- The costs and disbursements involved in buying property in NSW.
- Budgeting for your next purchase.
Whether you are purchasing a property for the first or the fifth time, knowing what costs and disbursements are involved is crucial for planning. Whether you are obtaining a loan or using your own funds, you need to factor these costs in so that on settlement day you aren’t left short and scrambling to find more money or dipping into those rainy-day funds you’ve been saving.
So, what costs and disbursements do you need to factor in outside of the purchase price? We have listed and explained the most common costs and disbursements below:
Transfer duty (formerly called stamp duty)
Transfer duty is payable in NSW when you purchase property. The amount payable varies depending on the property’s sale price. For example, the amount of transfer duty payable on a property being purchased for $630,000 is $23,460.00. A transfer duty calculator is available on Revenue NSW’s website. We recommend using this helpful tool to determine how much transfer duty you would be liable to pay.
In saying this, if you are a First Home Buyer you may be eligible:
- To opt in for the annual property tax instead of paying transfer duty (First Home Buyer Choice); or
- To receive an exemption or concession from duty (First Home Buyer Assistance scheme)
Further information regarding these options for First Home Buyers is also available on the Revenue NSW website.
Your share of council rates, water rates and/or strata levies
Prior to settlement, we obtain information from the Council, the water authority and the strata manager (if applicable) in relation to current and outstanding rates and charges associated with the property. Adjustments are then made based on this information. The Vendor pays for anything outstanding and current charges up to the settlement date and the Purchaser pays the rates and charges from the settlement date until the end of the then current quarter, in advance. This way, the rates and charges are apportioned fairly.
This means that on settlement, in addition to the purchase price, the Purchaser is required to pay for their portion of the rates and charges associated with the property. This could equate to hundreds of dollars so it’s important you’re aware of this and have budgeted for it.
Land Registry Services charge fees for services involving land titles, plans and property information. When you purchase a property there is at least one document and sometimes several documents that need to be registered on title of the property. These include but are not limited to:
- Transfer of land – this document changes the name on title from the Vendor to the Purchaser and shows the consideration; and
- Mortgage – this document you sign with the bank. They take a mortgage over the property in exchange for advancing you the funds you require to purchase it.
Each of these documents incurs a fee of $154.20 from Land Registry Services. This fee is current as at the time of drafting this blog however is reviewed each financial year.
Pest and Building Report/Strata Report
Prior to exchange of contracts or expiry of the cooling off period, there are certain searches and reports that need to be carried out to ensure that you are fully informed as to the condition of the property and are alerted to any potential problems. These searches include Pest and Building Inspections and/or a Strata Report. The cost of these reports will vary depending on the location of the property and the inspector that you engage but on average you can expect to spend around $300 per report.
Several years ago, Conveyancing in NSW began transitioning to ‘100% digital’. Part of this transition included moving away from physical settlements and physical lodgement. Settlements and lodgement now take place electronically. PEXA is an electronic settlement platform. PEXA charge a fee, an electronic settlement fee, which is usually in addition to any legal costs quoted by your Solicitor or Conveyancer to act on your transaction. At the time of drafting this blog, the PEXA fee for acting on a single title transfer is $123.97.
When you purchase a property, you must engage a legal professional – a Conveyancer or Solicitor who will facilitate the legal process of buying for you. Your Conveyancer or Solicitors role in the transaction includes but is not limited to reviewing and providing advice on the Contract for Sale, negotiating the Contract terms, preparing settlement figures, processing any transfer duty and liaising with your lender.
The legal fees payable by you to a Conveyancer or Solicitor to act on your purchase of property will vary. Each firm is likely to have different fees and charges and a different way they structure them i.e. GST inclusive or exclusive and inclusive or exclusive of disbursements.
Here at Coutts, we understand the importance of budgeting especially when it comes to buying a property and such, we offer fixed legal fees for acting on your conveyancing transaction.
ABOUT MELINA COSTANTINO
Melina joined the Coutts team in 2010 working as a Licenced Conveyancer within our Property & Conveyancing team, based out of our Campbelltown office. Her commitment to client services saw her progress further and into the role of a Senior Licensed Conveyancer in July 2022.
She graduated with a distinction in the Advanced Diploma of Conveyancing and is accredited with the Australian Institute of Conveyancers NSW.
For further information please don’t hesitate to contact:
This blog is merely general and non-specific information on the subject matter and is not and should not be considered or relied on as legal advice. Coutts is not responsible for any cost, expense, loss or liability whatsoever in relation to this blog, including all or any reliance on this blog or use or application of this blog by you.