Many locals think rich foreigners come here with money to burn and not too much sense when it comes to working out what is a good property or a good price to buy. But what they lack in knowledge of the local market they make up in mega bucks to smooth over all the problems that you or I would flounder on – or at least that is what lots of us think.
Foreigners can be the victims of uncaring or unscrupulous real estate agents often from their own country of origin. They come to a country, like Australia, of which they know very little so naturally they gravitate toward their own countrymen who may give them reassurance about a property for sale but so often it’s all reassurance with no the substance.
So they buy where they are told for a price that’s supposed to be good but in the years that follow they may come to realise they were ripped off. The huge commissions they unthinkingly paid lined the pockets of those agents who they thought had been helping them and the price they paid just added pressure to inflate the cost of local real estate.
The media says foreigners push up prices which push out locals especially first home buyers. The fact is that in general foreigners are not allowed to purchase established or second hand properties regardless of whether it will be for their home or an investment property. They are restricted to buying new and all purchases must be approved by the Foreign Investment Review Board (FIRB).
This means foreigners are only competing for new homes therefore locals have the established homes to themselves. In fact an established home might be only 12 months old so this hype about first home buyers being squeezed out of the market is largely a media beat up.
Regulations surrounding the purchase of properties by foreigners are relatively complex and have become even more so since 1st December 2015 when the FIRB introduced application fees and compliance penalties.
Engaging a Buyers Agent can be the solution
Foreigners can’t buy old or established properties but there are a few exceptions so they need to consult people who know what these exceptions are. Adelaide South Property can help and we also know what purchases rarely fail to gain approval.
Any foreigner must also weigh up the benefits of getting lower interest rate finance from their country of origin compared to using an Aussie bank. They may be more expensive but banks here will loan more, provide fixed interest rates and a greater variety of products and be protected from currency fluctuations.
It’s also critical to understand taxation obligations but it’s just as important to understand entitlements to claim big reductions in tax for costs incurred for things such as council rates, water rates, insurance, depreciation on your asset, interest on Aussie loans and much more.
It is not necessary for foreign buyers to restrict themselves to only purchasing off the plan properties marketed overseas by Australian developers. When buying Off-The-Plan it’s not always possible to be sure that what was ordered on paper will look just the same. You can never be 100% sure if the quality of workmanship will be what was expected. On the other hand when you buy a house that has just been built what you see is what you get – no uncertainty.
We believe that no foreigners, except for those who have substantial living experience in Australia, should contemplate purchasing any property without expert advice from a Buyers Agent.
Any person, not just foreign buyers, need to use a Buyers Agent unless they are able to personally search through maybe many dozens of properties before they find the right one. A Buyers Agent can introduce you to many properties and eventually make a short list of the ones you like. They would all be inspected and you would receive many photos and a full report on each one. Once you have decided on a property the Agent would negotiate a price and, if you wish, you can authorise your Agent to sign all contracts on your behalf.
There will be no obligation or cost for any initial consultation so if you would like to discuss your situation with us please contact Cheryl Lee on +61406 277 701 or email her on Cheryl@adelaidesouth.com.au