Please note we are currently unable to quote for insurance in Australia
Introduction – Australian nationals are investing in buy to let property for rental purposes as well as for second homes and holiday homes, particularly in coastal areas. An amazing 8% of Australian nationals now own second holiday homes. The largest age group of holiday home owners are the semi – retirement, the 50 – 64 year olds, who (according to recent studies), spend more time in their holiday home than younger age groups with second homes. These younger age groups tend to only occupy their holiday homes for 5 to 6 weeks per year; the rest of the time the property stands empty. The trend for second home ownership is also to purchase within the State the homeowner lives in to cut travelling time – bearing in mind the massive expanse of Australia and consequent flying or driving times across the country to get from A to B. A recent Trevor Atherton study also showed that changes in lifestyle and financial pension planning were driving the demand for holiday home ownership across Australia. In addition, local residents where second homes are located (mostly sitting empty) are sometimes getting angry about excessive noise and general disturbance levels from holiday makers. Local councils have responded to residents concerns piecemeal by creating new zones, taxes and restrictions on landlords and holiday makers, to try and protect community spirit and local tax payers. Over the last 20 years, the economic prosperity Australia has also attracted not just Australian nationals but also overseas property investors from the UK and other countries, (hoping to cash in on the rental and property boom). The Australian Government has recognised this trend and has proactively responded by new political policies, to protect it’s own citizens interests with regards to access affordable housing and protection of the environment.
Holiday Home Insurance Risks in Australia – whether the homeowner is an Australian national or an overseas property purchase, all interest groups will need adequate Australian holiday home insurance to protect the potential rebuild cost of the building and to replace lost or damaged contents of the dwelling. Assetsure can provide Australian holiday home insurance. The main risk to coastal based holiday homes is weather damage and the longer term impact of climate change. In the last forty years, 95% of the largest 20 property losses in Australia for general insurers have been weather related. Flood damage accounts for about one third of the insurance resulting from damage to property. Flooding is becoming more unpredictable as freak storms create flash flooding, not just in flood plains situated near rivers and creaks but also in coastal areas too. The total number of properties residing on flood plains is approximately 170,000. It is essential that potential holiday home owners check the small print of their holiday home insurance australia policy document – in terms of exclusions, restrictions and levels of cover. The ‘Insurance Council of Australia’ is working on a national flood mapping model as at the moment local flood mapping is only undertaken by local authorities. Having local knowledge of the risks that may impact the value of your holiday home are critical – it is not always easy to find out what these risks are if you are a foreign property buyer or investor living half way around the world…
Buying a Property in Australia – Official Steps for Foreign Investors – to control over speculation in the housing market, the Australian Government has a restrictive policy designed to force foreign investors to formally apply to buy a property. It aims to stop speculative practices as well as increase the number of property/ homes available in supply. This is to ensure a slower more manageable growth in property prices and access to residents of all incomes to purchase a second home. A summary of the conditions and exceptions of this policy are listed below:-
- Australian citizens with foreign spouse
- Australian expatriates
- Foreign nationals holding a permanent resident visa
Conditions and Restrictions
- Vacant land purchases must be developed on with 12 months
- Purchases of existing residences must be occupied within 12 months
- Off plan apartment units in a larger development are normally approved straight away, as long as; a) the dwelling has never been occupied and b) less than half the units on the development are owned by foreign property investors.
- Property that is already occupied is not normally available to foreign investors to purchase. The exceptions to this rule are foreign nationals or companies with executives for are resident in Australia for more than 12 months
- There is no pre-approval process for overseas holiday home investors. So if the application is declined (after you have bought your holiday home) you will be forced to sell the property.
- Decision normally take 30 days
- The Foreign Investment Online Application System is designed to assist foreign investors who wish to purchase an Australian holiday home
- If you are seeking to buy a holiday home for letting purposes be sure you familiarise yourself with the regulatory rights of tenants living in your investment property. For instance you must give the tenant a copy of the Consumer Affairs Bureau booklet ‘The Renting Book’