When you buy a new house, everyone’s aware of the obvious costs. You’ll need to pay for a removalist, some packing boxes, and a physio to fix your back afterwards 😉 But you may be surprised by some of the little-known costs of buying a house that you also need to plan for.
1. Statutory fees
Everyone knows about stamp duty. If you’re a first home buyer you may be lucky enough to avoid a hefty sum, but otherwise it’s an obvious cost that you have to factor into your budget.
A lesser known charge is the registration fee payable to Land Use Victoria when lodging the Transfer of Land form. It is calculated based on the purchase price, and while nowhere near as much as stamp duty, it can be up to $3605 for a property worth $1.5m+. It’s worth checking out their calculator to estimate the fee so you’re not caught short.
2. Cleaning the property
I often get calls from disgruntled purchasers, complaining that the property is a pigsty or that items have been left behind. Who pays for the cost of clean-up and removal?
Under the contract, the vendor must deliver the property to the purchaser at settlement in the same condition it was in on the day of sale, except for fair wear and tear. This means that all fixtures and goods included in the sale should still be there, and all appliances should still be working. The vendor is also responsible for rectifying any damage, but does not necessarily have to leave the property clean and tidy.
If an issue is identified at the final inspection prior to settlement, buyers may normally withhold up to $5000 of settlement funds. The catch is that they must pay an equal amount, which is held by a stakeholder until the dispute is determined. So buyers need to weigh up the cost and effort of dispute resolution against rectifying the issue themselves. In most cases they decide that it’s not worth it.
In any event, it is increasingly common for vendors to remove the option of withholding funds from the contract altogether. The only other alternative is for the purchaser to claim compensation from the vendor after settlement, as settlement cannot be delayed. The reality is that once vendors have their money they are unlikely to readily agree to pay compensation, so it may be difficult to enforce.
As a result, most buyers end up wearing the cost of cleaning the property and removing unwanted items, so these costs should be factored into your budget.
Buyers are often annoyed when vendors don’t hand over a full set of keys at settlement, but I always recommend that locks be changed regardless, for security reasons. This can include security keys and garage door remote controls. It’s just one of the hidden costs of buying a house, like painting over the vendor’s beloved purple feature wall and replacing the wine-stained green carpet 🙂
Aliza Taubman is the Principal Solicitor at Prime Property Lawyers
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