Background and outline of basic principles of buying a home or an investment property in Perth.

If you have no visa you are considered a foreign national. As such you are still able to purchase certain types of property in Western Australia although, in principle, you cannot buy an established property. The following types of properties are able to be purchased by foreign nationals in Western Australia:

1. Brand new property. Foreign nationals can buy a brand new apartment, villa or house that has never been sold before or lived in and is offered for sale directly by the developer. A foreign investor is not allowed to buy an established home or a property that has previously been sold to a private individual or company as an ‘off-the-plan’ opportunity. The sale is required to come straight from the developer to be considered ‘brand new’ under the Foreign Investment Review Board (FIRB) rule. The offer must be written subject to FIRB approval which is usually granted within 30 days. See link: FIRB
2. Vacant land for residential development. When buying land for redevelopment the foreign national needs to adhere to certain rules:
   • Vacant land can be purchased for a single residential dwelling. Such a development must be completed within four years from the date of approval. Foreign non-residents will not be approved to purchase an established dwelling to redevelop into a single new dwelling.
   • Foreign national are normally allowed to purchase an established dwelling for redevelopment of multiple dwellings in Australia however, they cannot rent out the existing dwelling prior to demolition. They also have to prove that this redevelopment genuinely increases the housing stock. It is the same as for single residential dwelling; the developers need to complete the development within four years of the date of approval.
   • As with brand new properties, the Offer for purchase of land needs to be written subject to FIRB rule.

   The brand new properties or (developed) vacant land properties acquired under this category may be rented out or sold freely at any time.

Foreign nationals residing in Western Australia on (temporary) working, student or bridging visas are considered temporary residents and, as such, have wider choices when buying property. Temporary residents are entitled to buy an established home, although for primary residency purposes only, not as an investment. Only one established property can be purchased by a temporary resident. This property has to be their principal place of residence in Australia.

If the temporary visa expires without being converted into a permanent residency, and the foreign national leaves Australia, the established property is not entitled to be kept as an investment property. In order to comply with FIRB rules, an established property that is purchased under a temporary visa has to be sold within three months from when it ceases to be their principal place of residence.

FEES FOR FOREIGN INVESTORS AND TEMPORARY RESIDENTS: An application for approval to purchase residential real estate by foreign or temporary residents will not be considered until the relevant application fee has been paid in full.

Scale of fees for FIRB approval:

Property Value                                         Fee

Under $1m                                               $5,000

Between $1m and $2m                        $10,000

Between $2m and $3m                        $20,000

For each further $1m increment in value add $10,000 per million.

There is a new penalty regime for breaches of the rules that apply to residential real estate purchased by foreign nationals and temporary residents. 

In order to ensure more equitable representation and favourable outcomes for themselves, more Perth property buyers are appointing their own independent buyer’s advocates. Are you considering buying property in Perth for the first time and wish to know more about origins of the current system in Western Australia?

Western Australia has adopted a similar model of property buying to the one practiced in Canada. The property buying process in both countries is streamlined and similarities exist, but in practice Perth property buyers do not seem to get as fair a deal as Canadian buyers. The points below highlight some of the key differences:

• Property buyers in Canada have the right to be represented by a buyer agent and do not have to pay for this right, as the buyer agent is entitled to share a portion of the Listing Agents Fee.
• Buyers in Perth, Western Australia, have no such guaranteed right but can opt to pay for the service. Property Buyers Services is a Perth buyer agent who can help you negotiate a property on a NO PURCHASE-NO CHARGE principle.
• A conjunctional sale (split commission sale between the selling and buying agents) in Western Australia is a discretionary right left entirely to the selling agent’s judgment.
• A conjunctional sale in Canada is mandatory, with the selling agent having no right to refuse a conjunctional buyer agent chosen by the buyer. Not in Western Australia.
• A selling agent in Western Australia has the right to discriminate against a conjunctional buyer agent in Perth chosen by the buyer.
• In Western Australia, the buyer does not have the right to make a complaint if the selling agent refuses to work with their conjunctional agent; only the seller, through the selling agent’s principal, can make a complaint.
• In both countries, the document used when presenting a formal offer to the seller is referred to as the Offer and Acceptance document. Once signed by both parties it is a legally binding contract.
• Western Australian selling agents act as dual agents in more than 98% of cases, i.e. they represent both seller and buyer. In Canada, the selling agent can also act as a dual agent and represent both parties, but this is very rare. In cases when it is practiced, the Canadian selling agent has to disclose the conflict of interest to the buyer. Under these circumstances, in Western Australia there is a conflict of interest where the contract (not only the property price but also the additional terms and conditions) is written by the selling agent who is paid by the seller.

So, although the principles of the Western Australian system are similar to those of the Canadian system, their implementation has been skewed to favour the seller, creating potential problems for the buyer.