Interesting facts about buying a property in Canberra
When it comes to buying property in Canberra, we are slightly unique to Australia’s other states and territories. Here are some interesting facts, that you may not be aware off.
When you buy a property, you sign a 99-year lease
All residential land in Canberra is known as leasehold, which means that you don’t actually buy the land, but instead you lease the land for a 99-year period. Interestingly, to date there have been no instances of 99-year leases expiring, given the first residential lease was issued for a block of land on the corner of Giles Street, Kingston and Wentworth Avenue in December of 1924. So, if you do the maths, the first ever leases are due to expire in 2023.
Leasees are required to pay a small fee to renew their leases for a further 99 year period, which must be granted unless the Commonwealth or territory requires the land for essential public works, and then compensation at market value would be payable.
Stamp duty reforms
In 2012, the ACT Labor government outlined their 20-year plan for stamp duty reforms, aiming to remove transfer duty in its entirety in the territory.
Since this time, taxation revenue in the ACT from stamp duty has declined from 20 per cent to 13 per cent, cementing the territory as having the lowest stamp duty dependence in Australia. Further to this, as of 1 July 2019, stamp duty was abolished for all first home buyers with a combined annual household income of $160,000.
Disclosures of energy efficiency ratings
From the late 1990’s, The ACT became the only state or territory in Australia, where it’s mandatory to disclose the energy efficiency rating (EER) of a property when it is put on the market. Prior to putting a house on the market, a vendor is required to employ a trained energy assessor to inspect the house and determine a rating.
Land tax (unimproved land value)
Land tax in the ACT is payable on all investment properties, it is not based on an aggregation of all property assets. Increases to the tax also form part of the stamp duty reforms.
On current Domain data, rental yields for houses in Canberra is 4.3 per cent, and for units it’s 6.1 per cent.
There are two components that determine how much land tax is payable – a fixed charge and a valuation charge. The fixed charge is $1,263 and the valuation charge is calculated by applying a rating factor to the average unimproved value.
Price guides
Prices guide regulations differ across all states and territories. In Queensland, it is illegal to provide a price guide to a potential buyer, however in Victoria it is mandatory. The ACT has some of the most relaxed price guide laws in the country. It’s up to the agent’s discretion as to whether they are willing to disclose a guide prior to an auction and there are no laws around vague guides.
Building inspections
In Canberra, it is the responsibility of the vendor to do a building and pest report of their house prior to selling. All relevant documents are then passed onto the buyer.
