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Investing In Melbourne Property
Disclaimer
This presentation is not to be considered legal or
financial advice. The advice provided on this presentation
is general advice only. It has been prepared without
taking into account your objectives, financial situation or
needs. Before acting on this advice you should consider
the appropriateness of the advice, having regard to your
own objectives, financial situation and needs.
Investing In Melbourne Property
• Why Melbourne?
• About Melbourne
• Finance
• Tax
• Legal
• Visas
• Property Management
• The Purchase Process
Why Melbourne?• World’s most livable city 2011,
2012, 2013, 2014*
• Healthcare
• Infrastructure
• Education
• Security
• Culture and Environment
• Sport
*The Economist Intelligence Unit (EIU) Global
Liveability Survey
About Melbourne• Located in the state of Victoria
• Most densely populated state in
Australia
• Second largest city in Australia
(4.17 million people)
• Over 75% of the state live in
Melbourne city
• 66% of Melbourne is Australian-
born
About Melbourne• Fastest growing area in Australia
• 10.5% population increase from 2012-
2013
• Districts surrounding Melbourne’s CBD
grew by 15%
• Melbourne growing faster than Sydney
over the past decade
• Over 65,000 new permanent residents
to Victoria a year (2011-2012)
Economy• Victoria has the second largest
economy in Australia
• Accounts for 25% of the country’s
GDP
• Largest income sectors are finance,
insurance and property
• Largest single employer is
manufacturing
• Fastest growing sector is the service
industry
Education• Melbourne University - oldest
university in Australia
• Monash University – largest
enrolment of nearly 56,000
students
• 30% of student population are
International students
• Over 200,000 international students
in Victoria
Historical Performance• Capital appreciation historical
average over past 10 years
• Apartments – 7% per year
• Houses – 8% per year
• Rental yield 4-5.6+% depending on
location and unit type
• Information openly available from
the REIV (Real Estate Institute of
Victoria)
Occupancy Rate• Amount of homes that are occupied
• Melbourne’s average over 96%
occupied
• Good rental market
• High number of owner occupied
• KL luxury condominiums have
occupancy rate of only 70% or less
Regulation• 10% down payment held in a trust
• By Australian regulation, this money
can’t be touched by the developer
• Upon settlement, this 10% is
transferred to the bank with interest
gained*
• 70% of units must be sold before
developer’s bank loan kicks in
Financing• Local loans allow maximum of 70%
financing
• Australian dollar loans allow 80% financing
• Australian banks can’t discriminate on age
• Current interest rate is the lowest for over
50 years
• Australian dollar weakened with the Ringgit
against the US Dollar
• Interest only loans for up to 15 years
Tax Benefits For Foreigners• Depreciation of fixtures and fittings
over 5 years, i.e. light fittings, blinds,
cupboards, etc.
• Claim property inspection as tax
deductibles (air ticket,
accommodation, food, transport etc.)
• Borrowing expenses can be claimed
as a tax deductible
• Used to offset your rental income
• Accrue tax credits if you eventually
move to Australia
Stamp Duty Savings• State of Victoria has stamp duty
incentives for buying new
properties
• Encourage new developments in
the state
• Stamp duty is proportional to
construction completion
• Off-the-plan projects, stamp duty is
on land value only
Fees• Body corporate
• Similar to management fee in Malaysia
• Used to maintain the building or area
that you live in
• Paid by the home owner
• Council fees
• Fees to offset public services
• Waste collection and disposal services
for your neighborhood
• Maintain parks and gardens
• Roads and planning
Conveyancing
• Conveyancing is the process of transferring ownership of a
legal title of land (property) from one person or entity to
another
• E.g. from developer to purchaser
• Conveyancers don’t necessarily have to be lawyers but
usually are
• Prepare, clarify and lodge legal documents – e.g. contract
of sale, memorandum of transfer
• Research the property and its certificate of title – check for
easements, type of title and any other information that
needs addressing
• Put the deposit money in a trust account
• Calculate the adjustment of rates and taxes
• Settle the property – act on your behalf, advise you when
the property is settled, contact your bank or financial
institution on when final payments are being made
• Represent your interest with a vendor or their agent
Australian Visas• You don’t need a visa to buy
Australian property
• FIRB application is required
• Buying one property does not
qualify you for a residency
• Buying multiple properties to
form a business may qualify
for a business visa
Australian Visas• Foreigners must sell their property
back to a resident
• Choose locations where locals want to stay
• Foreigners can only buy new
property, not sub sale
• Permeant residents qualify for first
home buyers grant
• Permanent residents can sell and
buy property to anyone
Property Management• Advertise your property for rent
• Show your unit to potential tenants
• Shortlist and filter tenants
• Inspect your unit for defects upon
receiving from the developer
• Collect rental
• Pay any fees from rental
• Organize for fixes on your unit
• Typically 7% of rental is charged as
their fees
Reserve Lot & Booking Fee
Issuance of Contract of Sale
Contract Signed 10% Deposit PaidExchange of
Contract of Sale
Pre-Settlement & Inspection
SettlementKeys Handed To
Client
Engage Conveyancer If Required
Apply FIRB If Required
Apply For Loan If
Required
The Purchase Process
The Purchase Process
• Purchaser pays booking fee
• Within 7 days of paying booking fee:
• The Sales and Purchase Agreement (SPA) is signed and
the 10% down payment is transferred to a trust account
• Legal fees (if any) are paid
• Apply FIRB if required
• 3-6 months before the project is completed loan
application process begins
• Pre-settlement and inspection of the property
• Upon settlement date the remainder down payment is
collected (10-30% depending on loan margin financing)
plus stamp duty and transferred over to the same trust
account as mentioned above
• Stamp duty is paid on top of the down payment amount
and varies depending on size and location of the property
• The loan can be settled externally by the client or with
a mortgage house or partner banks both locally or
overseas
• Keys are collected by purchaser or property manager
Thank YouFor more information on investing in Australian property, please contact
William Lee at:
+6 018 2388 972
