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Fees

Extra costs when buying property in Australia

The fees associated with buying a home in Australia usually total between 4 and 6 per cent of the purchase price, which is lower than in many other countries, although they can be over 6 per cent.

Most fees are calculated as a percentage of the value of the property you’re buying, so the more expensive the property, the higher the fees. Even removal costs are higher if you have a large house (unless you have a lot of empty rooms). If you’re buying and selling, you must consider the cost of both transactions. The main fees are as follows (although they change regularly and, in the current slow market, there are calls to reduce or abolish some of them):

Stamp Duty – Stamp duty varies considerably according to the price of a property and also with the state or territory. Average stamp duty rates are around $2,000 (on a $100,000 property), $4,600 ($200,000 property) and $14,000 ($400,000 property). Stamp duty also varies according to the type of buyer. In some states, it’s lower for first-time buyers or is waived altogether. For example, in May 2004 NSW introduced the First Home Plus scheme, under which first-time buyers are exempt from paying stamp duty on homes costing up to $500,000. First-time buyers also receive a discount on stamp duty for homes costing between $500,000 and $600,000. Victoria introduced similar legislation in March 2004, with first-time buyers receiving a cash grant of up to $5,000 to help pay towards stamp duty. The ACT has abolished stamp duty for first-time buyers for homes costing up to $273,000, and first-time buyers with modest incomes can apply for stamp duty discounts. See www.stampoutstampduty.com.au/rates for the latest situation in each state.

Land Transfer Registration – This fee is for recording a change of owner at the Land Titles Office and is payable each time a property is sold. It’s either a flat fee or a variable fee based on the price paid and varies from state to state. The fee on a $100,000 property, for example, is $56 in NSW (fixed fee) and around $460 in South Australia (variable fee – around $960 on a $200,000 property).

Legal Fees – Legal fees are usually between 1 and 2 per cent of the purchase price, but may vary according to the work involved. Legal fees vary considerably from state to state, e.g. from around $550 in Adelaide, Perth and Hobart to around $1,750 in Brisbane for a property costing over $100,000. The fees in most states are within the $550 to $1,100 range.

Solicitor’s or Conveyancer’s Fees – These are the fees for the documentation necessary for a property purchase. There isn’t a fixed charge and the cost of conveyance can range from around $500 to $1,700.

Government Taxes – There are federal and state taxes on financial transactions that vary according the state or territory.

Mortgage Fees – A range of fees is associated with mortgages, including a mortgage application or establishment fee, a valuation fee, legal fees, maintenance fees and a loan registration fee.

Termite & Pest Inspection – This is compulsory in some states, while in others it’s sufficient to certify that a property is free of termites and pests. However, a termite inspection is always recommended, whether required by law or not. The inspection costs from around $150 to $250 and may be paid by the vendor or the buyer or shared.

Strata Inspection – When you’re buying an apartment (unit), it’s wise to have a strata inspection (relating to the Strata Titles Act), which tells you whether there have been any administrative or structural problems with the building. Strata inspections cost from around $180 to $250.

Inspection or Survey Fee – Although it isn’t compulsory to have a building inspection or a structural survey carried out, it’s often wise, particularly when you’re buying an old detached house. You should allow from $400 to $500 for a structural survey.

Building Insurance – It’s a condition of lenders that properties are fully insured against structural and other damage. It may be necessary to insure a property from the day you sign the purchase contract.

Miscellaneous Costs – If you’re buying a new home, you may need to pay an architect’s and other fees. You also usually need to pay utility connection, reconnection, registration or transfer fees for electricity, gas, telephone and water. Although not a fee as such, removal costs must also be taken into account.