Finding your home in Australia

Finding and securing a home to buy or rent in Australia can be a difficult process.

Think first about where you would like to live, what kind of accommodation you need, and how long you would like to stay before doing your research into the legal and practical procedures.

The majority of Australians live in urban areas and, depending on their location and popularity, some cities are more expensive than others. If you don't mind a commute, consider a more rural area but remember to build the cost of travel into your calculations. If you are relocating from a much smaller country, it is important to consider just how big Australia is. Travelling between large cities can involve a major journey and if you choose to fly you will still need to factor in airport transfers and check-in times. Driving is an option, but the country is vast, rural services may be sparse, and fuel is expensive.

Finding a real estate agent

Real estate agents have to be licensed with the local territory or state (more information can be found on the Real Estate Institute of Australia’s website). Personal recommendation is always a good place to start but otherwise, try to find one that is interested in your needs and check their credentials first. An agent worth their fee will be able to guide you through the selection and buying process with minimal fuss.

If you are still overseas, you could start with a website search such as Property.com or RealEstate.com and there are plenty of other real estate search sites out there.

When thinking about buying, there are several things to take into account

FIRB Approval

If you are an expat looking to buy a house in Australia, you may have to obtain Foreign Investment Review Board (FIRB) approval (FIRB) approval from the Australian government first — and this applies whether you intend to live in the property or buy it as an investment. Those in the country on a temporary visa, a spouse visa, a 482 work visa or a student visa will:

• Need FIRB approval
• Only be allowed to buy one property to live in
• Will need to sell this property if they move out (so it’s a good idea to make sure the first property you buy is the right one for you)
• Be able to buy a property for investment if it is new or vacant land to build a property

There are some exemptions:

• An exemption certificate was obtained by the property developer.
• You are buying the property with a spouse.
• You inherited the property, were awarded it by a court order or as part of a divorce settlement.
• There are different rules for permanent residents, Australian citizens, New Zealand citizens and spouses, so it is worth checking out the current rules to find out which ones apply to you on the FIRB website.
• You can exchange contracts on a property before approval has been obtained but ensure that the contract is conditional on receipt of it — otherwise, you could be liable for financial penalties.

Once applied for, you should receive an answer in 40 days but this period can be extended.

Stamp Duty

As a foreigner, there may be extra Stamp Duty to pay in Victoria, New South Wales and Queensland on top of the normal rate. There are exemptions that apply, like buying the property with your spouse if they happen to be an Australian citizen.

Stamp duty is handled by the state or territory, not the national government; please see their websites below. Also, there's a useful online tool to help you calculate the costs involved.

• New South Wales Office of State Revenue
• Victoria Revenue Office
• Queensland Government Treasury
• Western Australia Department of Finance
• Northern Territory Department of Treasury and Finance
• South Australia Department of Treasury and Finance

Once contracts have been exchanged, you are entitled to a cooling-off period of around five to ten days, and the contract may be conditional on certain clauses (the cooling-off period does not apply to property bought at an auction). You will be required to pay a holding deposit of 10%.

Mortgages

The majority of Australian mortgages are repayment, and there is no such thing as a self-certification loan — it needs to be supported by proof of income. They are available on an 80% loan-to-value basis but like any major purchase, do your homework as there are plenty of financial products to choose from. Regarding your credit history, you are starting again. A copy of your credit history at home along with a letter from your bank manager will help in making the process easier. There are plenty of lenders out there who specialise in expat mortgages; it's worth getting expert advice to guide you through the process.

Extra fees and taxes

A few other things to consider:

• You could need as much as 5% of the purchase price to cover red tape.
• Each state or territory has its fees and duties.
• Some will demand that you have a termite and pest inspection.
• You may need to commission a structural inspection if you are buying an apartment.
• Capital gains tax may apply if you live in Australia for more than six months.

Renting

Many expats choose to rent a property first, to ensure they like the area, the schools, and the commute to work, for example. If this seems like the best option for you and your family, you will do well to start with a property search website and a licensed real estate agent for advice.

In our 2020 Global Housing Market Trends report, we revealed how housing markets across the globe have been affected by COVID-19 by analysing rental and purchase data from 2015 to mid-2020. The metrics we used were:

• Price-to-rent ratio — the average cost of ownership divided by estimated rental cost. Higher values suggest that it is better to rent rather than buy
• Price-to-income — a ratio of apartment prices to average disposable income. Lower values mean more affordable housing
• Mortgage as a percentage of income — a ratio of mortgage costs to take-home family income. Lower values mean more affordable housing.

Our findings show that in Australia, price-to-rent ratios inside and outside city centres have both seen increases since mid-2019, at 3.3% and 1.3% respectively. This shows a trend in favour of the rental market in Australia.

Tuan Duong, Principal of Duo Tax Quantity Surveyors, notes that “there’s generally a downward trend in housing prices but not to the severity that we expected” and goes on to say that he “expects there to be some recovery after the initial shock of the pandemic. We’re already starting to see lots of investors getting back onto the investing bandwagon, albeit at a slower pace due to slowing of the economy. Still, so far, we’ve seen some solid resilience in markets like Sydney and Melbourne.”

Would you like to live in a flat (an apartment) or a house? Do you need a garden or outside space or does the idea of high rise living in a more urban area best suit your needs? You may come across the term 'unit' which refers to a property that may be on more than one level (more like a house) but will be within a block, like a flat.

When you have found a property, arrange a viewing with the managing agent. Note that the rental market can move fast so dealing with people by name and building contacts could be key to making sure you secure the right home.

If you like the property, you will need to lodge an application (an agent can accept more than one) along with a bundle of supporting documents, including proof of identity, income and references. Sometimes, the prospective tenant will be asked for a deposit which will be returned if the rental does not go ahead.

Proceeding with the rental is relatively straightforward, and each state has a tenants' association to advise with rights and responsibilities. The new tenant will be asked for a bond (usually four to six weeks’ rent) in advance, and this protects the landlord against damage, unpaid rent or unpaid bills at the end of the tenancy.

It is important to be comfortable and settled in your new home, so there is a lot to consider when making a decision about where you would like to live. Equally important to your general well-being, is adequate health care cover. Call our expert team today for a friendly chat about what we can do to support you.

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