Western Australia has a population of approximately 1.83 million, of which some 1.34 million are situate in Perth, the capital city.
Many Singaporeans have already invested in Perth to take advantage of the wonderful outdoor life and excellent education facilities for children.
This paper briefly covers some of the issues, which a Singaporean wishing to invest in Perth ought to be aware of.
Foreign Investment Review Board (“FIRB”)
Australian Government policy is to seek to ensure that foreign investment in residential real estate increases the supply of residences and is not speculative in nature. The policy therefore seeks to channel foreign investment in the housing sector into activities that directly increase the supply of new houses, such as new developments. Obviously this in turn brings benefit to the local building industry and their suppliers.
All foreign interests intending to invest in real estate in Australia are required to seek prior approval of FIRB. Foreign interests include a natural person not ordinarily resident in Australia, a foreign corporation and a trust in which the beneficiaries are foreign persons or foreign corporations.
Residential real estate means all Australian land other than commercial properties. Hobby farms and rural residential blocks are included within the definition of “residential real estate”.
Acquisitions of developed residential real estate by foreign interests are not normally approved, except for the following categories:
- acquisitions by foreign companies with an established business in Australia buying for senior executives for periods longer than 12 months;
- foreign nationals temporarily resident in Australia holding a current temporary resident visa;
Acquisitions of residential real estate (including vacant land) for development by foreign interests are normally approved subject to a requirement of construction in the near future.
Applications to acquire existing residences for redevelopment are considered on a case by case basis. The age of the current improvements on the land and the amount expended on the redevelopment are relevant features.
Foreign interests acquiring “off the plan” will normally be approved. The property purchased under this category may be rented out, sold to Australian interests or other eligible purchasers or retained for the foreign investors’ own use.
Acquisitions of commercial real estate by foreign interests must also be submitted to the Government through FIRB for approval. There are a number of exemptions. A major exemption is where the value is less than $5,000,000, unless the land is vacant, or the whole or part of the land comprises an accommodation facility or the agent of a foreign government is acquiring the property.
Acquisitions of developed commercial real estate valued at $5,000,000 or more are normally approved. FIRB will not give in principle approval to applications. The actual application with all specifics must be made.
Fees of Real Estate Agents in Western Australia
A purchaser of property is not normally concerned with brokerage, unless he or she engages an agent to find a property for them. If they have not engaged a purchaser’s agent, the costs of the vendor’s agent will be met by the vendor from the sale price.
It is not uncommon for persons from other countries to engage a local agent to advise in respect of locations and to seek a property which fits the potential investor’s criteria.
If a prospective purchaser does engage an agent, the commission that the agent is now able to charge is negotiable. Previously there was a fixed fee on a sliding scale.
Stamp duty is payable by the purchaser of real estate on a sliding scale. It is applicable to every acquisition of real estate.
The rate is on a sliding scale commencing at 1.95% for properties under $80,000 rising through three increased rates to a final rate of 4.85% on the amount by which a property exceeds $500,000.
Talbot & Olivier
Our firm has been actively involved in the property market in Western Australia for many years and is experienced in all aspects of property law, including acquisitions by foreign interests. We act for a number of clients from South East Asia, and particularly, Singapore.Indeed one of our solicitors, Miss Melanie Lim, is from Singapore.
Again, a sliding scale of fees applies in acting for a purchaser or a vendor. As a guide, our fees in acting for a purchaser for a property worth $500,000 would be approximately $1,350.
If additional matters were required to be attended to, such as an application for FIRB approval, additional costs will be charged.
Talbot & Olivier Level 10 55 St George’s Terrace Perth 6000 Western Australia Tel: (618) 9325 8977 Fax: (618) 9221 1886 email:Â email@example.comÂ Contact: David Williams Paul Kordic Earle Scarff