Top 10 Tips When Buying Sydney Property
Sydney is an incredibly beautiful city with its almost year-round sunshine and stunning harbour and beaches. It offers a unique lifestyle, with beautiful beaches and ‘affordable’ housing within 10 km of the CBD. However, there are unique issues to be aware of when buying Sydney real estate. Whether you are buying an investment property or your dream home or apartment, here are ten tips to help you navigate the process.
1. Stamp Duty
Stamp duty is a tax that is payable by the buyer when purchasing a property. It is payable within three months from the date of your exchange of contracts. It is important to factor in stamp duty when you are calculating your budget as the higher the cost of the property, the higher your stamp duty. In NSW, it is approximately 4.7% of the purchase price. For example, the stamp duty on a $2,000,000 property is $95,500. The amount of stamp duty varies between states and in NSW, the Office of State Revenue is responsible for implementation of stamp duty.
To calculate your stamp duty, visit the Office of State Revenue NSW website: www.osr.nsw.gov.au.com.au
2. Land Tax
Your principal place of residence is generally exempt from land tax if the land value is less than $3 million, however, where the dutiable land value exceeds $3 million, you are liable for premium property duty. For more information on premium property duty, view our Property Buying Costs article. If you are planning on renting out the property then you are liable for land tax.
3. Building and Pest Inspection
Get a Building and Pest Inspection done on the property BEFORE you make an offer. If you are buying an apartment, you also need to do a strata search to ensure the financial health of the apartment complex and the body corporate.
Make sure you have a conveyancer / solicitor review the contract before bidding at auction or making an offer. By reviewing the contract prior to auction it gives you the opportunity to negotiate things with the vendors such as:
- the amount of deposit (5% instead of standard 10%)
- or length of settlement.
5. Buying at Auction
If you are buying a property at auction and are the winning bidder, you need to be aware that there is no cooling off period as there is when buying a house via private treaty. You also need to pay the deposit, usually 10% by either personal cheque or a deposit bond, immediately following the auction. As discussed above, you will need your solicitor to have reviewed the contract, to have conducted a building and pest inspection pre-auction and you will need to have your financing in place.
6. Building and Contents Insurance
We recommend you take out building and contents insurance upon exchange of contracts. Once contracts are exchanged, you have entered into a legally binding agreement that you will purchase the property. Therefore, if something unforeseen happens to the property after you have exchanged contracts and the vendor does not have any, or sufficient insurance on the property, you are still obligated to complete the transaction. You are safeguarding your interests.
7. Renovations in Sydney are Expensive
Be aware that building and renovating in Sydney is expensive. It can still be an excellent option for buyers, however it is important to know the approximate costs of renovating / building and factor them into your purchase price before buying a renovator’s delight and being surprised by the building quotes. For Sydney renovations within 20kms of the CBD, be prepared to pay $3,000 – $4,000 per square metre (sqm) depending upon the finishes you select. Obviously you can pay more than this and you may be able to pay less, however this is a guide to use in your initial calculations.
8.Development Applications on Neighbouring Properties
Check with the local council to ascertain whether there are any outstanding development applications on neighbouring properties. You don’t want to discover that your water view is going to be blocked by the neighbours adding another storey to their house. Council websites freely list current development applications on properties so you can geographically search for pending construction around your desired property.
9. Factors That May Negatively Affect The Value of Your Home
Busy artery road? Beside a school? Underneath flight path? Cold and dark due to wrong aspect?
When you inspect a property at a certain time of day or on the weekend, some of the factors listed above may not be apparent. For example, a quiet road on a weekend may turn into a busy artery road during the week. A house beside a school may have constant parking and traffic flow during the week but be quiet on the weekend. View a house at only one time of the day and you may not discover the true natural light in the property. In Sydney, the most desired outlook is a North or North Eastern exposure, so it is desirable for your main living areas or backyard to be facing north. The sun rises in the east and moves across the northern sky during the day and sets in the west.
To help avoid these pitfalls, the property needs to be visited at different times of the day as well as during the week and the weekend.
10. Use a Buyers Advocate
Buyers advocates can help you navigate the minefield of buying a property. Your buyers agent should have good relationships with the local real estate agents – if they don’t then don’t use them. These relationships allow buyers agents to know of properties that are quietly on the market that other buyers are not aware of. Since buyers agents are repeat customers, real estate agents know that a buyers agent is a serious buyer. Buyers agents have an in depth knowledge of the area and see multiple properties every day, so all the research is done for you and they know the market value of these properties.
So if you think using a buyers advocate might help you and you’d like to save money on your Sydney property purchase, contact: Bernadette Brennan, Principal of Premier Home Finders for a free consultation and obligation free quote.