(03) 9720 2922

Jansen Walsh & Grace


 


 Reminder.  To qualify for the 25% reduction in duty (50% for a new home), you must sign the Contract of Sale by 30 June.

“What do I need to know before I go looking to buy?”


Deposit for my first home.  Most first home buyers struggle finding the 10% deposit for their home.  Even if you have the 10%, your lender usually makes you take out lender’s mortgage insurance if you do not have a deposit of 20%.


You can now purchase a home with a deposit of 5% with help from the First Home Loan Deposit Scheme.  You must make your application to your lender.  You will need a Notice of Assessment from the Australian Taxation Office to demonstrate your taxable income for the previous financial year.



“Do I have enough to pay stamp duty?”  Every transfer is subject to land transfer duty (formerly known as stamp duty) on the value of the property.  However, there are several exemptions and concessions.  The most common ones are where you are:

  • a first home buyer;
  • a pensioner;
  • buying your principal place of residence;
  • buying your home off-the-plan.




"This is my first home."   You may be eligible for up to three.


Land transfer duty has been abolished for your first home if the purchase price is below $600,000.  This will enable you to put more of your savings towards paying off your new home.  If the home you are buying is between $601,000 and $750,000, you will still be eligible for a concession on duty, applied on a sliding scale.  The duty exemption and duty concession applies to both new and established homes.  Australian Defence Force personnel are exempt from the residence requirements for the first home buyer duty exemption and concession.


In addition, you are eligible for a land transfer (stamp) duty waiver of 50% on the purchase of your home if it is a new home and the sale price is less than $1 million.  If it is existing home or vacant land, the duty will be discounted by 25%.  You must use the property as your principal place of residence.  These deductions apply to contracts entered into before 1 July 2021.

Finally, you may be eligible for the $10,000 first home owner grant.  The property you are purchasing must not have been previously sold as a place of residence, occupied as a home, or used for the provision of short-term accommodation, such as Airbnb.  A new home can be a home that is substantially renovated, or a home built to replace demolished premises.  It cannot be an investment property or a holiday house. 






“I am a first home buyer and I am buying off-the-plan”  If you are a first home buyer, you may be eligible if dutiable value of your property, after applying the off-the-plan concession, does not exceed $750,000.


The amount of the duty concession depends on how advanced the construction of the building is and its value when the Contract of Sale is signed.  If construction is close to completion, the duty is likely to be higher.


In addition, you are eligible for a land transfer (stamp) duty waiver of 50% on the purchase of your home if it is a new home and the sale price is less than $1 million.  If it is existing home or vacant land, the duty will be discounted by 25%.  You must use the property as your principal place of residence.  These deductions apply to contracts entered into before 1 July 2021.



"Am I eligible for the pensioner duty exemption or concession?"  If you are the holder of an approved concession card (not merely because you are receiving the age pension), you are entitled to this exemption or concession on land transfer duty. The exemption is for properties up to $330,000 and the concession applies on a sliding scale to properties to $750,000. However, you must:

  • purchase the property for market value;
  • intend to reside in it as your principal place of residence.

The home may be an established home, a home built under a house and land package (where the person who sells you the land also builds the home as part of the agreed price), or a home that is built within 3 years of acquiring the land.  We can calculate the land transfer duty and the transfer registration fee, if you wish.  The calculation of the concession or exemption gets complex if one spouse or partner has an approved concession card and the other does not.  No land transfer duty is payable if you are purchasing an apartment or unit in a retirement village.  We have a separate page with information if you are buying an apartment or unit in a retirement village.


In addition, you are eligible for a land transfer (stamp) duty waiver of 50% on the purchase of your home if it is a new home and the sale price is less than $1 million.  If it is existing home or vacant land, the duty will be discounted by 25%.  You must use the property as your principal place of residence.  These deductions apply to contracts entered into before 1 July 2021.

Finally, you may be eligible for the $10,000 first home owner grant.  The property you are purchasing must not have been previously sold as a place of residence, occupied as a home, or used for the provision of short-term accommodation, such as Airbnb.  A new home can be a home that is substantially renovated, or a home built to replace demolished premises.  It cannot be an investment property or a holiday house. 




"Can I get the principal place of residence concession?"     Even if you are not a first home buyer, you are entitled to a concession on land transfer duty on a sliding scale if:

  • the property is valued up to $550,000;
  • you use the property as your principal place of residence within 12 months after settlement;
  • you reside in the property as your principal place of residence for a continuous period of at least 12 months.


If you are borrowing to fund part of the purchase price, your lender will calculate the land transfer duty and the transfer registration fee. However, we can calculate the land transfer duty and the transfer registration fee, if you wish.


In addition, you are eligible for a land transfer (stamp) duty waiver of 50% on the purchase of your home if it is a new home and the sale price is less than $1 million.  If it is existing home or vacant land, the duty will be discounted by 25%.  You must use the property as your principal place of residence.  These deductions apply to contracts entered into before 1 July 2021.

“I am buying off-the plan”  Even if you are not a first home buyer, you may be eligible if
the dutiable value of your property, after applying the off-the-plan concession, does not exceed $550,000.  However, you must intend to reside in it as your principal place of residence.


The amount of the duty concession depends on how advanced the construction of the building is and its value when the Contract of Sale is signed.  If construction is close to completion, the duty is likely to be higher.


In addition, you are eligible for a land transfer (stamp) duty waiver of 50% on the purchase of your home if it is a new home and the sale price is less than $1 million.  If it is existing home or vacant land, the duty will be discounted by 25%.  You must use the property as your principal place of residence.  These deductions apply to contracts entered into before 1 July 2021.



“I have found the house I want.  What should I check?”

The selling agent will give you a Vendor Statement and the Contract of Sale.  Do not sign the Contract of Sale until you check out the following.  Once you have signed, you are locked into the contract and you may have to go to the Supreme Court or the County Court to get out.  These are some of the things you should check.


Size of land  — what you must do before you sign.  A copy of the title for the property will be attached to the Vendor Statement along with a diagram showing its measurements.  It is important that you check these before you sign the contract.  You should also compare what you see and any plans the estate agent shows you with the shape on the title search attached to the Vendor Statement and check the shape of the land on LASSI.  It is free.  If you subsequently discover that the measurements of the land do not match those shown on the title diagram, there may be nothing you can do about.  Where there is any doubt, a licensed surveyor should be engaged before you sign.


Building — what you must do before you sign.  Another matter that should be checked before you sign the contract is the physical condition of any buildings on the property. There is unlikely to be any remedy against the vendor if you find out after you sign that the buildings have been constructed illegally, are infested by termites or defective in some other way.  The selling agent will tell you that you can have it subject to satisfactory building and pest inspection reports.  However, if you have already signed, then your rights are much more restricted.  The safest course of action is to have building and pest inspection reports before you sign the contract. 


Asbestos — what you must do before you sign.  Breathing in asbestos fibres can cause asbestosis, lung cancer and mesothelioma.  If the house was constructed before 2004, you should obtain a building report as to whether the construction materials include asbestos.




"Is the vendor concealing important information about the home I am buying?

Purchasers sometimes buy homes which were the scene of a murder, or are infested with termites, have hidden sinkholes or the building work is illegal.  Changes to the Sale of Land Act now require the vendor to inform you of the following in the Vendor Statement:

  • prior tests or investigations have revealed (or your or your agent otherwise know of) a defect in the structure of the building, a termite infestation, combustible cladding, asbestos (including loose-fill asbestos insulation) or contamination through prior uses of the property;
  • the underlying cause of an obvious physical defect is not readily apparent upon inspection (for example, whilst a large uncovered crack in a wall would be obvious to a purchaser upon inspection, the underlying reason for the crack, such as defective stumping, may not);
  • there has been a significant event at the property, including a flood, or a bushfire;
  • there is a history of pesticide use in the event the property had been used for horticulture or other agricultural purposes;
  • there are restrictions on vehicular access to a property that are not obvious during a property inspection (such as truck curfews or where access is via an easement that is not apparent on the Certificate of Title or plans);
  • facts about the neighbourhood surrounding the property which may not be immediately apparent upon inspection (such as sinkholes, surface subsidence, development proposals) that would likely affect the use and enjoyment of the property to a greater extent than the usual disturbances and inconveniences of occupying land of the kind and in the local area of the land being sold;
  • building work or other work done without a required building permit, planning permit or that is otherwise illegal;
  • the property during the current or previous occupation has been the scene of a serious crime or an event which may create long-term potential risks to the health and safety of occupiers of the land, such as:
    • extreme violence such as a murder;
    • use for the manufacture of substances such as methylamphetamine; or
    • a defence or fire brigade training site involving the use of hazardous materials.

Borrowing to fund your purchase  — what you must do before you sign.  If you are borrowing in order to fund part of the purchase price, you should make the contract subject to finance.




Cladding.  Service charges may be placed on land pursuant to a new Part 8B in the Local Government Act 1989 inserted by the Building Amendment (Registration of Building Trades and Other Matters) Act 2018.  The new part came into operation on 30 October 2018.


Rubbish — what you must do before you sign.  Sometimes the vendors leave the property in a poor state and you must clean up and remove old tyres and other rubbish at your own expense.  We suggest that the contract include a special condition that the vendors have an obligation to remove all old tyres, rubbish, etc at their own expense at settlement. 


“I am buying off-the-plan”
Legislation has been introduced to stop some shady developers from selling properties off-the-plan in order to show the pre-sales to the bank to get finance and then delaying registration and use the "get out of jail" card in the Contract of Sale to terminate the contract and resell the same property at a higher price, often to the same purchaser, who had to sign a new Contract of Sale to re-purchase the same property at a higher price.  The Act states that off-the-plan contracts cannot be terminated by a developer under a sunset clause unless ordered by the Supreme Court of Victoria or with your written consent.


"The estate agent will only submit my offer to the vendor if I use his conveyancer.  What can I do?"

Refusing to submit an offer unless you use his conveyancer breaches several laws.  The estate agent is attempting to earn a kick-back from the conveyancer.  At moment, referral fees paid by licensed conveyancers to estate agents is not illegal.  Consumer Affairs Victoria, in its Consumer Property Law Review, has expressed concern at the conflict of interests that may arise for licensed conveyancers who make a payment to an estate agent who has referred the vendor or purchaser to them.  It has been suggested, Consumer Affairs Victoria notes, that there should be a ban on the payment of referral fees or other commissions to estate agents as legal and ethical problems arise for the licensed conveyancer and also because the fee paid to the estate agent must be passed onto the client, resulting in higher overall charges for the client.  The Consumer Law Action Centre has made a submission that they should be banned.  Consumer Affairs Victoria is considering whether referral fees should be banned.




Traps for purchasers

There are a lot of dishonest people out there.  We mention some of the traps in this Guide, as well as the benefits of buying your own home.


Warning about rent-to-buy contracts

You should be wary of rent-to-buy contracts.   These are sometimes promoted by shady businesspeople.  The property is often overpriced and you end up paying a lot more than if you bought the property with a loan.  Legislation provides protections for people who purchase options to buy land as part of land banking schemes, including requiring money paid for options to be held in a trust.




Warning about paying the vendor's legal costs
Watch out!  Some vendors are tricking purchasers into unknowingly agreeing to pay part of the vendor's legal costs by disguising it in a special condition in the Contract of Sale.


We have also seen contracts signed by purchasers which allow the licensed conveyancer for the vendor to charge $1,150 for a default notice.


This is more than a lawyer would be allowed to charge and it is more than the major law firms charge for a default notice.  If you think this won't happen to you because you won't default, think again.  If you have a lender, then there is a real risk you will default.  A large number of banks, presumably because of the workload or because they do not have sufficient trained staff, are not ready to release the funds on the date fixed for settlement.  When that occurs, you will be in default.


Warning about paying 16% interest to the vendor

We also see many contracts in which the vendor is entitled to charge the purchaser 16% per annum for each day of default.  This is higher than the standard rate, which is currently 12% per annum.  As mentioned, you could default because your lender is not ready on the settlement date.  Tell the selling agent you want it reduced before you will sign the Contract of Sale.




"Can I inspect the property before settlement?"

The agent will contact you to arrange a time for you to inspect the property before settlement.  That will happen a few days before the settlement.  


"Can I claim damages from the vendor for default?"
When the purchaser defaults, it is easy for the vendor to seize the deposit and sue the purchaser for damages.  Not surprisingly, as the Contract of Sale is drafted by the vendor’s lawyers.  What if the vendor defaults?  Purchasers were often told by their lawyer or licensed conveyancer they had no remedy other than getting their deposit back.  The decision of the Supreme Court on 31 August 2020 shows that a purchaser can sue the vendor for damages.  In that case, the vendor was unable to get the mortgagee (a bank) to grant a discharge of mortgage and the caveator to give a withdrawal of caveat at settlement.  The Supreme Court awarded the purchaser damages for his loss.




Being the ATO's unpaid tax collector for GST

If you are buying off-the-plan or a brand new property, you will have to collect the GST and pay it to the Australian Taxation Office.  Under the new legislation, the GST, or an estimate of the GST, has to be collected and paid to the ATO on settlement on each sale.  It applies where settlement occurs on or after 1 July 2018, even if the contract was entered into before that date, but subject to the exception for existing contracts entered into before 1 July 2018 where settlement takes place before 1 July 2020.


The ATO was concerned it was missing out on GST owed by developers.  Some developers had sold off their developments, paid the builder and the bank and wound the company up without paying GST.


The ATO’s solution is to put the obligation on you to collect the GST on the purchase price and pay it to the ATO.  You become the ATO's unpaid tax collector.


The process involves giving a notice to the purchaser (even where the sale of your property is not a GST supply because it is exempt from GST) and completing two on-line forms which have to be lodged with the ATO.


This adds an additional layer of red tape to your property transaction.  Without a doubt, these extra steps add to the time it takes to complete your conveyance.  In addition, some conveyancing lawyers and licensed conveyancers may pass on the additional cost by increasing their fee.  If that occurs, you pay for the privilege of being the ATO's unpaid tax collector.


The information on this page is intended to help you if you are buying your own home.  We have separate pages with information if you are buying an investment property or your superannuation fund is buying a property.


About us

We have 40 years' experience assisting people in Melbourne's Outer Eastern Suburbs and the Yarra Ranges to buy their homes (conveyancing).




 

 



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Vermont South lawyers; Bayswater lawyers; Boronia lawyers; Studfield lawyers; Knoxfield lawyers Do you need conveyancing in Chirnside Park, Do you need conveyancing in Kilsyth, 
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Do you need conveyancing in Ringwood:  Do you need conveyancing in Heathmont?


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Vermont South lawyers; Bayswater lawyers; Boronia lawyers; Studfield lawyers; Knoxfield lawyers Do you need conveyancing in Chirnside Park, Do you need conveyancing in Kilsyth, 
Lawyers Vermont Do you need conveyancing in Lilydale, Do you need conveyancing in Mitcham, 
Do you need conveyancing in Montrose, Do you need conveyancing in Mooroolbark,
Do you need conveyancing in Nunwading, Do you need conveyancing in Mount Evelyn, Do you need conveyancing in Narre Warren East, Do you need conveyancing in Scoresby, 
Do you need conveyancing in Tecoma, Do you need conveyancing in Upper Ferntree Gully, 
Do you need conveyancing in Upwey, Do you require conveyancing in Ferny Creek, Do you need conveyancing in Kallista, 
Do you require conveyancing in Kalorama, Do you need conveyancing in Macclesfield, 
Do you require conveyancing in Menzies Creek, Do you need conveyancing in Monbulk, Do you require conveyancing in Mount Dandenong, Do you need conveyancing in Olinda, 
Do you need conveyancing in Sassafras, Do you require conveyancing in Selby, Do you need conveyancing in Sherbrooke, Do you need conveyancing in Silvan, 
Do you require conveyancing in The Patch, Do you need conveyancing in Tremont, 
Do you need conveyancing in Vermont, Do you need conveyancing in Badger Creek, 
Do you need conveyancing in Chum Creek, Do you need conveyancing in Coldstream, Do you need conveyancing in Dixons Creek, 
Do you need conveyancing in Gruyere, Do you need conveyancing in Healesville, Do you need conveyancing in Steels Creek, Do you need conveyancing in Tarrawarra, Do you need conveyancing in Yarra Glen, Do you need conveyancing in Yering, Don Valley, Do you need conveyancing in Hoddles Creek, Do you need conveyancing in Launching Place, 
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