Can a 491 visa holder buy a house in Australia? The short answer is yes, they can, as long as they they fulfil the criteria and get approval from the FIRB.
Many temporary residents struggle with the process of understanding their rights and options when it comes to buying property in Australia. So, we’re here to help you out.
From understanding the 491 visa and how it affects property ownership to financing options, government benefits, and tips for investing in Australian real estate, we’ll guide you through all the essential information.
Are 491 Visa Holders Allowed to Buy Property in Australia?
The 491 visa is a temporary visa given to skilled workers from overseas who are sponsored by a state or territory government, as per the regulations of the Australian government.
“It is important to note that 491 visa holders are allowed to purchase residential property in Australia, provided they fulfil the criteria and secure approval from the FIRB.”
This means that even as a temporary resident, you can own a home in Australia. But there are specific guidelines and restrictions that 491 visa holders must follow to when it comes to property investment.
Eligibility Criteria for 491 Visa Holders to Buy Residential Property
To invest in Australian property, 491 visa holders must fulfill certain criteria, such as getting FIRB approval, finding the appropriate type of property, and meeting the financial requirements.
The Foreign Investment Review Board ensure that foreign investments strictly adhere to Australian law and policy. Approval is mandatory for temporary visa holders and foreigners to buy a residential property in Australia.
On top of that, the type of property that 491 visa holders can purchase is also subject to restrictions. For example established dwellings are allowed only for personal residence and not investment purposes. This means that if this visa type holder wants to buy an investment property, it needs to be a new or off the plan.
You can also look into the possibility of FIRB exemption which is available for certain individuals and property types.
FIRB Approval Process: How it Works
The Foreign Investment Review Board approval process is the first and most necessary step for foreign investors to take before purchasing residential real estate in Australia. Getting FIRB approval is essential before making a property purchase to make sure that the investment aligns with the Foreign Acquisitions and Takeovers Act (1975).
Additional Information Around Australian PR or Citizenship and Buying Property
Permanent residency or marrying an Australian citizen can facilitate the process of getting FIRB approval.
You cannot get PR if you buy property in Australia. While it owning real estate can help your PR application, it does not automatically qualify you for it.
What Property Types Can You Buy?
When it comes to property types, the Australian government labels residential properties as either “new dwellings” or “established dwellings”. However, this is a little different for 491 visa holders.
“491 visa holders can buy new dwellings without restrictions, but are only allowed to buy one established dwelling for their personal residence and cannot rent it out.”
Still, approval is usually needed before acquiring a new dwelling, and temporary residents must abide by specific conditions when buying land for development. For instance, in some cases, development must be completed within four years from the date of approval.
Home Financing Options for 491 Visa Holders
Not all lenders might be willing to give loans for temporary residents. The borrowing limits and lender preferences for 491 visa holders might also be different depending on the borrower’s situation.
Borrowing Limits
To buy a residential property in Australia, they may be able to borrow up to 80% of the property value, as long as they are allowed to work in Australia for at least 12 months.
Additionally, they must get approval from the Foreign Investment Review Board (FIRB) to buy a residential property.
Preferences of Lenders
This can vary. Some lenders may be willing to lend up to 70% to 95% of the property value, but they may impose additional fees and higher interest rates than Australian citizens or permanent residents.
On the other hand, if the borrower is married to or in a relationship with an Australian citizen, New Zealand citizen or Australian permanent resident, some lenders may offer better terms.
You can speak to a mortgage broker like Soho Home Loans to discuss your options.
Government Benefits and Incentives for 491 Visa Holders
While 491 visa holders may be eligible for some government benefits and incentives, such as the First Home Owners Grant (FHOG) and other government benefits, their temporary resident status limits them in some ways.
For example, temporary residents can only apply for the first home owners grant (FHOG) if their partner is a citizen or PR. And they are not eligible for other government benefits like welfare and Medicare.
Can Temporary Residents Use Foreign Income for Mortgage Applications?
The good news is that it is possible to use foreign income for mortgage applications, but, not all lenders are willing to accept it.
Some lenders may have a simplified process for verifying income. They could accept foreign tax returns, pension statements and rental receipts as proof of income.
They generally use 80% of this revenue in their calculation. This is done to accommodate any changes in the exchange rate.
The Advantage of Buying Property with an Australian Partner
If you are thinking about purchasing property with an Australian partner, this could make the road a lot easier. Not only can it help you avoid the foreign stamp duty surcharge, but it also allows both partners to be listed on the mortgage.
Lenders often favour the Australian citizen or permanent resident to be the primary income earner in a partnership with a 491 visa holder, as they see it as a lower risk and with stronger connections to Australia.
Costs and Fees Associated with Property Purchases for 491 Visa Holders
The costs and fees in property purchases for 491 visa holders can add up quickly.
On top of the usual costs like stamp duty, legal fees, and other associated costs, 491 visa holders must also pay the FIRB acquisition fee and potentially face a foreign owner surcharge.
The FIRB acquisition fee is contingent upon the price of the acquisition and must be paid upon acquiring an interest in residential land. Moreover, the foreign owner surcharge is an additional amount for stamp duty paid by temporary visa holders and foreigners.
Compliance with FIRB Policies and Potential Consequences
When purchasing property in Australia, it is absolutely necessary for 491 visa holders to comply with FIRB policies to avoid serious consequences. Violation of these policies can result in criminal & civil penalties and the forced sale of the property.
To make sure that you are well-informed and compliant with the investment policies, we recommend you consult with the FIRB.
Tips for 491 Visa Holders Considering Property Investment
If you’re a 491 visa holder thinking about investing in Australian property, property investment, we recommend you wait for permanent residency before purchasing property in Australia.
This helps you avoid the long administrative process in getting approvals as well as the additional costs associated with temporary resident status. Also, it will provide you with more favorable financing options.
Contacting local migration agents can also be helpful.
Summary
Buying property in Australia as a 491 visa holder is possible, but it comes with its own set of challenges and restrictions.
From understanding the unique visa implications to obtaining FIRB approval, adhering to the eligibility criteria, and sourcing financing options, the journey of property investment as a temporary resident can be long.
Having said that, with the right guidance, information, and assistance, it is possible to enter the property market in Australia.
By following the suggestions and recommendations in this guide, you may make the most of your temporary resident status and confidently invest in the Australian property market.
Frequently Asked Questions
What are the benefits of 491 visa?
With the 491 visa, you can live, work, and study in Australia permanently and take advantage of all the awesome lifestyle benefits Australia has to offer. If you’re looking to explore different career options or different cities, you can also do that and find the right lifestyle for you.
Can I apply for PR while on 491 visa?
Yes, you can apply for permanent residency while on the subclass 491 visa in South Australia. To be eligible, you will need to have lived and worked in a designated area for three years, with the primary applicant’s taxable income for each of the three financial years being no less than $53,900.
Additionally, you must meet the eligibility requirements set out on the Department of Home Affairs website.
What are the conditions after 491 visa is granted?
When you receive a 491 visa, the visa holder can reside in the designated area of Australia for up to five years, with permanent residency potentially available after three years. Eligible family members are also able to accompany them and must share the same requirements of living, working and studying in the designated region.
Do you get permanent residency if you buy a house in Australia?
No, buying a home in Australia does not grant you permanent status. The Australian government takes into account a variety of additional considerations in addition to your talents, credentials, work experience, and financial assets when evaluating your application for permanent residency.
