The complete list of property expenses
The number one pet peeve of new homebuyers is without a doubt the hidden expenses that come with buying a property.
I’ve put together what I believe is as close to a complete list as you will find anywhere, although I know by now that there are always new ones popping up. If I’ve missed any please leave a comment at the bottom and I’ll add them in.
As well as the upfront costs of buying a property, I’ve gone one step further and included the ongoing costs of owning a property (for both those living in or renting out), and the costs of selling a property.
Buying a property
It’s not unusual for initial costs to be over $10,000 (NOT including your deposit). Some may not apply to your situation, but it pays to be aware of as many as possible.
- Government fees
- Stamp duty – Now known as transfer duty, this is the state government fee for transferring the land from the seller to you. Please be aware that first home owner concessions are now all but gone, unless you’re buying or building a new home, or if you’re in WA or NT. See here for more info for each state. You can use this calculator to estimate your amount payable. The value will be added to your loan amount.
- Registration of title – $100 – $200. Also known as Transfer Registration or Transfer Fee. This is the cost of registering the transfer of the title of your new property with the state government. See the calculator above.
- Mortgage registration fee – $100 – $200. State government tax on registering the mortgage on your property. See the calculator above.
- Financing fees. Your mortgage broker should provide a list of all lender costs involved in getting your home loan.
- Loan establishment fee – $0 – $800. This usually covers the banks legal fees, and sometimes also includes the valuation and settlement attendance fees. Some banks will waive this fee if you’re taking a packaged loan.
- Settlement attendance fee – $0 – $300. Bank charge for having a solicitor attend the property settlement to release the banks money. Some banks may waive this charge or it may be included in the loan establishment fee.
- Valuation fee – $0 – $400. The bank may charge you to have a valuer assess the value of your property before they approve your loan. Some lenders waive this fee.
- Lenders mortgage insurance – 1-3% of your loan amount. This is the premium you pay to insure the lender for lending you more than 80% of the property value (LVR). It can usually be added to the loan amount rather than having to pay upfront. The final cost depends on the lender’s insurer and how small your deposit is. Here is a general calculator, but you will need to check the final value with your lender.
- Rate lock fee – Around $400. Fee paid to lock in your interest rate between the time of your loan application and settlement.
- Security guarantor fee – $200 per guarantor. This is for when you use guarantors as security when your LVR > 80% to avoid LMI. Not sure what this all is? Check out the free property beginner’s guide.
- Legal fees. $1,200 – $3,000. There are DIY kits available, but it’s not recommended unless you know what you’re doing. Conveyancers will suffice for most straightforward situations, while solicitors may be required for more complex setups. If you need a solicitor, expect to pay between $2,000 and $3,000. Check if the items below are included in your legal representative’s fees:
- City agent’s fees for stamping contract
- Settlement attendance
- Administration costs
- Retention, archiving and storage of your file documents
- Property inspection reports – See below.
- Title search – $350. Checking there are no encumbrances on the property.
- Other disbursements to government authorities
- Title insurance – $400. Protects you against any claims against the title of your property.
- Certificate of currency – $50
- Special arrangements – For example, if you need a contract drawn up for between you and your partner.
- Property fees
- Balance of council rates, strata fees/land tax, and water charges – $500 – $700. You’re required to pay the vendor pro rata amounts for the rates they have already paid, taken from the settlement date. Fees will vary for different properties. This may be added to the settlement amount or to the 2.5% deposit (see below).
- 2.5% deposit – 2.5% of the property value (some seller’s may ask for higher, but you can usually negotiate it down). While this is not technically an additional cost, be aware that you will need to pay a 2.5% non-refundable deposit to the owner’s solicitor once your offer is verbally accepted to activate the cooling off period. This amount can also be used to count towards your home loan deposit. You should also allow for a bank cheque fee of $10 – $15 to pay the deposit. Note: If you buy at an auction, you will usually be required to pay this immediately.
- Building inspection – $300 – $700. A building inspection checks structural soundness and lists any visible defects and necessary repairs. For apartments, a strata report usually suffices instead.
- Pest inspection – $200 – $350. A pest inspection checks for any signs of past or present pest infestation. For apartments, a strata report usually suffices instead.
- Strata inspection report – $200 – $350. A strata inspection examines and reports on the written records of the owners’ corporation. It will let you know what work has been done or is planned to be done on the building, as well as the strata fees and financial situation. This can usually be sourced by your conveyancer.
- Survey report – $400 – $700. A survey shows where the property is in relation to the boundaries of the land. Lenders sometimes require a survey report
- Post purchase expenses. These costs are all variable, and you may not pay for any of them. Just keep them in mind.
- Moving costs – Getting your furniture and belongings into your new place. You might be able to do it all yourself or with friends, or hire a ute/van/truck for a day.
- Furniture – Don’t forget about furnishing the new place. It’s amazing how much you need when you start with an empty property, and it adds up fast.
- Connecting services – Phone, internet, electricity, gas, cable TV, etc. Tip: get onto Telstra as early as possible, the lead times can be lengthy.
- Renting it out – If you use an agent they will pass on advertising and administration costs, plus take 1 weeks rent when they find a tenant. Doing it yourself is free. Guide coming soon.
It’s a lot more than just mortgage repayments you’re looking at for the next 30 years. Some of these will depend on if you’re living in the property or renting it out, and if you purchased a house or an apartment.
Note: For those renting out their property, you probably know that a lot of these can be claimed as tax deductions. I am working on getting a how to guide out on this as soon as possible. Until I do, you should to check out this, this and this from the ATO.
- Loan repayments – Your largest ongoing expense. If you’ve got a variable rate then watch out for interest rate rises.
- Council rates – $250 – $500 quarterly. To find the exact amount you can sometimes find these at the bottom of online property listings, otherwise ask the agent selling the property.
- Water charges – $100 – $250 quarterly. Again you can look online or ask the agent for an accurate value. Note that even if you rent your property out, you need to pay the connection charges, and you need to have water efficiencies in place in order to pass on usage costs.
- Strata fees – $500 – $1,500 quarterly. This is for apartments only. The money is used by the owner’s corporation for maintenance and repair of common areas, as well as some being put into a sinking fund. Look online or ask the selling agent to get the exact amount you will be paying.
- Land tax – Varies. It’s a state government tax on your land value above a certain threshold, but it only applies if you own more than one property (your main residence is exempt). For apartments the land value is divided up between each apartment so they’re usually under the threshold. Check the relevant state revenue website for rates and thresholds. NSW VIC QLD WA ACT SA TAS (NT exempt)
- Insurances. These are all optional (except for building insurance for houses). It’s up to you what insurances you do or do not purchase.
- Building insurance – Varies. The cost of building insurance will depend on the age, size, location and type of construction of the property, plus the level of cover that you want. Make sure to compare quotes from at least 3 different providers. Note: This is normally compulsory for houses in order to get your home loan, but for apartments the building will already be insured through the strata.
- Contents insurance – Varies. Will insure everything inside the walls of your property i.e. everything not covered by building insurance.
- Landlords protection insurance – Varies. Can include contents insurance, public liability insurance, malicious damage or theft by tenants, and loss of rent if a tenant leaves without paying rent or leaves the place uninhabitable
- Income protection insurance – Depends on your income. Protects you if you become sick or injured and can no longer earn an income to support mortgage repayments.
- Home loan fee – $0 – $300 p.a. Yearly bank service charge for your home loan. Your mortgage broker should tell you if you will have one and how much it will be. If not ask.
- Rental income tax – If you’re rental income exceeds your investment expenses then you will need to declare and pay tax on the income received.
- Property manager – 5-7% rent. If you choose to rent out your place using a real estate agent then expect to pay 5-7% commissions, plus the advertising and tenant landing fees noted in the upfront costs list every time you need to find a new tenant.
- Electricity & gas
- Telephone & internet
- Maintenance – Unpredictable. If your property is in good condition, you’ve got good tenants and if you’re a handy person then you can avoid or cheaply fix a lot of issues. Some of the most common ones are:
- Fixing water leaks
- Replacing carpets
- Electrical repairs
- Repairing/replacing appliances
- Hot water issues
- Renovating – Not an expense usually forced upon you but chances are at some point you will end up renovating, and it will definitely cost you a lot of time and money.
- Cleaning – This one applies for when you’re in between tenants and need to give the whole place a once over. A professional clean can cost a few hundred dollars.
- Bad tenants – If you get stuck with problem tenants you could be facing long periods of no rent, as well as legal and possibly repair costs. Solution: screen your tenants thoroughly, and/or take out landlords insurance.
Selling a property
A lot of these mirror the buying expenses, but there are some new ones to be aware of.
- Agent fees – Around 2.5%. Real estate agent’s commission for selling your property. Rates vary between agents and will usually also include advertising fees. Generally it will cost you more though if you use a cheap agent and sell your property at a lower value.
- Capital Gain’s tax – $0 – > $100,000. CGT is a tax on the capital gain you make from selling your property. Everything you need to know is in 11 strategies for minimising your capital gains tax.
- Conveyancing – Around $1,000. Same advice applies from the buying a property section.
- Cleaning – A professional clean is almost definitely called for when selling. Expect to pay a few hundred depending on the size of the property.
- Maintenance – Before you sell is the time to make sure everything is in working order to boost the property value. Cost will depend on property condition and how much you can DIY.
- Refinancing – Depending on what your next move is and your loan setup, you may be up for bank fees such as closing your loan which can range from a few hundred to thousands of dollars.
- Relocation –Don’t forget to allow for moving or selling everything that’s still in the property, especially the larger items of furniture.
- Service cancellations – Electricity, gas, phone, internet, cable TV etc.
Did I miss any? Leave a comment below and I’ll add it to the list.
P.S. If you found this helpful could you please do me a big favour and SHARE it because the more of us that are aware of this stuff the better. Cheers!