are considering investing your money in Australia rather than in England, here are a few things to keep in mind:
Firstly, you can’t just buy a house or apartment in Australia:
- In most cases, you will need permission from the Foreign Investment Review Board (FIRB). It can take between 40 and 130 days to get a decision. If you’re in a rush to exchange contracts, you can still do so, but make sure the contract is conditional on FIRB approval.
- If you are buying a new-build property, you may not need FIRB approval, and if your spouse is an Australian national, even if he or she lives away from Australia, FIRB approval will not be required.
Fees and expenses will vary from State to State, but you should typically budget between 5% to 7% of the purchase price to cover the following (amongst others):
- Government taxes – Property sales in Australia do not all come under one set of legislation handled by the Australian Federal Government. Each State has its own government departments for land and property, and also its own branch of the Real Estate Institute, and the Law Institute.
- Agent’s, solicitor’s and registration fees – There is no uniformity in estate agents’ fees, solicitors’ fees or Government fees for handling the registration of property sales or stamp duty on the purchase itself. As a result, fees can vary greatly from State to State.
- Local council charges – The city or town or district where the property is located will levy its own charges on the property. This is in addition to any Government taxes.
- Building Survey fee – Similar to the position in the UK. It is not always essential to have a survey carried out, but it would be a sensible thing to do, particularly for older buildings.
- Building insurance – As in the UK, this is not mandatory, but it is highly recommended that you insure the property.
- Strata inspection – A strata inspection report (also known as a strata search, Owners Corporation Records Inspection or Section 108) is a report that all purchasers should invest in whether they are buying a residential or commercial property. It will provide historic information and details of what is happening within the building or complex going forward. For example, it should reveal details of any special levies or charges, significant expenditure over the past 3 years, breaches of bye-laws and regulations, defects and planning issues, ongoing or historic disputes, current occupants, and insurance information. A comprehensive strata inspection report should be the equivalent of our standard property enquiries (‘CPSEs’) and Local Authority Search in the UK.
- Termite and pest inspection – This probably doesn’t cross your mind when you’re thinking of buying a house in the UK, but in Australia it’s a different story. In some States, this is compulsory. Termites cause over $1 billion damage across Australia annually with recent studies indicating that as many as 1 in 3 Australian homes have termites active ‘in their yard’ (that’s the ‘garden’ to me and you). The average cost of repairing termite damage is thought to be around $10,000 and can be a lot more – and that’s not including the cost of the termite treatment. You have been warned!
Now, “how was that…”?