Have you been thinking about entering into the property market but you don’t know where to start? Maybe you want to buy your first home, an investment property or a vacant block to build the home of your dreams.
Whatever the case may be, we have spelled out the most important things to know about buying property so that you don’t have to go searching.
1. What is Stamp Duty?
Stamp duty is a tax that is payable for the transfer of property. This means that when you purchase property you will also have to pay stamp duty on that purchase. There are some exemptions for stamp duty so make sure you seek legal advice on whether any of these exemptions apply to you and your circumstances
2. Get your finances in order!
Buying a property is a big financial commitment. It is important that you understand all of the financial implications involved and have secured adequate financing before you enter into a contract to purchase a property. It is very helpful to seek out a mortgage broker to help with this part of the process.
There are two types of financial approval that you can get being conditional approval (otherwise known as pre-approval) and unconditional approval. The main difference between the two is that unconditional approval means that your lender has completely assessed and approved your loan, whereas conditional approval requires you to meet further conditions before you receive your loan. For this reason, we always recommend that you receive unconditional approval so that you can be assured you are able and ready to purchase your property at settlement.
3. What is unregistered land?
Unregistered land is land that you can purchase “off the plan”. This means that the Development Application to create the land has not yet been approved. There can be some risks with purchasing unregistered land so ensure that you seek legal advice to understand these risks and implications before you proceed with a purchase.
4. Take advantage of financial assistance schemes!
When you are buying a property, every penny counts! For this reason, we recommend that you make sure you are aware of any financial assistance schemes that are offered in relation to the purchase of a property.
For instance, a well-known scheme is the First Home Owners Grant. One of the benefits that this scheme offers is a whopping $10,000.00 towards the purchase price of your first home, regardless of whether you are building or buying. The requirements to receive this grant include that it must be your first home, it must be a new home that has not previously been lived in, and it cannot be worth more than $750,000.00.
5. What is the cooling-off period?
The cooling-off period is a short window after signing the contract where you are still able to withdraw from the purchase without facing serious legal and financial consequences. After the cooling-off period ends you are bound by the contract to purchase the property as agreed between you and the seller.
During the cooling-off period, we will provide our advice on the contract and negotiate any amendments to ensure that you can be completely satisfied that your decision to purchase the property is the right one! We also use the cooling off period to conduct any due diligence reports including pest and building reports and/or a strata report. Typically, the cooling-off period is also used to ensure you secure your unconditional finance approval unless it has already been obtained prior to signing contracts.
6. Be aware of any restrictions relevant to the land!
Land is often subject to various restrictions which impact what you can and cannot do on that land. These restrictions are unique to each parcel of land so it is important that you seek legal advice before you purchase a property. Being aware of restrictions on the land is particularly relevant if you plan to undertake any form of work on the property.
7. Be aware of the zoning restrictions over the land!
Similar to restrictions, how the land is zoned will also impact what you are able to do on the land. For this reason, it is important that you get legal advice on zoning restrictions to ensure that the land is fit for your purposes. Again, it is particularly important to be aware of the zoning if you plan to undertake any work on the property, such as building new dwellings or altering anything that currently exists on the land.
8. Different methods of sale have different repercussions!
Different ways of purchasing property have different outcomes and consequences. For example, if you purchase a property through an auction, there is no cooling-off period. This means that once the hammer falls, if you are the highest bidder, you are bound by your bid. The only scenario whereby you will get a cooling off period from the auction process is if you exchange contracts (i.e. contracts are signed and dated) the day after the auction takes place. This means that if you sign the contract on the same day of the auction, even if it is after the property has been passed in, you will not get a cooling off period. This is a common misconception when it comes to purchasing property at an auction and it can lead to detrimental consequences.
That is why we strongly advise that you seek legal advice to ensure you understand all of your rights and obligations before you purchase a property via any means. We would also advise that you undertake all due diligence necessary such as getting the necessary reports done. This is discussed in further detail below.
9. Get your property inspected!
It is vital that you undertake all the necessary due diligence before you purchase a property. We highly recommend that a pest and building report is carried out on the property. This is because when you purchase a property you are purchasing it in its current state and condition. It is therefore vital that you are aware of any issues relating to the property before you purchase as you will not have a right to rescind the contract if you discover them after the property has been transferred to you. We also recommend that you invest in a strata report if it is deemed to be relevant for your purchase.
We typically suggest that these reports are undertaken during the cooling-off period as discussed above in point 5. These inspections and reports are important because they can help you discover if there are any issues in a property and can also give you peace of mind when making such a significant financial purchase.
10. Explore your options!
There are so many different types of property that you can purchase, from vacant land to house and land packages, to units or apartments, to investment properties. To ensure that you are making a purchase that is the best fit for you, take time to explore all of your options.
But… the most important thing to know before you buy a property is whether you have the right legal representation to assist you throughout the process!
Here at Marsdens Law Group, we understand how important these decisions are and strive to uphold our values of excellence, community, integrity and trust in all that we do.
So if you are considering buying a property, please do not hesitate to contact us so that we can support you in this exciting next step of your journey.
The contents of this publication are for reference purposes only. This publication does not constitute legal advice and should not be relied upon as legal advice. Special legal advice should always be sought separately before taking any action based on this publication.