In April 2017, the Federal Government announced that the 457-visa program
would be abolished by 2018. The 457 visa which allows skilled migrants to work in Australia would be replaced by two new Temporary Skills Shortage (TSS) visas: a two-year short-term visa and four-year medium-term visa.
So, with the 457-visa expected to be abolished by next year, what does this mean for 457-visa holders looking to buy a property in Australia?
What does the 457-visa changes mean for potential property buyers?
Firstly, the changes to the 457 visa
will not impact you. 457 visa holders can continue under their existing agreements and apply for permanent residency in accordance with their current visa. If you are planning on emigrating to Australia to live permanently, and decide to purchase a property then these visa changes should not affect you.
However, the property buying process for 457-visa holders can be complicated due to lenders changing their policies for 457-visa holders. In spite of this, if you have a stable income in a high demand profession, have over a year left on your current visa and the majority of your savings are in Australia, then lending might be more favourable towards you.
Bear in mind that you might also need to seek approval from the Foreign Investment Review Board. However, if you are planning on applying for permanent residency, then you might prefer to wait before purchasing a property and applying for a home loan, as permanent residents can secure finance far easier than someone classed as a foreign investor.
How much can you borrow?
For property buyers on a 457-visa, the amount that you can borrow from a lender largely depends on your situation including your employment history and marital status.
80% of the property value: Anyone on a work visa in Australia can borrow 80% with certain banks who are happy to work with foreign citizens living in Australia. This means that you need a 20% deposit to buy a property. Keep in mind that you will also need around 5% in purchasing costs for legal fees, stamp duty etc.
Buyers may be able to borrow 90% of the property value from some lenders, however it’s best to speak to a mortgage broker first to find out what your eligibility requirements are and our In-House Mortgage Broker can assist you with this.
Should you buy now or wait for permanent residency?
Buying property in Australia as a permanent resident is far easier and more affordable than buying property as a foreign buyer. You therefore might want to wait until your permanent residency comes through, especially if you don’t have that much longer to wait.
If you buy a property as a 457-visa holder, then you will have to pay a stamp duty surcharge in New South Wales, Victoria and Queensland. This surcharge is currently between 3% to 7%, depending on which state you buy in and can amount to thousands of dollars on top of what you will be paying for your property.
Property buyers on a 457-visa can avoid the stamp duty surcharge if they purchase in another Australian state that doesn’t apply the stamp duty surcharge to non-resident buyers. Property buyers can also avoid the surcharge if they buy with a permanent resident or Australian citizen.
Yet to receive a 457-visa?
If you have yet to emigrate to Australia on a 457-visa, then it’s best to check that your occupation is listed on the skilled migration list.
Under the new visas to commence in 2018, 268 occupations qualify for the two-year visa, whilst 167 occupations quality for the four-year visa. 216 occupations though which are currently covered by the 457-visa will no longer quality, such as Actors, Auctioneer, Dental Therapist and Flight Attendant.
It also means that those on the new two-year visa will not be able to obtain permanent residency, whilst the four-year visa will require a three-year minimum residency requirement before applicants can qualify for permanent residency.
This means that potential property buyers might soon face the same barriers that foreign buyers face, including the requirement for FIRB approval.
Get in Touch
To find out more about buying property as a 457-visa holder
and what the visa changes mean for you, get in touch with our iBuyNew Property Consultants today to discover more.
Call us today on 1300 123 463