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Australia: Guide to Buying Costs and Procedures

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Last Updated: Jul 24, 2007

Buying costs are moderate in Australia

How high are realtors’ and lawyers’ fees in Australia? What about other property purchase costs?

Transaction Costs

Who Pays?
Stamp Duty 1.25% - 6.75% buyer
Registration Fee 0.01% - 0.6% buyer
Conveyance Fees 0.5% - 2.00%
0.4% - 2.00%
buyer
seller
Realtor's Fee 1.6% - 9.80% seller
Costs paid by buyer 1.76% - 9.35%
Costs paid by seller 2.0% - 11.87%
ROUNDTRIP TRANSACTION COSTS 3.76% - 21.15%
See Footnotes
Source: Global Property Guide

How difficult is the property purchase process in Australia?

The policy of the Government of the Commonwealth of Australia in regards to residential real estate is an inward-looking, conservative one, to say the least. Acquisition of residential real estate by foreign nationals and corporations is subject to Foreign Investment Review Board (FIRB) approval. FIRB approval is not required by Australian citizens resident abroad, or for acquisitions in residential-zoned properties by foreign nationals holding permanent resident or “special category” visas (i.e. New Zealand citizens), or by foreign nationals purchasing with their Australian spouse as joint tenant.

Priority is given to foreign investment in areas that would directly increase housing stock. Not only would the quantity of the housing stock would be affected, it would also bring benefits to the local construction industry and their suppliers. The wariness of the government on foreign influx in developed residential real estate stems from a desire to avoid excess demand, create greater stability of housing prices as well as encourage the supply of new dwellings that would benefit Australians, whether through ownership or lease.

Since government approval is obligatory in acquiring residential real estate in Australia, it is inadvisable to sign a contract before securing approval from the FIRB, unless the contract allows for a grace period for securing government approval, prior to completion.

Buying property involves the following steps:

  1. The seller must secure a title search, plans, easements and covenants recorded in title from the Land and Property Information department. These documents must be attached to the Contract of Sale.
  2. The seller should also secure a Zoning Certificate from the Municipal Council as well as Drainage Diagram from the Local Water Authority.
  3. The solicitor for the buyer must then prepare a transfer form (given that there are no outstanding interests in the property) for execution of the sale.
  4. The contract and transfer form must then be sent to the Office of State Revenue, where it is stamped and duties settled.
  5. The transfer form and certificate of title are then sent to the Land and Property Information Department for registration.





Footnote to Transaction Costs Table

The round trip transaction costs include all costs of buying and then re-selling a property – lawyers’ fees, notaries’ fees, registration fees, taxes, agents’ fees, etc.

Stamp Duty:
Stamp duty depends on the value of the property and follows a sliding scale. Stamp duty is paid by the buyer when the contract is sent to Office of State Revenue. If the contract is not stamped within 3 months, an exchange penalty is due on the amount of stamp duty payable at the rate of 12.78% per year.

For easier reference, the Sunday Morning Herald has an online stamp duty calculator.
http://www.smh.com.au/business/money/tools/tax/stampduty.html

Stamp duty on property transfers varies by State, thus:

VALUE OF THE PROPERTY, AU$

DUTIABLE VALUE, AU$ (US$) MARGINAL STAMP DUTY RATE
New South Wales (Sydney)
Below 14,000 1.25%
14,001 - 30,000 175 + 1.5% of excess over 14,000
30,001 - 80,000 415 + 1.75% of excess over 30,000
80,001 - 300,000 1,290 + 3.5% of excess over 80,000
300,001 - 1,000,000 8,990 + 4.5% of excess over 300,000
Over 1,000,000 40,490 + 5.5% of excess over 1,000,000
Australian Capital Territory (Canberra)
Up to 100,000 2%
100,001 - 200,000 2,000 + 3.5% of excess over 100,000
200,001 - 300,000 5,500 + 4% of excess over 200,000
300,001 - 500,000 9,500 + 5.5% of excess over 300,000
500,001 - 1,000,000 20,500 + 5.75% of excess over 500,000
Over 1,000,000 49,250 + 6.75% of excess over 1,000,000
Victoria
Up to 20,000 1.4%
20,001 - 115,000 280 + 2.4% of excess over 20,000
115,001 - 400,000 2,560 + 5% of excess over 115,000
400,001 - 500,000 16,810 + 6% of excess over 400,000
500,001 - 870,000 25,660 + 6% of excess over 870,000
Over 870,000 5.5%
Victoria (principal residence)
Up to 20,000 1.4%
20,001 - 115,000 280 + 2.4% of excess over 20,000
115,001 - 400,000 2,560 + 5% of excess over 115,000
400,001 - 500,000 16,810 + 6% of excess over 400,000
500,001 - 870,000 25,660 + 6% of excess over 870,000
Over 870,000 5.5%
Queensland
Up to 20,000 1.5%
20,001 to 50,000 300 + 2.25% of excess over 20,000
50,001 to 100,000 975 + 2.75% of excess over 50,000
100,001 to 250,000 2,350 + 3.25% of excess over 100,000
250,001 to 500,000 7,225 + 3.5% of excess over 250,000
Over 500,000 15,975 + 3.75% of excess over 500,000
South Australia
Up to 12,000 1%
12,001 to 30,000 120 + 2% of excess over 12,000
30,001 to 50,000 480 + 3% of excess over 30,000
50,001 to 100,000 1,080 + 3.5% of excess over 50,000
100,001 to 200,000 2,830 + 4% of excess over 100,000
200,001 to 250,000 6,830 + 4.25% of excess over 200,000
250,001 to 300,000 8,955 + 4.75% of excess over 250,000
300,001 to 500,000 11,330 + 5% of excess over 300,000
Over 500,000 21,330 + 5.5% of excess over 500,000
Western Australia
Below 80,000 2%
80,001 to 100,000 1,600 + 3% of excess over 80,000
100,001 to 250,000 2,200 + 4% of excess over 100,000
250,001 to 500,000 8,200 + 5% of excess over 250,000
Over 500,000 20,700 + 5.4% of excess over 500,000
Tasmania
Below 1,300 AU$20
1,301 to 10,000 1.5% of excess over 1,300
10,001 to 30,000 150 + 2% of excess over 10,000
30,001 to 75,000 550 + 2.5% of excess over 30,000
75,001 to 150,000 1,675 + 3% of excess over 75,000
150,001 to 225,000 3925 + 3.5% of excess over 150,000
Over 225,000 6,550 + 4% of excess over 225,000
Northern Territory
500,000 and below (0.065 x V2) + 21V where V = property value/ 1,000
Over 500,000 5.4%
Source: Global Property Guide

Land Transfer Registration Fee:
Paid to the Land Titles Office (in NSW and NT), this fee is for the transfer of ownership to the buyer. It varies from state to state, with certain states imposing a fixed fee while others impose a variable fee based on the purchase price. The solicitor or conveyancer typically pays this on behalf.of the buyer. The registration fee is paid to the Department of Natural Resources in Queensland or Department of Land Administration in Western Australia.

In New South Wales, registration fee is AU$75 regardless of size or value of property. In South Australia, registration fee for properties worth above AU$40,000 is AU$194 plus 0.6% of value above AU$50,000.

Property Conveyance Fee:
Solicitor’s or Conveyancer’s fees are paid for the documentation necessary for a property purchase. Property conveyance can be done by a solicitor (lawyer), a conveyancer (a land broker, land agent or settlement agent), or even the buyer and the seller. In the Canberra, Queensland and Tasmania, solicitors have a monopoly on conveyance, while in Victoria a conveyancer must work with a solicitor. In other states, the parties are free to choose.

Solicitor's fee are generally negotiable and can be a fixed amount, an hourly rate (with or without ceiling), or a percentage of the property value (typically around 1% to 2%). GST is always paid, thus, it is worth asking if the fixed fee is already inclusive of the GST.

Some lenders provide property conveyance as a free service to borrowers. Separate conveyance fees are usually paid by both the buyer and the seller (in some states the buyer’s costs are higher, as there’s more work involved).

Realtor's Fee:
Except for Queensland, real estate agent's fee is negotiable in all states.


TYPICAL AGENT'S FEE

PROPERTY VALUE, AU$ (US$) MAIN CITIES SUBURBS
New South Wales 2% - 2.5% 2.5% - 3.5%
Australian Capital Territory 2.5% 2.5% - 4%
Victoria 1.6% - 2.5% 2.5% - 3%
South Australia 2% - 2.75% 2.75% - 3%
Western Australia 3 - 3.25%
New Territories 2.5% - 4%
Source: Global Property Guide

Agent's commission in Queensland is set by the government at a maximum of 5% of the first AU$18,000 of the sale price and 2.5% of the balance of the sale price (plus 10% GST).

In Tasmania, agent's fee is freely negotiable, nevertheless, the Real Estate Institute of Tasmania recommends the schedule below (inclusive of GST, as of July 2007).


TASMANIA: REAL ESTATE AGENT'S COMMISSION

PROPERTY VALUE, AU$ (US$) RATE
10,000 and below 9.81% with a min of $100
10,001 to 50,000 $981 + 5.35% of excess over $10,000
50,001 to 100,000 $3,121 + 3.75% of excess over $50,000
Over 100,001 $4,996 + 3.55% of excess over $100,000
Source: Global Property Guide

 

Australia - more data and information

Your Comments

posted by Kevin Davies | 2008-06-03

Researcher

This information is most valuable. However feedback from the market is that the cost of discovery of property interest information relevant to a transaction is growing rapidly, and so is transaction risk, as it is not now practical to warrant that all potential interests will or can be discovered at transaction time. Usually this is an on-cost to the conveyance and of similar scale. Are these costs included in your breakdown of transaction costs ?

posted by our Editor: Matthew Pollock | 2008-06-03

No. The problem I see would be - how would we quantify such costs?

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