So you’ve decided to jump into the property market, and are looking for a great investment property that will hopefully set you on the path to wealth. Finding something within your budget will no doubt be your number one priority, but you’re probably also aware that there are a range of costs associated with purchasing a piece of real estate, including fees and charges from the banks and mortgage lenders, solicitors and surveyors. In this article we’re going to look at some of the most important costs you should plan for as part of your property investment strategy.
Every state in Australia imposes stamp duty (also know as transfer duty) on the purchase of properties, although the amount will depend where the property is located as every state has different rules. The stamp duty is generally based on the market value of the property or the purchase price (whichever is the higher amount). There are exceptions and stamp duty discounts although again the rules vary between each state and territory. As an example, in NSW if this is the first property you are buying you may be eligible for the first home buyer’s Plus Scheme which means that you pay no stamp duty on properties up to $500,000 in value, and properties valued between $500,000 and $600,000 receive a concession.
Stamp duty is also applied to the mortgage documents in order to make them legal documents, and the amount of duty payable varies between the states. Most banks and other lenders have information on the stamp duty rates and you can also find stamp duty calculators online that will help you estimate how much you will need for your investment property based on your circumstances.
Like stamp duty, registration fees are applied when you purchase a property and submit a document called a Transfer of Land with a State Title Office. In most cases this procedure is done by your solicitor or conveyancer, and the amount will vary depending on where the property is located although generally it is capped at around $1,400.[i] Additionally a registration fee imposed by the Government will be payable upon the transfer of the land.
Conveyancer or Solicitor Fees
As you can see from the above, having a solicitor or conveyancer can save you a lot of time and effort, and although you are allowed to act on your own behalf during the purchase and settlement phase it is not recommended by investment property experts. As a rough estimate, most conveyancers will charge no more than $1000 to $3000 depending on the amount of work required during the settlement stage of the property. Because purchasing a property can be complex and the rules are different between each state and territory, it is sensible to find someone experienced who will be able to take care of the paperwork for you, while also knowing the local rules and regulations.
If you are looking at hiring a conveyancer or solicitor when you purchase an investment property it is a good idea to ask for an estimate of their fees and charges in your initial discussions with them. This way you will be able to budget for their fees as well as the other charges you will be liable for.