Harith Wickramasingha
Most international students face challenges in finding appropriate housing to live in for the duration of the course. However, some students are fortunate enough to be in a position to purchase their place to live in. The million-dollar question is can overseas students purchase property in Australia? Yes, you can. However, the kind of purchasing process you will undergo depends on whether it is a residential or investment property.
Consider your financial situation carefully. Generally, buying a home while studying can be more challenging than when working. Homeownership entails a significant commitment compared to renting, with the obligation to repay the mortgage each month. If you anticipate returning to university or TAFE soon, or if you are currently a student, weigh the feasibility of managing a mortgage along with the associated costs of homebuying. If unsure, continuing to rent or living at home might be more practical.
Types of property international students can purchase in Australia
International students in Australia have a range of property options available for purchase, each with its unique considerations. These include apartments/units, popular for their potential affordability and amenities; townhouses, offering a middle ground with multiple levels and shared facilities; houses, providing more space and privacy though less common due to higher costs; studio apartments, and new developments, allowing the acquisition of properties before construction or completion.
Requirements to purchase property in Australia
International students can apply for home loans to buy property in Australia. Foreign investors, notably overseas students, face extremely stringent lending standards. International students must have a good credit history. They should have the means to prove that they can manage the student home loan installments.
Generally, students on the following types of Visas can be accepted for a loan:
- Student Visa (Subclass 500)
- Skilled Recognised Graduate Visa (Subclass 476)
- Skilled Graduate Visa (Subclass 485)
- Skilled Regional (Provisional) Visa (Subclass 489
If you’re an international student with a temporary resident visa, you’re in the clear to buy property. Just remember, you’ve got to hit up the FIRB for approval first.
Costs associated with purchasing property in Australia
Let’s take an example of buying a $500,000 property in Queensland. What are the upfront costs are assosicated when a student buys a property?
| Purchase price (AUD) | $500,000 |
| Stamp duty (First-home buyer grant – As an international student you might not be eligible for this grant) | $0 |
| Stamp duty (non first-home buyer) | $8750 |
| Building inspection and pest inspection (combined) | $600 |
| Mortgage registration fee | $187 |
| Transfer fee ($35 for every $10,000 over $180,000) | $1120 |
| Loan application fee | $600 |
| Lenders mortgage insurance (with only 10% deposit) | $12,000 |
| Council and water rates | $500 |
| Conveyancing and legal fees | $1,800 |
1. Stamp Duty
Stamp duty, a tax imposed by state or territory governments, is a significant consideration for property buyers in Australia. Calculated based on the property purchase price, the amount varies depending on the location. Apart from the deposit, stamp duty often represents one of the most substantial upfront costs for buyers. It’s essential to use tools like the Stamp Duty Calculator to estimate these costs and regularly check for any available concessions, as state-based schemes and incentives change frequently. Calculate your stamp duty using this calculator.
2. Transfer Fee
Another fee to be aware of is the transfer fee, enforced by state governments to cover the costs associated with transferring the property title. The actual expense can vary significantly based on the property’s location. For more detailed information on title transfer fees, prospective buyers should refer to the state or territory revenue office website where the property is situated.
3. Mortgage Registration Fee
Mortgage registration fees, imposed by state or territory governments, are relatively minor compared to other significant costs. Typically ranging from $119 to $200, these fees contribute to the overall expenses associated with property acquisition.
4. Legal and Conveyance Fees
Legal and conveyance fees are incurred for services provided by licensed conveyancers or solicitors. These professionals handle crucial tasks such as reviewing contracts, ensuring title compliance, facilitating the smooth transfer of property titles, coordinating stamp duty payments, and drafting settlement documents. Costs for these services can range between $700 and $2500, depending on the complexity of the property purchase and the service provider chosen.
5. Mortgage Application Fees
Banks charge mortgage application fees to set up the mortgage, and buyers need to understand the breakdown of these fees, including additional charges such as mortgage registration and loan service fees. Prospective buyers are advised to inquire about reduced-fee deals or packages and carefully review these fees, ensuring clarity and transparency, as they will be outlined in the loan contract.
These are only a few of the overall costs associated with buying a property, some other costs such as moving costs, connecting utilities, and inspection fees may apply.
Frequently Asked Questions
Do I automatically get PR if I buy property in Australia?
Unfortunately, as a student purchasing property in Australia does not automatically grant you a Permanent Residency (PR). Property ownership and immigration status are separate matters. If you wish to obtain PR in Australia, you need to apply through the relevant immigration channels and meet the eligibility criteria set by the Australian government.
Will I be able to rent out my property?
Yes, you can rent out your property, providing an opportunity for income generation to offset expenses. This income will need to be disclosed during tax time.
How can I secure financing for the property?
Securing financing may be challenging for international students. Due to the limited duration of your visa, banks and other lending agencies may be unwilling to lend you large sums of money. You will need to explore options like lenders specializing in foreign buyers, collaborating with a local co-borrower, or financing the house completely yourself.
What happens to the property if the student’s visa expires?
Property ownership is not directly affected by visa status. However, compliance with visa regulations is crucial, and seeking legal advice to navigate any potential implications is recommended. If by any chance your student visa expires, you will need to sell the property as you will no longer have access to enter Australia.
Will I be eligible for government grants?
As an international student due to the limited nature of your student visa (validity of 3-5 years), you won’t be eligible for property grants in Australia. However, this may change in the future. Check with the local states’ concessions and grants before purchasing your property.
