Investing in property from the UK

[Ronansmyth]

My wife and I are moving to Sydney at the start of 2016 (all things going well). She is Australian and has some property in Sydney with her brother. He has seen a potential investment opportunity, but for us to invest would mean selling the property we have in Oz (fairly straightforward) and also borrowing to make up the rest.

 

I suspect the best option for us would be getting a mortgage from an Australian lender whilst we are in the UK, but I am not sure what the process for this is or if there are any pitfalls. This would be a renovation project (my brother in law is a builder who does this for a living) and we are confident there will be a healthy profit for us, but I am not sure about the mortgage process. We also have the option of freeing up equity in our home in London.

 

has anyone any experience of getting an Oz mortgage when in the UK?

 

thanks

[MARYROSE02]

I Googled 'buying property in Australia from overseas' and this was one site that came up - private company rather than a Government department, but seems to be relevant.

 

Home » Real Estate » The Purchase of Australian Property by Foreign Residents

[h=1]The Purchase of Australian Property by Foreign Residents[/h]

[h=2]Purchase of Australian Property : FIRB Approval & Process[/h]The Australian Assistant Treasurer announced significant changes in April, 2010 to the rules surrounding the purchase of established (ie. previously occupied) residential housing by temporary residents, and the rules surrounding the purchase of vacant land. Temporary residents were again required to seek Foreign Investment Review Board (FIRB) approval when acquiring established property and to sell the property when leaving Australia.

The FIRB rules are relatively complex and we have tried to simplify some aspects in the documents below. The first is a Guide focussed on explaining the purchase process for foreign citizens who are not resident in Australia wishing to invest in Australian property. The second document contains Flow Charts which attempt to summarise the FIRB rules as they apply both to Temporary Residents in Australia and Foreign Non-Residents (FNR) outside of Australia. These flow charts constitute our interpretation of the rules and are NOT intended to be relied upon - you are encouraged to contact the FIRB (www.firb.gov.au) directly or we can arrange professional advice, if requested.

 

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[TD=colspan: 2]Purchases of Australian Property by Foreign Citizens [/TD]

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A Guide for Foreign Citizens Buying Australian Property (PDF)

A concise guide to the issues and practicalities involved in the selection, financing and purchase of Australian property for foreign citizens. Including FIRB restrictions, income and capital gains tax considerations and arranging Australian mortgage finance for a purchase.

 

 

 

 

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[TD=colspan: 2]Purchasing Australian Residential Property : FIRB Flow Charts [/TD]

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In terms of understanding the FIRB requirements it is worthwhile appreciating that no restrictions exist in relation to either Australian citizens or permanent residents (PR) purchasing property, and that foreign non-residents (FNR) may not own any share of an established property except in very limited circumstances. The most complex situations generally arise when purchases are being considered on a joint basis e.g. an Australian citizen plus foreign non-resident (FNR) citizen seeking to acquire property. We strongly recommend that foreign purchasers seek specific legal advice in advance of any purchase.

FIRB Process - The Purchase of Established and New Australian Property

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Note that foreign investors intending to buy real estate in Australia have relatively open access to the Australian market and mortgage finance, with mortgages up to 80% of the property value typically available, but they must seek prior approval from the Government through the Foreign Investment Review Board (FIRB) unless specifically exempted by the Foreign Acquisitions and Takeovers Regulations.

[h=3]Purchase of Australian Urban Property[/h]

The following individuals are NOT required to seek approval for the purchase of Australian residential real estate:

 

 

 

• Australian citizens living abroad purchasing either in their own name or through an Australian corporation or a trust;
  
• Foreign nationals who are the holders of permanent resident visas or are holders, or are entitled to hold, a ‘special category visa’ purchasing either in their own name or through an Australian corporation or a trust; and
  
• foreign nationals purchasing, as joint tenants, with their Australian citizen spouse.
  

 

 

Foreign persons are normally given approval to buy:

 

 

 

• Vacant land for development, including house and land packages where construction has not commenced, subject to a condition imposed under the FATA that continuous construction commences within 12 months for residential developments, or 5 years for commercial developments not to be used for residential purposes; and
  
• New dwellings such as house and land packages, home units and townhouses purchased ‘off‑the‑plan’ that is under construction or newly constructed, but never occupied or previously sold. ‘Off‑the‑plan’ sales to foreigners are only permitted for new development projects or extensively refurbished commercial structures, which have been converted to residential, on condition that no more than half the dwellings in a development are sold to foreign persons.
  
• Certain categories of foreign nationals, who hold a visa that permits them to reside in Australia continuously for at least the next 12 months, may be given approval to purchase established residential real estate (that is, second hand dwellings) for use as their principal place of residence (that is, not for rental purposes) while in Australia. A condition of such purchases is that the dwelling must be sold when the foreign nationals’ temporary resident visas expire, they leave Australia, or the property is no longer used as their principal place of residence.
  
• Foreign companies, with an established substantial business in Australia, buying for named senior executives resident in Australia for periods longer than 12 months, may be eligible for approval provided the accommodation is sold when no longer required for this purpose. Whether a company is eligible, and the number of properties that may be acquired, will depend upon the extent of the foreign company’s operations and assets in Australia. Unless there are special circumstances, foreign companies normally will not be permitted to buy more than two houses under this category. Foreign companies would not be eligible under this category where the property would represent a significant proportion of its assets in Australia.
  

 

 

Proposals by foreign persons to acquire developed residential real estate that do not fall within the above categories are subject to the FATA, but are not normally approved. All contracts by foreign persons to acquire interests in Australian urban land should be made conditional upon foreign investment approval, unless approval was obtained prior to entering into the contract. Contracts should allow a minimum of 40 days from date of lodgement for such a decision. Foreign investors are in breach of the FATA if they enter an unconditional contract to acquire property before approval is granted and may be subject to significant penalties.

 

 

 

Complete the Inquiry form

 

 

[newjez]

Sounds like a tax/foreign exchange nightmare. I'd keep it simple. Can't you invest in the UK?

[MARYROSE02]

I've got a house in both countries, living in one and renting the other out depending on where I was at the time. The tax affairs are not unduly complicated, so long as you keep all your records, and submit your returns. I was most slack about submitting a form to HMRC to get my rent paid free of NRL tax, but finally did it after five years in OZ. I used to get it back each year when I submitted my HMRC return.

[phixon]

Hi, I'm a mortgage broker here in OZ and we still own properties in the UK. Some banks will take your UK income and shave a % off it to allow for variances in exchange rate. Apart from that, as your wife is an Aussie, then you can borrow quite a high percentage of the purchase price and it's straight forward. Your wife being an Aussie is key here, if you were both on say temp visa's then it's a little more restrictive.

I'm not on this website often but send me a personal message if you have more specific questions. I'm on here today looking to find a lender in the UK who will do mortgages as we are in OZ. If anyone knows an answer to this please let me know.

Thanks

[rammygirl]

No FIRB if one of them is an Aus citizen.

 

Selling the the other property will incur capital gains tax though.

[Ronansmyth]

Thanks everyone. Yes, my wife Aussie, so we would borrow through her. We've been speaking to our Australian accountant and were filled in about the Capital gains tax.

 

one to mull over I think.

[Pumpkin]

Thanks everyone. Yes, my wife Aussie, so we would borrow through her. We've been speaking to our Australian accountant and were filled in about the Capital gains tax.

 

one to mull over I think.

 

Whether Aussie or not, I don't think you will find many lenders in Australia willing to lend to you whilst you are not resident.

[phixon]

Whether Aussie or not, I don't think you will find many lenders in Australia willing to lend to you whilst you are not resident.

 

 

Yes you can

[Pumpkin]

Yes you can

 

I didn't say you could not. Read again.

 

Most lenders will only lend to residents. I am a British citizen, but I live in Australia, it would therefore be pretty hard to get a mortgage in UK, not impossible, but hard.

[Alan Collett]

Thanks everyone. Yes, my wife Aussie, so we would borrow through her. We've been speaking to our Australian accountant and were filled in about the Capital gains tax.

 

one to mull over I think.

 

Also, CGT is payable with no CGT discount, and tax is payable on the capital gain in Australia at non resident rates of tax => suggest you have a pro forma tax computation prepared so you can see the consequence of a disposal of your existing property.

 

Best regards.