Homes & Relocation Detail
Be aware of Aussie property rules
Hugh Longhurst of Victoria based property company Central Equity explains the regulations you need to know.
For many decades residents of the UK have made the journey down under to start a new life, and although the Australian legal system is based on the British system, property buyers are constantly surprised by the significant differences between the UK and Aussie systems.
The Australian Federal Governments Foreign Investment Review Board (FIRB) controls the process of overseas home acquisition and essentially requires overseas purchasers who are not permanent residents (PRs) to either buy brand new homes that have never been occupied or 'off-the-plan' buildings to be built specifically for the purchaser.
For example, and unlike in the UK, when purchasing a property in Victoria the responsibility for declaring the status of the property (in terms of subdivision, title, town planning, etcetera) is the responsibility of the vendor and is included in every contract under Section 32 of the Sale of Land Act. This Section 32 provides great peace of mind for the purchaser as the vendor is required to declare all relevant information in regard to the purchase of the property to the purchaser.
It should be noted that when the purchaser signs the contract they should always be requested to sign the vendor's statement first and that this document should be pre-signed by an appropriate vendor's representative.
If the property being purchased is already constructed then the contract of sale is typically a single document with the vendor's statement attached and does not include any drawings of the dwelling. If it is a detached or semi attached to be built 'off-the-plan', then typically a home's building agreement is signed for the construction of the home and would include detailed drawings and specification.
Many builders use a pro-forma document provided by the Housing Industry Association (HIA). The purchaser will typically be required to pay a 10 per cent deposit on the land value and up to 5 per cent deposit on the house value. Deposit monies paid on the land are held in a statutory trust account and cannot be touched by the vendor or the purchaser. If the dwelling is completed and title exists the vendor may ask the purchaser to sign a Section 27 to release the deposit prior to settlement.
Purchasers should typically aim buy Freehold Title property wherever possible – this is the best quality title and allows the owner to hold the property indefinitely, to live in the property or rent the property out. Purchasers should be aware that terms of Section 32 of the Sale of Land Act may not apply in other states (they may have alternative though similar arrangements), and likewise titles may vary also.
One of the most popular types of property purchase for migrants in Victoria seems to be 'off-the-plan' in Melbourne as there are major savings in state government stamp duty payable when purchasing the property; this could be between AUS$10,000 and AUS$30,000 (depending on the cost of the property).
Prior to settlement it is typical for the purchaser to appoint a solicitor or conveyancer to handle the process of settlement and transfer of title. It is best that this role is filled by somebody either based in the state or familiar with the state of purchase as there are subtle variations between states with such things as stamp duty.
Central Equity has had an office in London continually for the last decade and has considerable experience dealing with overseas purchasers. For further info, contact Central Equity's London Office on (free phone) 0800 169 5287 or visit Australian Property.
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