Purchasing a property abroad is a major decision. Before purchasing in foreign property markets such as London, New York and Perth, a prospective buyer must understand the legality and money matters involved. They should also be aware of the restrictions imposed on foreign investors.
JLL Associate Director of International Residential Property Vanessa Chan pointed out that a prospective buyer must put into mind other considerations such as regeneration and government infrastructure around the property they want to purchase.
Chan also discussed how much it would take to process an overseas sale. She said that costs actually vary from country to country and city to city. For instance, in the United States, a lawyer's fee is typically about $5,000, letting and management fees are about 0.5 percent of the gross rent and a broker's fee ranges from 2 to 5 percent.
On the other hand, purchasing a property in London means paying stamp duty which ranges from 2 to 12 percent or more depending on the property's classification and location. Johns&Co Client Relationship Manager Duncan Peacock explained that starting April 1, 2016, an additional stamp duty levy of 3 percent will be imposed on all second home and buy-to-let purchases.
Strawberry Star Group chairman Santosh Gowda clarified that the additional stamp duty levy will only apply to properties located in England, Wales and Northern Ireland. He said that properties in Scotland may soon consider the same policy as the Scottish Parliament may introduce it soon. Furthermore, broker's fee in London ranges from 2 to 5 percent of the price of the property plus a 20 percent value-added tax.
Meanwhile, in Australia, foreign investors are required to pay an application fee before their applications to purchase a real estate property are processed. The fee for a residential property valued at A$1 million or less is A$5,000.
Chan also said that now is a good time to invest in London, New York and Perth. Transaction cost of purchasing a home in London is still relatively low, the New York market is still attractive and the Perth government has recently invested a lot of money in real estate.
