What Costs Are Involved When Buying Property in Australia?

Buying property in Australia involves more than the deposit. A range of additional upfront and ongoing costs may apply depending on the property, the state or territory, the buyer's circumstances and the loan structure. Understanding these costs before entering a contract can help buyers plan more effectively and avoid financial surprises at settlement.

The deposit is the amount of the purchase price that the buyer contributes from their own funds rather than borrowing from a lender.

A contract deposit may be payable after the contract is signed or becomes binding. Depending on the transaction and jurisdiction, it may be paid into a real estate agent's trust account, to the seller's legal representative or under another arrangement specified in the contract.

A contract deposit of up to 10% is commonly requested in some transactions, but the amount may be negotiated and practices vary. The contract deposit forms part of the purchase price and is not an additional charge on top.

The total amount the buyer needs to complete the purchase may be greater than the contract deposit. Buyers may also need funds for the balance of their contribution at settlement, transfer duty, conveyancing, inspections, lender charges and other purchasing costs.

Transfer duty is a state or territory government tax that may apply to certain property purchases and transfers.

The amount payable can depend on factors including the applicable dutiable value, jurisdiction, property type, buyer circumstances, intended use and eligibility for concessions or exemptions.

Transfer duty can be one of the larger purchasing costs. Rates, thresholds, concessions and payment timeframes vary and may change over time.

Confirm the likely amount and payment requirements with the relevant state or territory revenue authority, conveyancer, settlement agent or solicitor before becoming unconditionally committed to the purchase.

See our guide, Stamp Duty Explained in Australia, for further general information.

A conveyancer, settlement agent or solicitor may assist with the legal and administrative aspects of a property purchase, including reviewing the contract, conducting title and property searches, preparing transfer and settlement documents, liaising with the lender and managing settlement.

The services required, professional qualifications and terminology vary between states and territories. Fees also depend on the complexity of the transaction, searches, disbursements and other work required.

Obtain a written quote that clearly identifies professional fees, searches, government charges and other disbursements before proceeding.

A building inspection provides an assessment of the property's condition and may identify visible defects or areas requiring further investigation. A pest inspection may identify evidence of termites, timber pests or other pest activity.

The appropriate timing and contractual treatment of inspections depend on the property, jurisdiction, contract and method of sale. Buyers may arrange inspections before making an offer, before signing a contract, during an applicable cooling-off period or under an inspection condition where permitted.

Auction purchases and unconditional offers may provide less opportunity to complete inspections after committing to the purchase.

Inspection scope, qualifications and costs vary by property, location and provider. Confirm what is included in the report and obtain local quotes from appropriately qualified inspectors.

Some lenders may charge fees when a loan application is submitted, approved or established. These may include application, establishment, processing, package or administration fees.

Not every lender or loan product charges the same fees, and some fees may be waived or bundled into a package.

Confirm all upfront and ongoing lender fees, when they are payable and whether any are refundable before accepting a loan offer.

A lender may arrange a property valuation as part of its assessment of the loan and the property offered as security. Depending on the lender, loan product and valuation type, the cost may be paid by the lender or charged to the borrower.

Other lender-related settlement, document preparation or administration fees may also apply.

Confirm:

• whether a valuation fee applies;
• whether additional valuations may incur further charges;
• which settlement or administration fees are payable; and
• whether any fees are included in a loan package.

These lender charges are separate from conveyancing, settlement-agent, solicitor and government registration costs.

Government registration fees may apply when ownership of the property is transferred and when a lender's mortgage is registered over the title.

The applicable fees, calculation methods and payment arrangements vary by state or territory, document type and transaction.

These charges are separate from transfer duty, conveyancing fees and lender charges.

Confirm the applicable title transfer, mortgage registration and other government fees with your conveyancer, settlement agent, solicitor or the relevant land titles authority.

Lenders Mortgage Insurance, commonly called LMI, is insurance that protects the lender, not the borrower.

LMI may apply where a borrower has a higher Loan-to-Value Ratio, commonly above 80%, although the threshold, premium and eligibility requirements vary between lenders, loan products and borrower circumstances.

The cost may depend on factors including the loan amount, LVR, lender, mortgage insurer and borrower profile. It may be paid upfront or, subject to lender approval, added to the loan balance.

Where LMI is added to the loan, the total amount borrowed may increase and interest may be charged on the higher balance.

See our guide, Understanding LVR and Lenders Mortgage Insurance in Australia, for further general information.

At settlement, certain property-related charges may be apportioned between the buyer and seller so that each party is responsible for the relevant period of ownership.

Adjustments may include council rates, water charges, land tax, strata or owners-corporation levies and other amounts, depending on the property, contract and jurisdiction.

The adjustment may result in either the buyer or seller receiving a credit or debit in the settlement statement.

A conveyancer, settlement agent or solicitor will generally calculate and explain the applicable adjustments as part of the settlement process.

Moving costs may include removalists, packing materials, temporary storage and insurance for belongings in transit.

Connection and setup costs may include electricity, gas where applicable, water services, internet, telephone, security systems and other household services.

Costs vary depending on the distance moved, property size, service providers, existing connections and the level of assistance required.

Obtain quotes early and allow an additional buffer for unexpected moving or connection expenses.

For properties in a strata, community-title or similar managed scheme, ongoing levies may be payable to a strata company, owners corporation, body corporate or other scheme manager.

Levies may contribute to common-property maintenance, administration, insurance, reserve or sinking funds and major works.

Before purchasing, review available financial statements, levy notices, budgets, reserve or sinking-fund balances, meeting records, insurance information, planned works and any current or proposed special levies.

The records available and the name of the relevant body vary by jurisdiction and scheme type. A strata, community-title or owners-corporation report may assist with this review.

Buyers may need to arrange building insurance, contents insurance or other appropriate cover in connection with the purchase and ownership of a property.

The date from which the buyer should hold building insurance depends on the jurisdiction, contract, property type, method of sale and when risk passes under the transaction. Strata properties may also have building insurance arranged through the relevant scheme, although this may not cover the buyer's contents, improvements or personal liability.

Investment-property owners may also consider landlord insurance, while owner-occupiers may need contents and other personal cover.

Confirm the required insurance, insured amount and commencement date with the insurer, lender and conveyancer, settlement agent or solicitor before committing to the purchase.

Even after building and pest inspections, maintenance items, safety work, appliance replacement, cosmetic improvements or unexpected defects may need attention after settlement.

Allow a separate budget for urgent repairs, essential services and desired improvements. Obtain quotes where possible and retain a contingency amount for issues that were not identified before purchase.

Costs of owning property extend beyond the mortgage repayment and may include:

• Council rates
• Water and utility charges
• Building and contents insurance
• Strata, owners-corporation or body-corporate levies
• Property-management fees for investors
• Maintenance and repairs
• Land tax where applicable
• Security, gardening and pool maintenance
• Appliance replacement
• Utilities and service subscriptions

Land tax treatment depends on the jurisdiction, property use, ownership structure, exemptions and the owner's total landholdings.

These expenses are separate from the mortgage repayment and should be included in ongoing affordability planning.