Buying a new home is thrilling, but are you across the ongoing costs and maintenance required?
Brilliant, you’ve found the one. You’ve paid for the prerequisite building inspections, your finances are in order and your mortgage is ready to go. Now it is time to tackle the legal fees and hefty stamp duty fees – and the property’s ongoing costs.
There are considerable differences between the ongoing financial commitments and upkeep a house demands compared to a unit.
Council rates for houses and units
All local councils in Australia charge homeowners rates to pay for local services including infrastructure and waste management. Councils set their own rates, which are charged against the value of your property. When considering a property for sale, be it a house or unit, you should evaluate the council’s levies. It’s surprising how much they differ between local governments.
House owners generally pay much higher council rates than unit owners. This is due to the fact a house owner is solely responsible for the rates charged against their property value, while unit or townhouse owners will either be charged the minimum general rate or the general rate charged against their portion of the complex, or a combination of the two. As rate calculation varies between states and local councils, it is best to check how rates are calculated in your local area.
The Valuer General is responsible for conducting property land valuations for local, state and federal government. Revaluations of your land for tax and rate purposes occur at different intervals depending on your location. For example, revaluations occur annually in South Australia, every two years in Victoria and every three years in New South Wales. If you believe your land valuation is inaccurate, resulting in higher council rates, you can contest the valuation by submitting an Objection to Valuation to your local council.
Strata management versus self-management
Owning your own house brings with it many wonderful freedoms but also responsibilities. Under Torrens title, your land and castle are your domain, and so long as council permits, you can do with it as you please. Conversely, all maintenance and upkeep fall on your shoulders.
When buying into a complex, whether it be a studio, unit or townhouse, your ownership is governed by strata title, or the lesser-known stratum or company titles. The common areas of the complex will be managed by an Owner Corporation and strata regulations will outline the owners’ rights and obligations.
It is important you look into the strata regulations and management fees associated with a complex before buying. While far less hands-on maintenance is required in owning a unit or townhouse, if you are not happy with the ongoing fees or regulations then the property will become far less appealing. Along with attending annual strata general meetings, you may want to consider becoming a member of the managing committee to have greater control over the complex’s management.
If you are buying a unit off the plan, make sure you understand the pros and cons. While you can secure a property at today’s market value with a deposit and pay the remainder upon completion of the building works, when the value is likely to have risen, there are risks. The development may fall through or unexpected building complications may occur.
House and unit home insurance costs
Houses tend to attract higher insurance premiums than units or townhouses due to their size and security requirements. That said, if you’re buying into a complex, you will need to pay strata insurance, which protects the building’s common areas, in addition to home and contents insurance.
Strategies to minimise home and contents insurance costs include:
- Bundling policies such as car, life, health, pet and travel insurance with home and contents insurance
- Increasing your excess to save money each month that you don’t claim
- Protecting your no-claim status, which can save up to 65 per cent on premiums
- Paying annually if you have the cash flow, to reduce the premium
By shopping around for a policy that best suits your needs and ensuring you don’t pay for unnecessary extras, you can cut home insurance costs from the outset. Make sure you talk to your chosen insurer about steps you can take to reduce risk and safety hazards around your home, and update the insurance company about any changes to your home and contents that may affect your premiums.