Purchasing your first home is one of the most exciting times in your life. To make sure the excitement doesn’t fade prematurely and you avoid any nasty surprises after contracts are exchanged, you need to ensure you undertake due diligence prior to entering into a contract.

What is due diligence?

Due diligence is the investigation of all aspects of a property that might affect its value or suitability. The approach will depend on whether you are looking to purchase as an owner-occupier or as an investor. If you are intending to live in the home, you should consider the suitability of that property over the period you wish to occupy it. If you are investing, you might consider demand for the property in order to maximise price and rental growth.

Before you embark on your property search, you should ensure you have your finances in order. Organising a home loan pre-approval is a great way to ensure you enter the property market with confidence in your purchasing power.

Searches

Essential Searches

Undertaking searches are a necessary part of the conveyancing process. Searches provide general information about the property, enable adjustments to be made at settlement (e.g. to account for water rates, council rates, body corporate and land tax) and uncover whether there are any major issues with the property.

The contract for sale is required by section 52A of the Conveyancing Act 1919 (NSW) to include a number of search documents, such as:

  • title search
  • registered plan
  • dealings noting encumbrances
  • planning certificate
  • sewer service diagram
  • service location print
  • notices with respect to smoke alarms and loose-fill asbestos insulation
  • swimming pool compliance/non-compliance certificate, and
  • additional documents for strata properties and properties sold off the plan

You are able to view the draft contract for sale prior to making a commitment to a property.

Additional Searches

In addition to studying the searches included in the contract for sale, it is important to make further enquiries prior to exchange of contracts. A Pest and Building Inspection report is recommended. A Pest Inspection report will inform you whether the property is affected by pests while a Building Inspection report will provide information about the structural integrity of the property and any ancillary structural matters you should be aware of.

If the property is part of a strata scheme (such as a unit, flat, apartment), you should obtain a Strata Inspection Report. This report is a review of the Owners Corporation records. The report details all aspects of the property contained within the strata scheme, such as: levies, pet policies, structural or building defects, disputes/breaches of by-laws, meeting minutes, insurances, compliance documentation and planned/previous works.

Further enquiries with respect to zoning, mining, heritage listing and RTA proposals may be necessary. If the vendor is a company, a company search should also be obtained. At Sanders Legal we ensure relevant searches are conducted to provide you with the right information to help you make informed decisions, without unnecessary expense.

Government Grants available to first home buyers

The NSW Government is currently offering the following assistance to first home buyers:

First Home Owner (New Homes) Grant (FHOG)

A $10,000 FHOG is available to first home buyers purchasing a new home or building a new home. It is not available to first home buyers purchasing established homes but is available to substantially renovated homes.

The purchase price of newly built or substantially renovated homes must not exceed $600,000. The purchase price of vacant land combined with a building contract/variation must not exceed $750,000.

A number of eligibility requirements must be met, including the following:

  • You must be at least 18 years old
  • You must be first home buyer as a person (not a company or trust)
  • At least one applicant must be an Australian resident or citizen
  • You/your spouse/partner/co-purchaser must not have previously owned a home prior to 1 July 2000
  • You must occupy the home as your principal place of residence within 12 months of the purchase/construction for six continuous months

First Home Buyers Assistance Scheme (FHBAS)

The FHBAS offers a full or partial exemption on transfer duty (stamp duty). It applies to the purchase of an existing home, new home and vacant land on which you intend to build a home.

For homes purchased now, under the FHBAS no transfer duty is payable for homes valued at less than $650,000 or vacant land valued at less than $350,000. Concessional rates are payable for homes between $650,000 and $800,000 and vacant land between $350,000 and $450,000.

 A number of eligibility requirements must be met, including the following:

  • You must be at least 18 years old
  • You must be first home buyer as a person (not a company or trust)
  • At least one applicant must be an Australian resident or citizen
  • You/your spouse/partner/co-purchaser must not have previously owned a home prior to 1 July 2000
  • You must occupy the property as your principal place of residence within 12 months of the purchase for six continuous months (if you are a member of the Australian Defence Force these living requirements do not apply)

Other considerations

When looking at a property, take special consideration of the usability of rooms that might be marketed as habitable but under local council regulations, are not. Rooms in basements and attics may fall into this category. The improper use of a space may render an insurance claim void.

Buying your first property should be a momentous occasion. We are able to guide you through the conveyancing process from start to finish to empower you to make informed decisions and ensure you don’t encounter any unpleasant surprises along the way.