Booklet: Buying Property in NSW (Chapter 1 – Introduction)

Booklet: Buying Property in NSW

Below is Chapter 1 of our ‘Buying Property in NSW’ booklet. To read the other chapters of our booklet, click the links below:

Purchasing property in New South Wales (NSW) is a significant investment and a complex process that requires careful consideration and planning. This booklet outlines some of the main factors you need to think about before making a property purchase. While this is not an exhaustive list, it covers crucial aspects that every potential purchaser should consider to ensure a smooth and informed buying experience. 

For most people, a property will likely be one of their biggest assets in their lifetime. When the market is not in your favour as a purchaser, you need to make sure that you have done everything that you can to make sure that you are ready to put forward an offer for a property and to follow through on the offer.​ If you would like to speak to our team further about buying property, call us on 1300 654 590 or email us at wehelp@adlvlaw.com.au. 

Beyond the price you’re willing to offer, there are several key elements to address such as:

Ownership

In Australia, there are various ways to own property, each with its own legal implications. Understanding these forms of ownership is crucial when purchasing property. You can own property as: 

  • A sole proprietor; 
  • Joint tenants; or 
  • Tenants in common.

Financing arrangements

Are you planning to secure a loan from a bank? If so, have you obtained pre-approval? Do you have a mortgage broker assisting you with this process?

Consider if the loan needs to be guaranteed and who would guarantee it. It is important that the guarantor receives independent legal advice regarding their obligations. 

If you are not using a bank loan, will you be using your own funds or receiving funds from family? If you are receiving funds from family, is it a loan or a gift? How will this be documented? It is important for all parties to consider any effect this may have on future inheritances.

Tax and duties

Purchasers will face different taxes and duties depending on their residency/citizenship status and whether the property will be their primary residence or an investment property that forms part of a portfolio. 

Do you understand the amount of stamp duty that needs to be paid? You should always check if you are eligible for any exemptions or concessions, or if you may be required to pay a surcharge. 

Your lawyer should also advise you on whether you need to withhold a portion of the purchase price to remit to the Australian Taxation Office (ATO) upon settlement. 

You should consider whether you will need to pay land tax on the property once you own it, and factor this into your holding costs for the property.

Due diligence

Are you satisfied with the condition of the property and all of its inclusions? Have you arranged for a building inspector to inspect the property? Have they prepared a report that identifies the condition of the building and are you satisfied with this report? 

If you are buying an apartment, have you inspected the strata report so that you can understand the periodic and special levies you will need to pay? Are you comfortable with the 10-year plan the owners corporation has in place to maintain the structural integrity of the building?

Terms of the contract

The contract is divided into 2 main parts: details about the purchase and details about the property. The first part, comprising of standard and special clauses, outlines the key terms of the purchase. This includes the settlement period and the parties involved. You should understand the obligations of you and the vendor, and what happens in the event of a breach. Consider your ‘worst case scenario’ and make sure the contract protects you in that event. 

The second part of the contract describes any encumbrances that may be registered on the title to the property. You should also be aware of any inclusions and exclusions related to the property. 

If there are any special agreed terms between you and the vendor (or their agent), you should ensure these are incorporated into the contract via special conditions.

General timeline

  1. Pre-approval: Obtain pre-approval from your lender. Note that pre-approval is often only valid for 3 months.
  2. Due diligence: Conduct your due diligence, including inspecting the property yourself, and review the contract. Purchasers should seek assistance from lawyers to review the contract and strata report.
  3. Negotiations: Once familiar with its terms, negotiate the contract with the vendor (via their agent). This is your opportunity to negotiate not only price but also other terms you want for the purchase.
  4. Exchange: Once there is offer and acceptance on the purchase price and the terms of the contract have been negotiated to the satisfaction of both parties, exchange contracts. Ensure you obtain advice regarding whether you have a cooling off period (usually 5 business days), or if you are locked in on signing. The deposit is typically payable immediately on exchange. 
  5. Settlement: There will be a gap between exchange of contracts and settlement. This is called the settlement period, which is usually 42 days (6 weeks). In this time, you should ensure you have the relevant funding in place and that your bank and your lawyer are ready to complete the purchase on your behalf. You then need to complete the purchase on the settlement day by paying the balance of the adjusted purchase price less any deposit.  

Navigating the purchase process can be overwhelming. We recommend engaging a lawyer to guide you through the process. Andreyev Lawyers can provide advice and ensure all elements are thoroughly reviewed and understood. To speak to our team, call us on 1300 654 590 or email us at wehelp@adlvlaw.com.au. 

To download a PDF of our booklet, enter your email below.

 

The information contained in this post is current at the date of editing – 21 August 2024.

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