The Queensland residential property market has not only remained very stable over the past two years but it continues to record a steady rate of growth across all of Queensland including regional areas. This, along with Queensland’s beautiful beaches and relaxed lifestyle, make it a very sought-after entry point for young families and first home buyers trying to find their dream home in an affordable and desirable location.
Nationally, the residential property market in Australia underwent a significant shift during and after the COVID-19 pandemic. Government policies of record low-interest rates and economic stimulus packages combined to push Australian property prices up by around 25% nationally. There was also a shift by many Australians from the larger cities to regional areas which also inflated property prices across regional Australia in a way that hadn’t been seen before.
It’s impossible to predict the best time to enter the property market and the key to success is developing a strategic property plan well before dipping your toes into the market. In this article, we consider 7 key things you need to know before buying residential property in Queensland.
1. Define your real estate needs upfront
Before looking at potential real estate it’s important you know yourself and your real estate needs down to the finest details. For example, if you are a young couple with two small children you might be after a four-bedroom house with a reasonably sized backyard that is close to schools.
The following questions can help you formulate your real estate needs:
- How much land do you need?
- What size house do you need?
- Do you want to purchase an existing house or a house and land package?
- What is your budget?
- What is your preferred location?
- Are there any specific features you need for your new home?
- Are you looking to buy a house to live in long term or just for a few years as your family grows?
- Are you looking to buy an investment property complete with tenants?
- Is your purchase a long-term wealth creation strategy?
- Does the decision to buy NOW align with your long-term financial goals?
- Is it cheaper to continue renting or should you buy?
- What is your preferred method to complete your land or home purchase: private treaty, auction, via tender, or buying off the plan (most common for house and land packages).
The answers to some of these questions will help you develop a more focused, long-term financial strategy that should serve you well, in the longer term, regardless of how the Queensland property market performs over the next few years.
You must be confident that your finances and ability to service a mortgage will match your real estate wish list. This is where finding the right experts can help you move forward, particularly with advice around potential eligibility for any Government grants and identifying the best home loan for your specific circumstances.
2. Engage the right experts
Before buying residential property, it’s vital to identify the most competent professionals to advise you and act on your behalf (and in your best interests) at all stages of your purchase.
When selecting a real estate agent – you want to find a person who can offer you the best deal and who has demonstrated knowledge about the property location you are considering. As a purchaser, you won’t be directly paying a fee to the real estate agent, so your choice of real estate agent is not as important a decision as for the vendor who pays a listing fee. First-time buyers may be more comfortable using the bigger name agencies such as RE/MAX, Century 21, Ray White, Raine & Horne or L J Hooker. Only choose a smaller boutique real estate agency if you feel confident that they have a good selection of listings and competitive prices.
For the conveyancing transaction, it’s crucial that you find the best conveyancing solicitors to manage all stages of your purchase from the exchange of contracts until the date of settlement when keys are handed over to you. When selecting a conveyancer or law firm, make sure they not only understand the fundamentals around the purchase of the property but also have a sophisticated understanding of current government policies and tax implications around buying residential property in Queensland.
Tax laws and government stimulus policies around real estate sales and purchases are a movable feast. Your conveyancing lawyer must not only understand the key issues but also be able to explain those to you in simple terms. Your conveyancing solicitor will carefully review your Contract of Sale and complete the title searches (including building and pest inspections) and they will manage your purchase from exchange to settlement.
Finally, regardless of the experts, you decide to engage, you must still do your own research – starting by identifying what you are looking for in your purchase of Queensland residential property. Some excellent research tools and websites to consult include:
- Domain has real estate listings and you can get a sense of property prices across different locations.
- The Real Estate Institute of Queensland and the Property Council of Australia’s Queensland branch are both great sources of information housing affordability in different locations.
- Residex is a property research site owned by CoreLogic which aggregates Australian property data and analytics.
- The Queensland Valuer-General has links to residential property values as well as changes to any state government policies around sales and purchases, stamp duty and other applicable taxes.
Any of these sites are a good starting point for you to gather information before you begin to understand the complexities around the purchase and your best options.
3. Understand the Queensland residential property purchase processes
In Queensland, there are a number of different ways you can approach a property purchase. You can purchase a home using a private treaty. This is where you approach the vendor (the seller) privately and make an offer based on their listed price. You will be negotiating directly with the seller or their real estate agent.
You can attend an auction and register as a bidder where you will make competing bids with other buyers. The person with the winning bid then negotiates directly with the vendor or their real estate agent and conveyancers to complete the purchase.
If you buy a property at an auction in Queensland, there is no cooling-off period and no requirement for the vendor to have conducted inspections. Both of these points are really important for new home buyers to know. If you win the bid at an auction – you will be required to exchange contracts and pay the 10% deposit on the day of the auction.
An astute buyer should have completed their own pest or building inspections of the property well prior to the auction so that they are entering the auction process with full knowledge about the property and its features.
You can purchase real estate using a tender process where there may not be a listed price. Here you will submit your offer with the required deposit (around 5 to 10%) which the vendor will either accept or reject depending on how closely your offer matches their desired sale price.
Home buyers might want to build a new home and can buy straight off the plan – usually in a house and land package. The entry price points here can be attractively lower – initially – as you are bidding on land only. Then you select your preferred builder to build on your land in accordance with the land development agency’s requirements.
Regardless of which buying process you choose, you are still bound to the usual government regulations and legislative requirements (such as cooling-off periods) required to finalise the purchase. It’s vital to understand all your legal and contractual obligations to avoid making common mistakes many new home buyers can make. Remember to never sign any document without first consulting your legal advisors.
4. Understand your legal obligations
Even though most home buyers (particularly first home buyers) will rely upon their conveyancing solicitors to handle their home purchase, it’s still important to understand your legal obligations around disclosure, time frames and all applicable taxes and stamp duties.
As a buyer, your duty of disclosure is far less onerous than for the vendors (or sellers). There are however a number of legal obligations which you must first satisfy in order to complete your property purchase in Queensland. These concern insurance requirements, finance, building and pest inspections and transfer duty (also known as stamp duty).
It’s crucial to ensure you arrange for a building and pest inspection prior to purchase to ensure that your intended property is constructed safely and fit for purpose and free of any pest infestations. When you choose your building and pest inspectors make sure that they are appropriately qualified with the Queensland Building and Construction Commission (QBCC) by searching for their licence number. You can also check with the Queensland State Government for more information about this.
You must also pay close attention to time frames around inspections and make sure that you have these well underway before any deadlines. If you are attending an auction, your pest and building inspections must be done before the day of auction.
Your second legal obligation – particularly after an exchange of contracts has taken place – is ensuring that your mortgage financing is in order. All banks and financial institutions will require that you have taken out the necessary insurance policies on your intended new home and even possibly mortgage protection insurance if your deposit is below a certain threshold. So you must check that you have arranged all the necessary insurance to ensure your bank releases your mortgage funds to the vendor to complete the purchase on the date of settlement.
If for any reason, release of mortgage settlement funds are delayed, the vendor can choose to impose cost penalties on you for late settlement. Conveyancing is time sensitive.
This is where it’s really important that you as the buyer and mortgagor read both your Contract of Sale as well as your mortgage contract provided by your bank or financial institution. Read and understand your legal contracts. If you have any questions, talk to your conveyancing firm or your bank manager to clarify any areas of uncertainty about your legal obligations.
The final legal obligation you need to address is to calculate the stamp duty payable on the purchase. Stamp duty is called transfer duty in Queensland. Your conveyancing solicitor can help you organise the disbursement of this payment (to the Queensland State Government) and they can also advise if you are eligible for a discount or concession because of your income or personal circumstances.
Most residential contracts are subject to a satisfactory building and pest report. If this is in your contract, it is up to you to organise the inspections within the required time frame with a licenced trade professional. Make sure you read your contract and understand the date and time you become responsible for the property. You will need to organise the appropriate insurance.
First home buyers who purchase a house valued at less than $500,000 which they plan to live in after settlement will receive a concession so their transfer duty obligations are zero. There are also other exemptions from transfer duty which apply to Queenslanders transferring property including those around property transferred on death of an owner, divorce property settlements, property donated to charities and other legal grounds. Your lawyer can advise whether any of these apply to your particular case. In any event, you must factor in transfer duty costs (if applicable) as an additional cost during your residential property purchase.
Finally, first home buyers and young families should check whether they are eligible for a First Home Owners’ Grant in Queensland which is worth $15,000 and can be put towards your deposit or mortgage. This grant is a state government policy initiative designed to help first home owners gain entry into the market. Your lawyer, conveyancer or your banker can advise you about this further.
There are specific terms and conditions you must meet to be eligible for this including:
- Your purchase contract is dated 1 July 2018 or later.
- You are aged over 18.
- You are an Australian Citizen or permanent resident.
- You and your spouse or partner have not previously owned property in Australia.
- You are buying or building a new home.
- Your intended new home is valued less than $750,000.
- You intend to occupy your new home after settlement and it will be your principal place of residence within one year of the settlement date and you must live there continuously for six months after settlement.
Understanding all your legal obligations and any potential financial grants or tax exemptions is a good place to begin wrapping your head around the full costs of home ownership in the longer term.
5. Understand the full cost
There are many different costs in purchasing residential real estate in Queensland and the main ones are:
- The initial deposit which is usually 5% to 10% of the property value and payable on exchange of contracts.
- Bank and financial institution fees associated with setting up a new mortgage covering your home loan application fee (which your bank uses to cover the cost of processing your loan application, preparing the documents, attending settlement, stamping and lodging and registering your mortgage documents at the Queensland Land Titles Office.
- Valuation fees – conducted by your bank to determine the size of your mortgage.
- Mortgage protection insurance required by banks when you borrow more than 80% of the property’s value. This insurance will protect the bank in the event that you default on your loan and they have to repossess and sell the property to cover the outstanding loan amount.
- Building and contents insurance – will be required by your bank if you have a mortgage.
- Conveyancing and legal charges (usually ranging from between $600 to $1500) which covers your lawyer acting on your behalf from exchange of contracts up until settlement and includes all title search fees and usually building and pest inspection fees. Upon engaging your solicitors/conveyancers it’s essential you read over the items contained in their costs agreement which should outline these costs in greater detail.
- Transfer duty which you can calculate by using the Queensland Government’s transfer duty estimator.
- Completion adjustments are required on settlement – these include the proportion of any utility bills or council rates paid by the vendor paid in advance of the final settlement date. Both the vendor and the purchaser agree to these amounts which are usually outlined in the Contract for Houses and Residential Land.
After you have completed your purchase and are about to move into a new home, you will find additional costs such as moving expenses and costs to get new utilities (water, gas, electricity) connected before you occupy the property. Ongoing expenses will be your annual or quarterly council rates as well as body corporate fees (for strata developments), land tax (if applicable) and you must have a good idea of what these will be to ensure that your budget can comfortably cover them for the years to come.
6. Understand what happens on day of settlement
Settlement usually occurs between one to three months after exchange of contracts. Your lawyer or conveyancer will usually attend settlement and this is where the title to the property is formally transferred from the vendor to you as purchaser. Settlement is a complex and important transaction and you are not legally required to be present but if you’re curious about the process you may want to attend.
Apart from paying the final purchase amount to the vendor in the form of a bank cheque, settlement day also requires that you pay all council rates and other applicable fees are all paid and up to date upon settlement.
There are three parties present: the vendor, the buyer and the bank (if there is a mortgage). The bank’s legal representatives will hand over the settlement cheque to the vendor and the process is completed. You will be handed the keys to your new home and you can now legally take possession. Your legal representatives will manage the final paperwork and both they and the bank will hand you the necessary paperwork including receipts and proof of purchase.
7. Understand your ongoing tax obligations as a homeowner/mortgagee/investor
After the property has been transferred to you, your ongoing obligations will be around paying your council rates on time and any land tax obligations which may apply. Land tax is levied by state and territory governments and it varies from state to state.
In Queensland, you will be required to pay land tax annually based on the total taxable value of your land (not your total property value) as at 30 June and only applies to land which is valued at $600,000 or more.
If you purchased a residential property valued at $650,000 being a house on a block of land – the land value would be included in that valuation and would be around $200,000 to $300,000 depending on your location. All land valued below the threshold of $600,000 is exempt from land tax.
Owner-occupiers
If you are living in your residential property you can apply for a land tax exemption by creating a Queensland Revenue Office (QRO) online account and indicating that you are applying for a Home exemption (category R).
Investors
When you purchase residential property in Queensland which you intend to use as an investment property where you will be collecting rent, you will be liable to annual land tax. This is where it’s important before purchasing to consider the land value well in advance of making any offer. You need to understand your annual land tax obligations and factor those into your ongoing costs.
The taxable value of your land is determined by your annual land valuation which is issued by the Queensland Government’s Valuer-General. In Queensland, you will be liable for land tax if the total taxable value of your freehold land at 30 June is $600,000 or more and you are not living in your home. A block of land valued at $600,000 will incur land tax of $500 per year. Current land tax rates are set out in the table below.
| Total Taxable Value | Rate of Tax |
| $0 – $599,000 | $0 |
| $600,000 – $999,000 | $500 plus 1 cent for each $1 more than $600,000 |
| $1,000,000 to $2,999,999 | $4,500 plus 1.65 cents for each $1 more than $1,000,000 |
| $3,000,000 to $4,999,999 | $37,500 plus 1.25 cents for each $1 more than $3,000,000 |
| $5,000,000 to $9,999,999 | $62,500 plus 1.75 cents for each $1 more than $5,000,000 |
| $10,000,000 or more | $150,000 plus 2.25 cents for each $1 more than $10,000,000 |
Your other ongoing obligations are council rates for your local area. These include waste utility charges (garbage collection), environmental management and compliance levies and bush preservation levies. Average general council rates in 2021-22 for owner-occupied properties can range from around $800 to $1,200 per annum.
Brisbane City has some of the lowest minimum general rates in the South East Queensland area. It’s well worth researching what your council rates will be well before you start your property search as these vary from location to location and form part of your ongoing tax obligations as a homeowner.
Our experienced team at Bush to Beach Legal can help you with all your property law requirements. We offer competitive pricing options as well as complimentary services such as detailed contract review. We can also advise on more complex property transactions such as subdivisions and larger property development projects.
We provide a conveyancing service which is easy to access and simple to understand so that you can purchase your new home or investment property without worrying about unforeseen consequences or hidden fine print. Contact us today or learn more about how we can help as your Sunshine Coast conveyancing lawyers.
The contents of this article do not constitute legal advice, are not intended to be a substitute for legal advice and should not be relied upon as such. You should contact Bush to Beach Legal for legal advice or other professional advice in relation to any particular matters you or your organisation may have.
