Repost: Bye Bye Banks And Hello New 1.5B Foreign Investor Fund

Chinese buyers with no Australian residency or local family connection can still get property loans here thanks to a newly established billion dollar fund that caters specifically towards their needs.

Victorian-based brokerage firm Lending HQ launched its funding options on Monday at Investorist’s China Connection Roadshow in Shanghai and Shenzhen held from March 27 – 31 with in excess of $1.5 billion loan-ready pool of funds for both residential and development loans.

“On our first day of China Connection in Shenzhen, the response to the Lending HQ fund offering has been extremely positive.  It’s a great confidence boost for our Chinese agents and their clients, plus the developers here launching their Australian projects, knowing their deals can be finalised without issue.”

“Competitive funding options such as those arranged by Lending HQ, are set to shake up the big four banks once they get wind of just how much business is being written outside their loan books,” Investorist CEO and founder Jon Ellis said.

Ellis said the funding options were created specially to service foreign investors who have been locked out from lending through the various Australian financial institutions in recent months.

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“This new fund is set to be a game changer, particularly in the new build property market which attracts large numbers of non-resident buyers. It does give customers the opportunity to ‘bypass the banks’ and source finance at very competitive interest rates. Many hard working foreign buyers, who satisfy all the same borrowing criteria as Australians as well as FIRB (Foreign Investment Review Board) rules, have been penalised by banks’ blanket lending restrictions applied to all non-residents,” Ellis said.

“The pent-up demand for this type of non-bank lending is high in China. We expected an enthusiastic response at our China Connection events, where hundreds of local agents are introduced to our developers’ projects – and it’s certainly proven to be true. Having a financing solution available to take to their Chinese buyers has added tremendous confidence to their decision making,” Tim Graham, Sales Director – Asia Pacific for Investorist told Elite Agent.

“Investorist has no management role or involvement at all in the fund.  It is merely working with Lending HQ principals to introduce the loan products to the thousands of active users of the Investorist marketplace, both network partners such as real estate agents, migration agents, financial advisors and sellers such developers and project marketers,” Graham said.

Graham said the primary target was initially for Chinese investors who wished to buy property in Australia as they had difficulty securing finance from Australian banks due to their non-resident lending policies, adding there was also strong interest from Malaysian and Singaporean investors.

“Developers, and agents looking to find lending solutions for their clients would deal directly with the fund operators. The operators of the fund can be as hands on with the customer as needed or can send through a list of applicant requirements for the agent to complete themselves, and then the fund operators do the rest,” added Graham.

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Article Repost From – https://eliteagent-com-au.cdn.ampproject.orgJune Ramli – Staff Writer

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NAB, Westpac raise interest rates for property investors

National Australia Bank has hiked interest rates for property investors, the latest in a series of recent pricing increases by major lenders to offset pressure on profits.

NAB (NAB), the third biggest home lender by market share, today said variable rates for new and existing investors would rise by 15 basis points, effective Monday December 12, increasing the cost to 5.55 per cent. In contrast, owner-occupiers will continue to pay 5.25 per cent.

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Westpac today also raised interest-only rates for investors and owner-occupiers by 8 basis points, citing the need to maintain “prudent lending practices”.

NAB chief operating officer Antony Cahill said the bank didn’t make the decision “lightly”, having to balance the needs of customers and shareholders in an “increasingly challenging environment”.

“A low-rate environment poses considerable challenges to all lenders, and we must respond to what is happening in the economy and the market,” he said.

The repricing of rates for existing customers will boost profits from NAB’s $100 billion of investment loans on its books. The bank also has $135bn of mortgages to owner-occupiers, according to the regulator’s most recent data.

It marks the biggest rate repricing by the big banks since holding back half the August cash rate cut. It also follows the industry’s hiking of investor loans mid-last year in an attempt to comply with the regulator’s cap on lending to landlords.

While the 10 per cent annual growth cap worked to slow lending to investors, demand has been recently picking up again. According to the Reserve Bank, system-wide annual investor credit growth bottomed at a seven year low of 4.6 per cent in August, before steadily rising to 5.3 per cent in October.

NAB’s move comes ahead of the RBA’s final board meeting of the year tomorrow, which is widely expected to result in the official cash rate being held at 1.5 per cent.

Despite the cash rate being on hold since August and greater political scrutiny on the industry, banks have recently been raising various home loan products to offset rising funding costs, slowing credit growth, hot competition and regulatory changes.

Last week, Commonwealth Bank raised a range of fixed mortgage rates, following similar moves by Westpac. NAB’s online subsidiary UBank also lifted variable home loan rates by 10 basis points, while junior lender ME also raised rates for new customers by up to 15 basis points.

Martin Crabb, head of research at broker Shaw and Partners, told clients today it wasn’t surprising banks were hiking fixed rates.

“Funding costs are soaring,” he said.

Mr Cahill said the banks’ recently reported lower net interest margins “particularly in home lending, and they remain under pressure”. He said the bank took account of a range of factors, when adjusting rates including being required to have more “stable” funding such as deposits, elevated overall funding costs, regulatory requirements and the “competitive pressures at play”.

The big four banks’ combined profits eased 2.5 per cent last year to $29.6bn. Profitability metrics — such as return on equity and net interest margins — also decreased.

“We will continue to regularly review our products and pricing, and make decisions that enable us to achieve a balance for all stakeholders – borrowers wanting to buy a home or grow their business, depositors and investors seeking a return on their investment, and our shareholders who rely on our dividends,” said Mr Cahill.

Westpac chief of consumer banking, George Frazis, said standard principal and interest mortgages were priced at a lower interest rate because they encouraged customers to pay down the loans, reducing the bank’s capital requirements.

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“We believe it is necessary to slightly increase the price differential between interest-only and principal and interest home loans. We are encouraging customers, where appropriate, to move to the lower principal and interest home loan at no additional cost until March 31,” he said.

Article By: Michael Bennet / Reporter

Source: http://www.theaustralian.com.au/business/financial-services/

Property Investment in Australia: A Guide for Overseas Investors

 

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The Australia Government views foreign investment as a nest for the country’s growth. Its foreign investment policy on property emphasizes investment into “new dwellings.” Partly, as a way of creating construction jobs but also to enhance economic growth.

It is a favourable view, particularly for an overseas investor. Investing in Australian property has become a popular way of expending money for profit. And not just because of the laxity of the government, but also because:

  • The Australian property market is stable.
  • There’s consistent capital growth
  • Government policies are direct and less restrictive
  • Australia is generally a great place to live.
  • Property investment in Australia is considered a safe investment.

Be that as it may, the government imposes certain guidelines that foreign investors must understand and comply with. Otherwise they face harsh penalties.

This article shades some light on how to invest in property in Australia as an overseas investor. Hopefully it can help you avoid some of those harsh penalties.

 

What Property can you Purchase as a Foreigner?

First of all, no purchase of Australian property can be made by a foreign citizen without the approval of the Foreign Investment Review Board (FIRB). Committing yourself into a transaction before getting approval is not advisable.

Second, as a foreigner normally, you are not allowed to purchase established properties. You can, however, apply to purchase new dwellings.

According to the FIRB, new dwellings are properties that have never been sold by the developer or been occupied before for more than 12 months. Anything other than that (apart from commercial residential premises, including hotels) is considered as an established dwelling.

Foreign persons can also buy vacant residential land for development.

Any purchase is subject to foreign investment approval which is usually without conditions for purchase of new dwellings. For purchase of vacant land, approval is on condition that construction of a new dwelling is completed within four years.

What are the FIRB Fees?

An application fee is sanctioned by the FIRB and the Australian Tax Office before approval is awarded to purchase residential real estate in Australia.

The fee differs depending on the size of investment.

Value of Real Estate Investment (AUD) FIRB Application Fee (AUD)
$0 – $1,000,000

$1M – $1,999,999

$2M – $2,999,999

$3M –$3,999,000

$4M – $4,999,999

$5M – $5,999,999

$6M – $6,999,999

$7M – $7,999,999

$8M – $8,999,999

$9M – $9,999,999

$10M or more

5000

10100

20300

30400

40600

50700

60900

71000

81200

91300

fees are tiered per million

 

Tax Treatment on Rental Income and Capital Gains

Rental Income

In every year that your property earns an income, you will have to complete an Australian tax return.  Claims for deductions for certain kinds of expenses are welcome. Just make sure that you notify your tax advisor. He/she will be able to use that information in completing your tax return.

The tax treatment of your rental income depends on whether:

  • It exceeds all of your deductible expenses—that’s it is “positively geared.”
  • It is equal to your deductible expenses — “neutrally geared”,
  • It is less than all your deductible expenses — “negatively geared”.

Capital Gains

Australia charges a Capital Gains Tax (CGT). Basically, capital gains are added to your taxable income in the respective year and taxed accordingly, usually at a marginal rate no greater than 47%.

 

About Finding and Selecting a Property to Buy

Where and what you buy will affect the return on your investment. Consider this before selecting a property to buy:

Choose an area where there’s potential for growth. The main goal for a foreign investor should be towards getting a good return on their capital.

Coincidentally, Australia’s property market is rife with opportunities to grow your wealth. Most investment grade property are situated in the big cities, especially Sydney, Melbourne, Brisbane, and Perth. Geelong in Victoria and Newcastle in New South Wales have been in good shape for the better part of the last decade. Darwin, the capital of the Northern Territory, and coastal areas like Queensland’s Gold Coast are all sitting at different stages of the property cycle. Mining towns like Port Hedland in Western Australia experience stellar capital growth with varied slumps.

Follow the usual investment indicators to guide to you, such as proposed infrastructural changes in a suburb that could affect its future house prices.

 

What are the Property Purchase Costs?

The direct purchase costs involved with buying property in any of the Australian states include Government stamp duty, land transfer, and mortgage registration fees. Victoria, New South Wales, and Queensland include a stamp duty surcharge fee for foreign investors in addition to the above.

Other costs include legal/conveyancing fees, architectural and pest inspection fees, loan application fees, insurance cover and pro-rata adjustments for services, such as strata, water and council rates.

Overall, the costs can be quite substantial. You will need to include them in your financing considerations as they play an important role in your final decision.

In conclusion, property investment in Australian is not at all difficult. By following the appropriate professional advice at every stage of the process and meeting the FIRB requirements, you’ll be okay.

Reference: http://www.investinproperties.com.au