Understanding the Hidden Costs When Buying Property i.e. in Western Australia

1. Stamp Duty

One of the biggest expenses you’ll face when buying property in Western Australia is stamp duty (or transfer duty). Stamp duty is a tax imposed by the WA government and is calculated based on the property's purchase price. For example, if you’re buying a property worth $600,000, the stamp duty could be around $22,515. However, first-home buyers may be eligible for concessions or exemptions, depending on the property’s value.

How to prepare: Use a stamp duty calculator to estimate this cost before making any offers, and factor it into your overall budget.

2. Council Rates

Once you’ve purchased your property, you’ll need to pay ongoing council rates. These rates are collected by your local government and are used to fund services such as waste collection, public parks, and road maintenance. The amount varies based on your property's location and value. In areas like Perth, council rates can range from $1,000 to $3,000 per year, depending on the size and value of the property.

How to prepare: When considering a property, ask for the current council rates to better understand your future financial obligations.

3. Strata Levies (if applicable)

If you’re buying a unit, townhouse, or apartment within a strata complex, you’ll be responsible for strata levies. These are fees paid to the owners’ corporation (or strata company) to cover shared costs like building maintenance, insurance, and common area upkeep. Strata levies can vary greatly, ranging from $500 to $2,000 per quarter, depending on the property's size and amenities.

How to prepare: Request a copy of the strata budget and levies before purchasing, so you know exactly what costs to expect.

4. Building and Pest Inspections

Before finalizing the purchase of any property, it’s advisable to conduct a building and pest inspection. These inspections are designed to uncover any hidden structural issues or pest infestations that could cost you a fortune in repairs later on. In Western Australia, these inspections typically cost between $300 to $700, depending on the property size and the inspection scope.

How to prepare: Allocate funds for these inspections early on, and use the reports as leverage during price negotiations if issues are found.

5. Surveys and Valuations

In some cases, especially when buying land or a property with boundaries that aren’t clearly defined, you may need to arrange for a land survey. This ensures the property’s boundaries are accurate, avoiding future disputes with neighbors. The cost for a survey in WA can range from $800 to $1,500.

Additionally, your lender may require a property valuation to ensure the home is worth the amount being borrowed. The cost for a valuation is typically $300 to $500, though some banks cover this fee.

How to prepare: If you think a survey or valuation might be necessary, get quotes early in the process and factor this into your overall budget.

6. Legal and Conveyancing Fees

When buying a property, you’ll need a solicitor or conveyancer to handle the legal aspects of the transaction, such as transferring the title and reviewing the contract. Conveyancing fees in Western Australia generally range from $800 to $2,000, depending on the complexity of the transaction.

How to prepare: Choose a licensed conveyancer or solicitor and ask for a breakdown of costs before proceeding.

7. Loan Establishment and Mortgage Insurance

If you’re taking out a mortgage, there are additional costs to consider. Some lenders charge a loan establishment fee, which can range from $500 to $1,200. Additionally, if you’re borrowing more than 80% of the property’s value, you may need to pay Lenders Mortgage Insurance (LMI). LMI protects the lender in case you default on the loan and can be a significant expense, sometimes running into the tens of thousands of dollars, depending on your loan size.

How to prepare: Ask your lender for a detailed breakdown of all fees and consider saving for a larger deposit to avoid LMI.

Conclusion

Buying property in Western Australia involves more than just the purchase price. From stamp duty and council rates to strata levies, inspections, and loan-related fees, these hidden costs can add thousands of dollars to your budget. By understanding these additional expenses and planning ahead, you’ll be better equipped to make a smart, informed decision and avoid any financial surprises along the way.

Take the time to do your research, consult with professionals, and factor in all these costs to ensure you’re fully prepared when purchasing your next property.

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