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The Aspect Effect: What Does The Aspect Of Your Apartment Mean?

Daniel Chadrawy on May 9, 2022

You’ve probably heard it mentioned a time or two how north-facing apartments are the way to go when buying or renting. YES, we know. Every real estate agent will tell you this.

But what you probably haven’t heard is that there are a number of factors that contribute to deciding on a suitable apartment solely based on personal preference. Depending on your lifestyle and the apartment’s location, features and pricing, it may be beneficial to consider all aspects when looking for your next property.

Read on to find out everything you need to know about the role of direction in finding your dream home or exciting investment.

apartment orientation

Factors to Consider

When it comes to searching for property, the direction it faces is often overlooked. BUT in actuality, this can make or break your decision. There are many factors to consider, but ultimately, it is entirely up to personal preference and how these aspects can benefit you and your lifestyle.

Location & View

Location and view can do wonders for your apartment (and your mood!). If, of course, it’s facing the right way, you can receive the perfect amount of sun and natural light at the most ideal time of day for you.

1. North Facing Apartment

An apartment with north-facing windows and features is often the most desirable for apartment hunters.

Although an apartment that is north-facing provides no DIRECT sunlight, its popularity comes from the clear and consistent lighting and absence of glare throughout the whole day.

Pair this with some large windows and a good view that is not restricted by other buildings, and you’ve got the ideal property in real estate.

facing north, north direction, north side, north facing aspect

2. South Facing

On the other hand, south-facing windows provide the most direct sunlight throughout the day, brightening up your living space despite the size or amount of windows.

The only downside to apartments facing south is that open views can mean the intrusion of some very bright light into your living space which can cause damage to certain features of the property over time, like furniture and materials.

On the bright side, though, an aspect facing the south lessens the amount of money you spend on electricity bills since you can rely on the natural light from the sun for most of the day.

sout facing aspect, direct sunlight

3. East Facing Apartment

With an east-facing aspect, you can forget about setting multiple alarms in the mornings and let the natural and direct sunlight wake you up and improve your sleep schedule. Calling all early birds, if you remember Never Eat Soggy Weetbix, you’ll remember that the sun rises in the East. An east-facing window would provide the perfect view of a beautiful sunrise with no obstructions.

Unfortunately, we do need to mention the cons, but luckily there really is only one – the morning sun will only last until midday. This means your living space will become darker as the day goes on, especially in winter, so this is something to note as the seasons change.

east facing aspect, sunrise

4. West Facing

Apartments facing west have the opposite appeal to those facing east. West-facing windows provide less sun in the mornings but the perfect opportunity to catch the stunning sunset in the evening. Hello, golden hour!

However, if sunsets aren’t your thing, the low angle of light from the sun can make for a hot summer, and the glare it gives off can become a bit of a nuisance for west-facing aspect owners. Luckily, it’s nothing some blinds or shades can’t fix.

These apartments are ideal for people who are more productive later on in the day and wish to maximise the amount of afternoon sun.

west facing aspect, sunset

Your Lifestyle

Your lifestyle choices are often the deciding factor in choosing an apartment so it is important to take them into account when considering the direction it will face.

Maybe your job requires lots of natural sunlight.

Maybe your sleep schedule is off balance.

Maybe your daily routines work around lighting from the sun, like yoga at sunrise or a long walk nearby at sunset.

Think carefully about every aspect of your life and how each direction may provide benefits or restrictions. It’s okay to give a north-facing apartment the flick if the view is all it’s got going for it. Also, don’t be afraid to ask questions if you’re unsure of how certain features may affect your lifestyle.

direct sunlight, natural light

Pricing

Don’t forget to work out and compare the value of the apartment you’re looking at against other apartments AND the area they are in. It is also a good idea to consider the level of the apartment and how it could impact your view. Generally, the higher the floor, the better the view, and the pricier the apartment.

Another important thing to consider is capital growth. Properties that are placed in prime locations and have water views will increase in value over time regardless of the aspects and/or hold higher rental yield potential.

Liviti’s Tips & Tricks for choosing the best aspect for you

Inspection

Regarding the inspection process, there are many ways you can make the most of this experience and find out as much suitable information as you can to make this choice easier for you.

This includes:

1. Visiting the property multiple times at different points in the day – most real estate agents tend to host inspections during working hours – when the place is filled with the most natural lighting. So, it is important that you go and have a look at the property at other times to get a feel of how the sunlight could impact your daily life.

2. Turning off electric lights – this is to see how well lighting from the sun can fill the apartment and its rooms. Bonus tip: do this with the previous step and examine the differences throughout the day. (TIP: Take photos so you can compare the difference)

3. Checking the aspect advertisement – if an estate agent is advertising a north-facing aspect, they may not always specify which part of the apartment this is. It wouldn’t be much use to you if your bathroom were to have the most sunlight, but your open-plan living space, balcony or garden were not reaping the same benefits. Got your phone handy during an inspection? It’s sure to have a compass on it so you can check the aspect of each room.

sunlight

More Tips

1. Don’t just think about sunlight; consider the wind as well – this could be great for laundry drying, but you should probably secure any outdoor furniture to keep it from moving or blowing away, especially if your apartment is on a higher floor.

2. Think about windows – regardless of deciding on a home with the perfect amount of lighting or not, it can always be beneficial to place windows and skylights (if possible) throughout the property to maximise the positive and mitigate the negatives of certain aspects.

3. Internal glass doors could be another thing to think about – this would allow more natural light into your home and fill more space.

What do you think?

Do you have an idea of which aspect may be best suited for you?

At Liviti, we want to help you as best as we can to get you into your dream home ASAP. So if you’re looking for any clarification, more information or are ready to get started on your property journey, give us a call at (02) 9056 4311 or click here and get in touch with one of our friendly team members!

Tallest Timber Building in Perth

Daniel Chadrawy on May 9, 2022

Plans for the world’s tallest timber building

Introducing C6…

YES, this building will be named after the periodic table’s symbol for carbon. Melbourne developer, James Dibble, has submitted plans for the world’s TALLEST hybrid timber tower. If approved, this mass timber construction will be Australia’s SECOND carbon-negative building after Sydney’s Atlassian tower, standing 3 metres taller at 183m. The $350 million apartment block will be located in the city of South Perth, close to the Perth Zoo.

The proposal for C6 currently includes provisions for 245 apartments ranging from 1 to 4 bedrooms, over 48 levels. The best thing – the ROOFTOP! Gardens, outdoor dining, entertainment spaces, and communal amenities… C6 is ticking all the boxes for sure!

(Source: The Fifth Estate) CGI of C6, the world's tallest timber tower

(Source: The Fifth Estate) CGI of C6, the world’s tallest timber tower

Hybrid timber tower

You might think that a structure made of timber would go up in flames… But thankfully, C6 is a ‘hybrid’ design. If you have never heard of a hybrid design, it refers to using different materials to create innovative structures. The hybrid nature of C6 creates a unique challenge for structural engineers and architects.

The mass timber construction requires a mixture of materials and an intricate engineering and design process that principal architect, Reade Dixon states, “has never been done before”.

The hybrid timber tower will include a MASS amount of timber – approximately 7400 cubic metres of timber. That’s about 3 TIMES as big as an Olympic Swimming Pool! The timber will make up almost half of the tower’s total structure, with a mixture of cross-laminated timber, glue-laminated timber, steel, concrete and other building materials.

(Source: The Fifth Estate) CGI street view image of C6

(Source: The Fifth Estate) CGI street view image of C6

A Carbon negative building

Did you know that buildings and their construction are responsible for around 36% of global energy use and 40% of energy-related carbon dioxide emissions?

The built environment is one of the 3 major drivers of climate change, and it doesn’t help that the building materials that the property industry relies on are steel and concrete – the most energy-dense materials to produce.

The good news is that the south Perth timber tower will be Australia’s SECOND carbon-negative building after the Atlassian tower in Sydney! It will feature an embedded power network, with wind and solar panels to create renewable on-site energy production.

C6 will also have 3500 square metres of floral, edible and native gardens – which will deliver tangible health benefits to residents. Rooftop gardens and urban greenery are incredible for our environment, as they create ‘shields’ for buildings, insulating the structure and absorbing pollutants. How amazing!

(Source: SMH) Image of the Atlassian tower in Sydney

(Source: SMH) Image of the Atlassian tower in Sydney

James Dibble, Grange Development founder and director, stated that if successful, the timber tower will set a new precedent for renewable building developments around the world.

“If we can accelerate a paradigm shift into the use of more renewable building materials such as mass timber in a hybrid nature and see even 10, 15 or 20 per cent of future projects use mass timber in their construction in the next few years, we will have succeeded,” said Dibble.

C6 aims to encourage developers around the world to ditch energy-dense building materials and go green with renewable resources. It is a relief to know that buildings constructed from engineered timber have a significantly lower carbon footprint than other structures, both during construction and operation.

(Source: The Fifth Estate) Image of C6 renders

(Source: The Fifth Estate) Image of C6 renders

More renewable building materials

There are HEAPS of other renewable building materials that not only ease environmental pollution but can save your money as well!

1. Bamboo

Not only does bamboo make comfy pillows, but it is also a fantastic green building material too! It is twice as strong as concrete and slightly stronger than steel. It only needs a small amount of energy to grow and is a renewable resource that produces more oxygen than other plants.

(Source: Quartz) Image of structure made of bamboo

(Source: Quartz) Image of structure made of bamboo

2. Sheep’s Wool

Yes, you read that right. Sheep’s wool is a great construction material that is entirely natural, environmentally friendly and can be regrown quickly. It is an amazing home insulator, with fibres that form millions of tiny air pockets that trap air. Wool is usually incorporated into ceilings, walls or attics.

3. Hempcrete

Hempcrete is a concrete-like material, created from the fibres of hemp plants. Hemp plants are fast-growing and therefore a renewable resource. Hempcrete is strong and lightweight, reducing the amount of energy required to transport the blocks.

Hempcrete is fire resistant and has great thermal and acoustic insulation qualities. It is also the biggest sustainable material that is carbon negative, meaning it absorbs more carbon than it emits!

4. Recycled Plastic

We produce around 400 BILLION kilograms of plastic each year, with only 9% of it being properly recycled. But did you know that your roof, walls and floor can be made out of recycled bottles?

Imagine a world where you NEVER see waste and plastic washing up on the shore of your local beach. Yes, this is possible, if recycled plastics are used in construction over the world. Recycled plastics are a perfect building material – cheap to produce, readily available and easy to mould. They are durable, waterproof and insulating, and can be suitable for properties withstanding any climate.

(Source: Domain) Image of Plastic Bottle Village: Structure made from 1 million recycled bottles

(Source: Domain) Image of Plastic Bottle Village: Structure made from 1 million recycled bottles

5. Cork

To you, its primary purpose may be a stopper for your fave red wine, but cork also serves as an outstanding sustainable structural material.

Harvested from trees, cork is extremely waterproof, with a weather-resistant quality that makes it incredibly durable. It is used in insulation panels, floor and wall tiles and even soundproofing, working as a natural insulator to regulate the temperature throughout the seasons.

Cork also has beautiful aesthetic qualities – giving buildings natural patterning, earthy tones and unique textural elements.

(Source: Arch Daily) Image of house made of cork

(Source: Arch Daily) Image of house made of cork

Conclusion

Plans for the innovative hybrid timer skyscraper in Perth have been submitted to the council for planning approval, with the building intended to commence next year.

Check out here for more interesting trend pieces!

The Annual Performance Gap Between Houses And Units Falls Further

Daniel Chadrawy on May 6, 2022

The last 2 months saw a fall of the annual performance gap between houses and units, from a record high of 28.3% in January to 8.7% in March. 

As noted by CoreLogic, units recorded a 0.3% rise in values over March much like its growth rates from the preceding two months. This resulted in a total increase of 0.9% in the first quarter of 2022, while house prices rose 0.8% in March and 2.8% in the first 3 months. 

While national houses are recording greater growth in comparison to units, it has also appeared to decelerate at a much faster rate. This pace of growth has dropped by nearly 5 percentage points, compared to a 3.8 percentage point drop in the unit market.

Source: Corelogic’s monthly Unit Market Update

But why apartments are so underpriced in comparison to houses?

1. Housing preferences during Covid 19 pandemic

According to PropTrack’s Home Price Index, house values have risen 39% since the pandemic, while unit values have risen only 16%. And yes, we’ve all heard that this was due to the pandemic’s impact on housing preferences.

During the lockdown, lifestyle has become a greater priority over proximity to the CBD. The experience of lockdowns made apartment living less appealing, with many people desiring more space and larger homes.

2. Low-interest rates provided an affordability boost

The interest rate in Australia has been held at a record low of 0.10% since November 2020, allowing home buyers to service more debt. This increases their ability to purchase a larger home, while also pushing up house prices.

3. Low level of investor activity

During the lockdown, Australia’s border is closed, resulting in less overseas demand and weaker rental conditions in inner-city markets. As a result, investor participation in the apartment market reached a new low, shifting preference bias towards houses.

In fact, the unit price gap is most pronounced in weakened inner-city apartment markets, where demand from international migrants and tenants has declined sharply.

However, as we enter COVID-normal, a lot has changed!

1. Demand for units outstripping houses as cities make a return

Reopened borders, relative affordability and tight rental markets have piqued investor interest.

“This is due to the relaxed restrictions around international travel earlier this year, where overseas arrivals tend to be renters, and tend to be concentrated in densely populated parts of cities.” , according to CoreLogic’s Research Analyst Kaytlin Ezzy

And the investment proposition for units is likely to improve, particularly as housing price gains slow and rental price pressures increase.

2. Housing affordability

It seems that affordability has and will continue to be a major contributor to the conditions of the property market *not necessarily good news*, and is something that most people take into account when buying and investing. 

Evidently, this is due to the higher inflation rate and the rising cost of living which has significantly impacted the difficulty of saving for a deposit for prospective buyers. And yes, this has increased in recent years too!

House prices have risen significantly, and affordability constraints are taking effect, potentially shifting buyer demand to more affordable apartment options. And since units tend to be cheaper, it is usually easier to save for a deposit, making them the better option for most first home buyers.

3. Updated price caps in The Home Guarantee Scheme

The Home Guarantee Scheme price caps is updated recently, and eligible first home buyers will likely prefer units, where they will have a lot more options.

The housing market is shifting toward apartments!

According to realestate.com.au’s latest report, the volume of unit enquiries increased by 21% in the first three months of 2022 compared to the same period in 2021. This is definitely the first good sign for the unit market!

Capital Cities VS Regional Markets

Capital Cities

Recent research has shown that Sydney and Melbourne unit markets have declined, while the unit markets of other capital cities like Brisbane and Adelaide are growing strongly above 4%. A typical unit in Sydney is pricier than a Brisbane unit and more than double that of Adelaide.

Although the growth rate of Hobart, Darwin and Canberra has been and will continue to increase, this pace has eased up in the previous month. 

According to Domain chief of research and economics Nicola Powell, this is especially prevalent in Canberra.

“What’s interesting about our unit market in Canberra is that it’s seeing a slower pace of price growth compared to houses and I think that in itself makes it much more affordable for a first-time buyer, as well as investors – [from] whom we’ve seen rising activity over the last 12 months…”, said Dr Powell

“and I think those two factors will be helping to support demand for units.”

This has made units in the capital territory a more affordable and popular choice *YES!*  for home-buyers and investors alike as evident by the increased activity by these property buyers in the past year.

Source: Corelogic

Regional Markets

Moreover, the regional markets of the country have observed better unit growth than houses. 

In a state by state comparison, four of them performed exponentially better with regional Queensland being proven to have the highest increase in unit value with a growth rate of 5.9%. 

Following this are:

  • Western Australia (4.3%)
  • Victoria (3.8%)
  • NSW (3.6%)
  • Tasmania (1.7%)
  • South Australia (0.5%)

Within NSW specifically, areas like Kiama and Wollongong are noted to be favoured by property buyers and investors because of this growth.

Kiama

Bright future for the unit market

In terms of affordability, it’s clear that the cheaper property type has already gained popularity among priced-out home buyers and investors. This increase in the demand for apartments, turned it into a more favourable option, especially as an entry point for most first home buyers. 

Regarding investment opportunities, according to Ms Ezzy, units are a beneficial investment opportunity because of the rental return. 

“units are currently rising faster than capital growth and faster than detached house rents”, she said, that proving its desirability amongst property investors. 

Despite the current slowing of property price growth, the above factors all point to the possibility of a stronger unit market performance than the one seen when the pandemic began.

Stay On Top Of The Market!

For more market updates and information on all things property buying and investing be sure to check out the Liviti website.

If you have any questions or are simply looking for more information get in touch with one of our trusted team members or call us at (02) 9056 4311. We’ll get back to you ASAP!

Why The Rental Market Is Exciting Property Investors

Daniel Chadrawy on April 27, 2022

Over the course of the pandemic, the rental property market has seen its ups and downs. However, property investors are buzzing with confidence and excitement that activity will rise again despite the drops in rental yield.

What is Rental Yield, and Why is everyone telling me it’s important? 

Gross rental yield is your rental income as a percentage of your properties’ value.

You calculate it like this:

Gross rental yield = (Annual rental income/Property value) x 100

Along with vacancy rates, rental yield is one of the two most important factors that investors consider before purchasing a property as it creates the ideal investment environment. 

This includes:

  • An area with a high and/or increasing rental yield 
  • A steady or declining vacancy rate

High rental returns and quick occupancy can result in positive cash flow.

Gross Rental Yields in 2021 

According to CoreLogic, 2021 saw annual rental value growth rise 11.8% to its highest point since 2008. However, the gross rental yield fell across Australia due to the COVID-19 pandemic and the rental supply constraints. 

So Why Are They Falling?

Supply and demand is a very popular phrase in the property market and relies heavily on each other to influence any changes it undergoes. The pandemic hit the rental market hard due to the undersupply of property for high demand, resulting in purchase prices skyrocketing.

Since there is a direct relationship between rental income and property value, when calculating rental yield, an increase in the median property sale price will result in an equal decrease in rental yield.

(Source: CoreLogic)

Is there any opportunity for me as an investor?

PRD chief economist Dr Diaswati Mardiasmo says falling rental yields aren’t necessarily bad news for investors.

Multiple other factors can contribute to market trends and create great property investment opportunities. These including:

  • Balance of local supply and demand: Rising rents, low or falling vacancy rates and a low average number of days on the market indicates a strong demand for rentals. This in turn, leads to higher rental returns and faster occupancy for better cash flow.
  • Planned developments for the area: Such growth drivers improve the livability providing the potential opportunity to attract more people to the area, leading to strong rental demand and future capital growth.
  • Slowing property price growth: This is good news for all property investors. As property price growth is now slowing down and rental rates are rising due to the return of overseas arrivals, rental yields are likely to rise again this year

Yes! These factors indicate a strong outlook for property investors, resulting in a recent boost in market activity. 

Rental Yields are back on the rise!!

The start of the new year alone is already showing a promising shift in these trends across all of the capital cities, according to PopTrack economist Angus Moore. 

“In Melbourne and Sydney, we saw advertised rents fall for much of the first part of the pandemic,” Mr Moore said. 

“That’s starting to reverse now, and rents are growing in these cities as well.”

According to realestate.com.au PropTrack data, the median advertised rent in Australia is $450 per week, a 4.5% increase over the previous 6 months as the rental market tightens and renters face limited options.

These rising rents will help support yields for property investors, particularly since property prices aren’t expected to rise as quickly this year, Mr Moore noted.

Adding to the rental figures, Corelogic reports show the growth in rent values (0.8%) has outpaced property values (0.6%), leading to gross rental yields stabilising at 3.21% over  February 2022 – the first time in 17 months that gross rent yields did not decline. 

Here, you might wonder what could be the reason for this. Well, this was because of the pandemic restrictions easing and the national & state borders opening up again. 

If these conditions remain constant throughout the year, gross rental property yield is expected to increase due to the inflow of international students, permanent residents and Australian citizens allowed back into the country. 

Usually, most overseas immigrants experience a ‘tenure cycle’ that begins with renting and shared accommodation when they first enter a new country to reside. 

This means that the increased number of people arriving in Australia will most likely rent first, and due to this greater demand, the property rental yield is expected to rise in the coming year, a big HOORAY here!

Increasingly Active Investors

Over the year of 2021, many investors exited the market, selling their property to take advantage of the strong house price growth.

But, and this is a huge but, this trend has reversed in 2022, with investors becoming increasingly active in the market. 

We observed a comeback of investors since COVID-19, “committing to $10.3 billion in investor loans as of December 2021, a rise of nearly 75% in the past 12 months”, according to Dr Mardiasmo.

During this time, the proportion of investor finance also increased, with total housing loan commitments rising from 23% in December 2020 to 32% in December 2021.

In addition, some investors have shown regret when opting out of the market too soon. 

Ryan Khorianto, a property investor, has two investment properties in Sydney, one in Lidcombe that he purchased five years ago and one in Leppington that he purchased several months ago and his own home.

Mr Khorianto sold another investment property in western Sydney in the mid-2010s, and while he made a $200,000 profit, he said it was a good lesson to hold onto the property for the long term.

He believes it would have increased in value during the most recent boom. Would you do the same thing if you were Ryan? Would you hold on? 

Now Is A Great Time To Invest!

Properties for sale across Australia are flying off the shelves *literally*, as current home buyers are snapping up homes fast to lock in low mortgage rates before interest rates rise in the coming months.

So now might be the perfect time to secure your investment property. 

Give us a call at (02) 9056 4311 or enquire here to speak with one of our investment strategists to find out how you can start building wealth through property today.

The First Home Loan Deposit Scheme – Everything You Need to Know

Daniel Chadrawy on March 31, 2022

Did you know that you could buy your first home with just a 5% deposit and pay no lenders mortgage insurance (LMI)?

Thousands of first home buyers have successfully secured their spot, bought their homes sooner and saved thousands from LMI exemption.

So here is the sign that you have been looking for! Check your eligibility criteria below and start your homeownership today.

What is the First home loan deposit scheme (FHLDS)?

How does the First Home Loan Deposit Scheme work?

It might seem overwhelming to save up to 20% of the home deposit. That is why The First Home Loan Deposit Scheme (FHLDS) allows first home buyers with deposits as low as 5% to get a home loan without paying Lenders Mortgage Insurance (LMI) fees.

Based on the maximum regional price cap under the scheme, first home buyers can save anywhere between $10,000 and $30,000 in LMI fees.

Moreover, the best part is that eligible first home buyers can use the scheme with other government programs. These can be the First Home Super Saver Scheme, First Home Owners Grant and Stamp Duty concessions.

eligible first home buyers

The New Home Guarantee Scheme Expansion (Updated 29th March 2022)

The New Home Guarantee Scheme is, in fact, the other name of the First Home Loan Deposit Scheme.

Under the Federal Budget Announcement made yesterday 29th March 2022, this scheme is expanded to assist more first home buyers to enter the property market.

50,000 places are now available across the three schemes for First Home Buyers, including

  • 35,000 places for First home buyers to buy new homes with a 5% deposit
  • 10,000 places for buyers to buy or build new homes in regional areas
  • 5,000 places for single parents to buy/built homes with a 2% deposit

Singles earning up to $125,000 and couples earning up to $200,000 will be eligible for all three scheme components.

The Family Home Guarantee scheme (single parents)

The new Family Home Guarantee allows eligible single parents with dependants to build or purchase a home with a deposit of just 2% without paying LMI.

Unlike the two schemes above, you don’t have to be a first home buyer to qualify for this scheme.

For example, if you are a single parent and found the perfect home for $550,000. But, you have been struggling to save enough for the standard 20% deposit of $110,000 required while paying rent.

Now, with the Family Home Guarantee, you could move into your dream home sooner, with just an $11,000 deposit (2%).

The Regional Home Guarantee Scheme

Freshly announced as part of the 2022-23 federal budget, this new scheme will help Aussies buy or build a new homes in regional areas. The government also hopes it will incentivise more migrants to settle in regional areas.

Under the Regional Home Guarantee Scheme, 10,000 home buyers will be able to buy or build a new home in regional areas with a deposit as low as 5%. Plus, the scheme will also spare them from having to pay lenders mortgage insurance (LMI).

Are eligible for the home loan deposit scheme?

#1 Your personal circumstances

First and most importantly, you should consider whether your individual situation meet all of the following criteria. They directly relate to your eligibility as a first-time home buyer eligible for the scheme.

There are several eligibility criteria that you need to meet:

Singles Vs Couples Application

The First Home Loan Deposit Scheme is available for both singles and couples.

Suppose you buy your first home on your own, and you want to apply for the first home loan deposit scheme. In this case, you need to check your eligibility criteria about your own circumstances.

On the other hand, if you are buying your first home with your spouse or de facto partner, where you are both named borrowers for the home loan, you can apply under the scheme as a couple. Still, you need to provide your lender with evidence confirming your relationship.

Noted that loan arrangements with your relatives, such as your parents or sibling, will not be eligible for the scheme.

the first home loan deposit scheme

An income test

To be eligible, your taxable income for the previous income year must not be more than $125,000 p.a. if you are a single first-home buyer.

For couples (married or in a de-facto relationship), your total income must not be more than $200,000 p.a.

Each income year starts on 1 July in a calendar year and ends on 30 June in the next calendar year. So, if you enter into a home loan agreement with your lender between this time, you would need to be able to provide your income tax assessment notice for the 2020-21 financial year.

A deposit requirement

The home loan deposit scheme assists singles and couples who have at least 5% of the value of an eligible property saved as a deposit. It is also a requirement of the scheme that you use the maximum amount of your savings towards your deposit.

If you have 20% or more saved, your home loan will not be covered by the scheme.

So, if you have less than the 5% minimum or more than the 20% maximum, you will not satisfy the deposit requirement for the scheme.

A citizenship test

This home loan deposit scheme is only open for Australian citizens, which means that you and your partner (if you apply as a couple) need to satisfy the citizenship test.

You will not satisfy the citizenship if at the Home Loan Date:

  • You are a permanent resident of Australia or a New Zealand citizen.
  • You are the Australian citizen’s spouse or de facto partner but are not yourself an Australian citizen.
  • You were previously an Australian citizen but have not reclaimed your citizenship.
  • You applied for or received notice of a positive decision on your application for Australian citizenship but have not received your citizenship certificate.

australia citizenship

A minimum age test

You need to be at least 18 years old or over to be eligible for the scheme. As part of a couple, you both need to satisfy the minimum age test.

A prior property ownership test

It’s important to understand that this scheme assists genuine first home buyers.

So, to be eligible for the scheme, you need to be a first-time homebuyer who has never owned:

  • Freehold interest in real property in Australia
  • An interest in a land lease in Australia with a term of 50 years (or more), or
  • A company title interest in land in Australia.

Again, if you are applying as part of a couple, both of you need to satisfy the above conditions.

An owner-occupier requirement

The home loan deposit scheme does not support investment properties. You must be an owner-occupiers who intend to move into and live in the property as the principal place of residence.

Under your Home Buyer Declaration, you will need to declare that you intend to:

  • Start living in the property you purchase within 6 months from either the date of purchase or the date an occupancy certificate is issued
  • Continue to live in that property for the duration of your home loan, which has a guarantee under the scheme.

You need to make sure that you have carefully checked all of the above documents. And be sure to speak to your lender and/or ask for professional advisers in case you’re unsure of any matter.

#2 The types of homes you are going to purchase

first home loan deposit for eligible first home buyers

You must be wondering what types of properties are considered under the home loan deposit scheme. Here’s the good news, most of the properties are included!

  • An existing house, townhouse or apartment
  • A house and land package
  • A vacant land together with a separate contract to build a home
  • An off-the-plan apartment or townhouse

If you are purchasing an ‘off-the-plan’ home:

  • You must have signed the contract of sale prior to the settlement date for your home loan
  • The settlement date for your home loan must occur within 90 days of your home loan becoming guaranteed under the scheme.

You must also move into the property within 6 months of your home loan’s settlement date.

#3 The property price threshold

There are thresholds on the property’s value, depending on which state or territory you are located. If your property is more than the price cap for its location, you will not qualify for the scheme.

#4 The lender for your home loan

Depending on which state or territory you live in, there are property value thresholds. If the value of your property exceeds the price cap for its location, you will not be eligible for the scheme.

A listing of these lenders is on the Scheme webpage at www.nhfic.gov.au.

Even if you are told that a specific institution is a Participating Lender, you should double-check that they are listed on the Scheme’s website.

If you are unsure whether any organisation or person is a Representative of a Participating Lender, you should contact the lender directly to ask.

pay lenders mortgage insurance

How to apply for the First Home Loan Deposit Scheme?

You can apply for the home loan deposit scheme directly or through a mortgage broker. Still, the lender must be a participant approved by the National Housing Finance and Investment Corporation (NHFIC). You can check the Participating Lenders List here.

The lenders or mortgage brokers will assess your eligibility alongside other standard home loan considerations such as your employment status, repayment ability, credit requirement etc.

The application must be submitted within 14 days and assessed as conditionally eligible to progress to a certified guarantee. Once the loan is pre-approved, you’ll have 90 days to return a signed and dated contract.

first home owner grant

Pros and cons of the Scheme?

For many people, purchasing their first home is a dream come true. It means no more putting up with renting, and it feels like you’re making progress in life while having your own place.

The first home loan deposit scheme has merit because the government acts as a guarantor on up to 15% of the property’s value, eliminating the need for LMI and resulting in significant savings.

However, you should also consider the pitfalls of the scheme, not least of which is buying a home with a mere 5% deposit. Below are some considerations to make.

The Pros:

  • Avoid lender’s mortgage insurance (which typically costs around 3-4% of the purchase price) and use this for the actual home deposit.
  • Get into the property market and own your first home sooner.
  • Your mortgage repayments will go towards paying off your home loan instead of on rent.
  • Act as an investment property as prices could rise after purchase.

The Cons:

  • A 5% deposit means that you will need to pay interest on 95% of the home’s value. So, you will need to pay more for a monthly repayment and more interest in the long run.
  • There is a risk of ending up in negative equity, where the outstanding balance on a mortgage is greater than the property value.
  • You might be charged a higher interest rate due to a small deposit. Other things to consider before applying for the FHLDS

Do you meet the lender’s credit requirements?

Lenders will typically assess your credit score when you apply for a loan. Your credit score determines how trustworthy you are as a borrower. It is generally measured on a scale of 0 to 1,200, or 0 to 1,000, depending on which credit bureau is calculating the score.

Generally speaking, the higher your score, the more desirable you are to lenders. In general, paying your bills on time and making regular progress in paying down debts will help improve your credit score. In contrast, bankruptcies, defaults, unpaid debts and multiple unsuccessful loan applications will lower it.

Can you meet repayment throughout the whole period?

A lower deposit usually means a larger mortgage. Also, keep in mind that you will not be able to switch to interest-only payments while you are covered by the scheme. If your circumstances change, you must continue to make the same payments. As a result, make a buffer for yourself. So be sure to prepare a buffer for yourself.

Do you have genuine savings?

If you can’t show that you’ve saved at least 5% of the home’s value or less than 20% of your home value, you may not be eligible for the scheme at all, though some lenders may still allow you to borrow.

Can you afford stamp duty and other upfront costs?

As a first home buyer, you might be eligible for stamp duty exemption and other discounts for the upfront costs. However, you still need sufficient funds to pay for these amounts.

What if you are not qualified?

Don’t worry if you don’t qualify! Other government schemes provide you with additional opportunities to enter the property market. You can, for example, have a family member act as a guarantor for a portion of your loan.

Want to know more?

Your first time buying a home is a significant life milestone. It is, by no doubt, a major purchase and could be one of the biggest you’ll make in your life.

With the help from the First Home Loan Deposit Scheme (FHLDS) and other government schemes, you can get to homeownership much sooner and save yourself thousands!

To help you get well prepared before stepping into the property market, Liviti is here to provide you with all information you need! Get in touch with us today at (02) 9056 4311 or click here for more guidance and talk to an expert.

The First home Super Saver Scheme

Daniel Chadrawy on March 30, 2022

We’ve all heard that it’s not easy for young people to buy a property in the current property market. Record high house prices, slow wage growth, and other economic uncertainties make everyone struggle to buy their first home.

So, will putting money into a super fund to save for a home deposit make it easier?

The First Home Super Saver Scheme will let you do just that. So, let’s dive right in.

How does the First Home Super Saver Scheme work?

As you all probably have known, super is the money set aside for your retirement.

However, to reduce pressure on housing affordability, the Australian Government introduced the First Home Super Saver Scheme in 2017, allowing first home buyers to make voluntary contributions towards their super and use it as a deposit.

Your savings, but lower tax

While it may not be the simplest strategy to increase your savings for a home purchase, this scheme can help you lower your taxable income while increasing your deposit. Simply put, because your super account has a lower tax rate than your savings account, you’ll wind up saving more.

If you make $60,000 per year, for example, your tax rate outside of super is 34.5 per cent, including the 2% Medicare levy.

Meanwhile, your super’s effective tax rate of voluntary contributions is only 15%. So by putting the money in super, you reduce your taxable income – the higher your tax rate, the better the benefits.

The earnings from your contributions

Other than the amounts you’ve contributed to your super fund, you can also withdraw the interest that you receive from your contributions.

The good news is that the Government allows FHSS scheme participants to calculate earnings using a fixed deemed rate, so you won’t lose out if your super performs poorly. The current “deemed rate” is 3.04% – which is much higher than the interest offered by savings accounts.

So, if your yearly super saver contribution is $15,000, $387.60 would be taken into account when you withdraw your FHSS money.

How the FHSS Scheme works

Here is a simplified version of a step by step on how the FHSS Scheme works:

  • Step 1: Make voluntary contributions to your super fund.
  • Step 2: Save up to the capped amount of $30,000 for singles and $60,000 for couples (Maximum $15k per financial year)
  • Step 3: Apply to the ATO for an FHSS determination – this will tell you the maximum amount that you can release.
  • Step 4: Withdraw funds from your super and buy your first home

How to set up and contribute to FHSS?

To be clear, the FHSS is not a new or separate account into which funds can be deposited. It allows you to save money and buy your first home using your existing super account. Your FHSS is ‘set up’ when you meet the requirements.

Here is how you can contribute to your FHSS:

  • Before-tax contributions include salary sacrifice contributions and any personal after-tax contributions you claim a tax deduction.
  • After-tax contributions include any extra contributions you make from money you’ve already paid tax on, like your after-tax salary.

Note: You can’t include contributions made by your employees or anyone else on your behalf in FHSS determination.

How much super can you contribute under the First Home Super Saver Scheme?

This scheme allows you to save up to $30,000 in voluntary contributions altogether. And, You can save up to $15,000 over the course of each financial year.

Under this scheme, you can use super as a deposit to buy any residential property in Australia or build your own home.

Changes to the scheme from July 2022

From 1 July 2022, you’ll be able to save more through the scheme – up to $50,000 per person.

The maximum amount per year that you can contribute remains the same, capped at $15,000. So, if you want to get the full benefit out of this scheme, make sure to start contributing to your super funds at least 3 years before you actually buy.

Are you eligible for FHSS?

If you are a first home buyer and considering using your superannuation to buy your first home, the below eligibility criteria apply:

  • Be a member of a superannuation fund.
  • Be at least 18 years old.
  • At least one applicant must be an Australian citizen or a permanent resident at the time of making an application.
  • Not currently and have never previously owned property in Australia, including investment property, vacant land, commercial property, a lease of land or a company title interest in land.
  • Not previously made an FHSS release request under the FHSS scheme

Check out more here.

Note that eligibility is assessed on an individual basis, meaning that if you apply as a couple, you both can contribute to your super and then access your own FHSS contributions to purchase the same property.

For example, two persons buying the same house might each get up to $30,000, bringing the total amount available to $60,000. From 1 July 2022, the total money a couple can withdraw is up to $100,000.

How to apply for the first home super saver scheme?

If you have satisfied the eligibility requirements for the FHSS Scheme, you can request the ATO to issue an FHSS determination and a release. And you can do this through the ATO’s service on your MyGov account — you don’t need to contact your super fund.

This determination will state the maximum amount that can be released to you under the FHSS Scheme as of the determination date. You can ask for an FHSS determination as many times as you want.

ATO will consider applicable taxes to determine how much money could be released from your super saver fhss scheme.

  • 100% of eligible non-concessional contributions (after-tax contributions)
  • 85% of eligible concessional contributions (pre-tax contributions)
  • Associated earnings using the deemed rate of return.

One thing to remember is that you must obtain an FHSS determination before signing a contract to buy any property. In most circumstances, you are no longer eligible to request an FHSS determination once you sign a contract to acquire a home.

As a result, we recommend that you do so when applying for a home loan. After that, you have a year from the date you requested your FHSS funds to sign a contract to buy or build a house.

Don’t worry if your first home purchase doesn’t go as planned; you will have another 12 months to sign your home contract or cancel your FHSS scheme application.

You can apply for an FHSS determination and request a release here.

voluntary super contributions

Important things to keep in mind before releasing your FHSS money

Once the determination has been decided, you can request the funds to be released. It can be done either from ATO or via your MyGov.

  • You can apply for the release only once.
  • Keep in mind that it might take up to 25 business days for your fund to be released and for ATO to pay you the money. Therefore, you need to buffer in about 5 weeks to get your savings released.
  • You have 24 months in total from the date you apply for FHSS determination to sign a contract to buy or build a home. At the end of your first 12 months, the ATO will automatically grant a 12-month extension and notify you of this.
  • You need to pay tax on the way out too. The ATO will withhold tax based on your expected marginal tax rate.
  • You can lodge your tax return with your actual income at the end of the financial year and get your withholding tax back.
  • Within 28 days of entering a contract to buy or build a property, you must notify the ATO.
  • If you release the money but don’t buy a house, you’ll have to pay additional taxes to keep it or redeposit it in your retirement account.

The Benefits of the FHSS?

As mentioned above, the biggest benefit of using the first home super saver scheme is the lower tax rate you may pay. If your income is less than $250,000 per year, you only pay a fixed 15% tax rate on your contributions instead of your normal marginal tax rate.

You can check the figure below for an easy example of saving you could make with FHSS.

Other benefits you can get from FHSS include:

  • The more salary sacrifice arrangements you contribute to your FHSS, the lower your taxable income. So, you pay less on your income tax too.
  • You will receive a fixed rate interest on your eligible contributions, with less applicable taxes too. The rate you receive is 3.04%, much higher than most interest rates that you get from banks.
  • If you change your mind, the savings remain in your super fund and go toward your retirement savings.

Some limitations you need to consider…

While FHSS allows you to save for your first home using your super account, it does come with some restrictions. To begin with, you can’t take money out of it like you can with a regular savings account.

With FHSS, you can only apply and withdraw your money once.

After that, the ATO calculates your earnings based on your qualified contributions and applies any applicable tax and tax offsets.

The ATO will use’ ordering rules to compute the maximum FHSS release amount. For additional information on eligibility and how to access funding, visit: ato.gov.au/FHSS

Additionally, suppose your annual income (including your before-tax contributions) exceeds $250,000. In that case, you may be required to pay an extra 15% on any or all of your before-tax contributions (bringing the total contributions tax to 30%).

Summary of the pros and cons of the FHSS scheme

Here are the pros and cons of FHSS:

The Pros:

  • Save more money on tax repayments with lower super tax (15%)
  • If you apply as a couple, you both can contribute your funds under the scheme and buy the same house
  • The amount you can withdraw doesn’t vary with falling markets
  • After you withdraw the funds, you will have a total of 24 months window to buy a home with the released money.

The Cons:

  • Money can only be accessed when you purchase your first home
  • Superfund fees apply (generally including an exit fee upon withdrawal)
  • You must save no more than $15,000 per year, so you’ll need to plan in advance if you want to save more
  • It takes time to get your money

residential property

Consider the rising property market

According to CoreLogic, in 2021 alone, median house prices in Sydney rose by a whopping 26%.

Under the current red hot property market, we highly recommend that you consider using the scheme to save for longer vs entering the property market early, based on your finances, plans, and personal circumstances.

If you have saved enough for your home deposit, the tax savings you can take advantage of through the FHSSS may be cancelled out by the extra dollars you’ll pay for a house at a later date.

Seek professional advice!

If you are still wondering whether the FHSS scheme is right for you, you can find more information about the scheme here or speak with a professional financial adviser from our Liviti team.

Real Estate Terminology

Daniel Chadrawy on March 30, 2022

Have you ever found yourself in a conversation about the property and just being flat out confused? We get it. Real estate terminology can be tricky to wrap your head around.

Understanding real estate terminology is the easiest way to be as involved as you can in your property search and avoid any nasty surprises. Of course, it is always a good idea to consult a legal professional during this process but having a good foundation on some of the terms that may appear frequently is definitely helpful.

We have curated a list of real estate terms that may pop up here and there. Feel free to use this as your own little dictionary if you encounter any terms you don’t understand on your property journey!

There are plenty of handy terms in here that you may need to know and understand PLUS more to come. So we suggest bookmarking this so you can come back to it at any point with ease.

TOP TIP: if you’re looking for a particular term, don’t want to scroll on and on and on, simply press Ctrl + F (Windows) or Cmd + F (Mac) to find it quickly. If you’re using a mobile phone click share and then ‘Find On Page’. It really is that easy!

A

A/C

An abbreviation for Air-conditioning that is placed inside of the property. It can be in the form of fixed A/C or ducted A/C to control the overall temperature of the building.

Adj

An abbreviation for Adjacent is used to compare specific features and benefits that are next to or adjoining something else.

Amen/Amenities

An abbreviation of Amenities, this is a feature of a property that makes it more valuable to potential buyers. These features can be both internal amenities and external amenities.

  • Internal Amenities – features offered and placed in the building.
  • External Amenities – features and services within close proximity to the building.

Apartment

A room or set of rooms fitted especially with housekeeping facilities and maintenance facilities like strata that are in charge of maintaining the complex to which that apartment is a part and usually leased as a dwelling.

API

An abbreviation for the Australian Property Institute, they are regarded as the industry voice for property professionals with essential tools and information. They set and maintain professional practice standards, codes of conduct and Code of Ethics.

Appreciation

In real estate, appreciation refers to your property’s value or, more specifically, how much its value increases over time.

Appraisal

An unbiased estimate of how much a property is worth. When buying a home, this is made by a third party also known as the appraiser so make sure that the loan amount put forward by the lender is accurate.

Auction

An Auction is conducted when a Vendor (someone selling their property) partners up with a real estate agency to create a public sale of the property to the highest bidder (the buyer).

B

BIR

An abbreviation for Built-in Wardrobes is an allocated space room of the apartment where a cupboard is automatically installed and fixed into them.

Bridging Loan

Also referred to as bridging finance, it is a short-term loan used to allow a buyer to purchase a new property if they have not yet sold their current most recent property they sold hasn’t settled yet.

Buyer’s agent (BA)

A licensed and certified representative of a buyer who is looking to purchase a property and helps with negotiations between the vendor and their agent. During the property transaction, they also act as the buyer’s bidder and decision-maker.

C

Cash-Out Refinancing

This occurs when a newer, larger mortgage replaces the old one and is an opportunity for a property owner to use their mortgage to receive cash.

Capital gain

The profit that is made after selling a capital asset like a house or apartment. This is based on what the property initially valued compared to its current market value.

Capital Gains Tax

Capital gains tax results from the profit made from selling an INVESTMENT property only, not a family home.

Capital Gains Tax Discount

When you sell an asset like a property – you are entitled to a discount of up to 50% reduced capital gains tax as long as you have owned the asset for at least 12 months and are an Australian Citizen.

Capital Growth

This is the increase in value that your asset accumulates over time. This is calculated by comparing the market value (what it’s currently worth in the market) to the amount you paid when you first purchased the asset.

Capital Return

This is a returned payment from an investment that is not considered taxable and is not taxed as an income.

Caveat

A warning prohibiting one from certain acts or practices.

Caveat emptor

Latin for “let the buyer beware” is a warning to the buyer that they have the responsibility to thoroughly check the quality of the property they intend to purchase.

Certificate of occupancy

A certificate validating that a building project has reached a stage where it complies with all relevant statutory rebuilding regulations and is ready for occupation.

Certificate of Title

This is a legal document proving the official ownership of a piece of land.

Common property

Property or a part of a property that is not owned by one individual but by the whole group residing there who all have equal rights to use that piece of land.

Contract

A written or spoken agreement, especially one concerning sales, tenancy, and employment, that is forcible by law.

Conveyancer

A licensed professional specialising in giving the buyer information and advice regarding the sale of a property.

Counteroffer

A new return offer that is made by the seller in response to the original offer.

D

Deposit

The amount (usually 10% of the sale price) that needs to be paid as a first instalment on the purchase of something such as a property. Very important for off the plan apartment purchases as well, as a deposit will take your chosen apartment off the market until the project is completed.

Deposit Bond

An insurance policy acts as a cash substitute guaranteeing that the buyer will pay the vendor the deposit at the settlement date.

Depreciation

The amount that the value of an asset such as a property is reduced over time. In real estate, this term refers to a decline in the value of the land, the building’s structure, or any equipment assets within it such as windows, carpet, ovens or blinds.

Depreciation Schedule

A report outlining all of the available tax depreciable assets relating to a residential investment property or commercial building.

Disbursements

Costs incurred by a licensed estate agent, solicitor or conveyancer which can be passed on to the client.

Display Home

A house, townhouse or villa that has been built for display purposes to help the buyer get an idea of its appearance and inclusions when they enter a contract for the building of their own house.

Display Suite

Display suites provide potential purchasers with the opportunity to preview features & finishes of the future property, often featuring sample kitchens & bathrooms, or at least finishes boards. This creates an image in their minds of how a particular project is going to look.

Display Apartment

A finished apartment that is built for display purposes, especially for off the plan apartments, to help the buyer get an idea of its size, what it will look like, and the type of fittings and fixtures it will include.

Due Diligence

Due diligence is an investigation or review of the physical and financial of the property and its location prior to purchase.

E

Equity

The difference in the value of a property asset and the debt owed on that asset.

Equity = (what your property is worth) – (how much debt you owe)

For example, if your property is worth 800,000 and your mortgage is 430,000,

Equity = 800,000 – 430,000 = 370,000

Equal Credit Opportunity Act

A legal act created to make it unlawful for creditors to discriminate against any applicants due to race, colour, religion, national sex, marital status, age, disability or because they receive public assistance.

Exchange of contracts

The legal process where two legal representatives of the buyer and seller swap signed contracts to bind the agreement to sell a property. A deposit is usually paid at this time and may be forfeited if either party backs out of the deal.

Exclusive listing

When the seller of a property (vendor) has signed an agreement to make an estate agent solely responsible for the sale of their property.

F

Fair Market Value (FMV)

An accurate price that property or asset would sell for in an open and competitive market where both buyers and sellers understand the asset being sold with no added pressure to rush the transaction.

FHG

An abbreviation for Family Home Guarantee, this is a government initiative that supports eligible single parents with dependants in purchasing a family home by allowing them to pay a deposit as small as 2% and protecting them from Lenders Mortgage Insurance.

FHOG

Also known as First Home Owner Grant, it is a national scheme funded by states and territories providing a single grant that is payable for first-time homeowners that meet the given criteria.

Fittings

Removable items in a home can be taken out without damaging the items or space from where they were located. These items will not be noted in the contract, So if you are hoping the seller will leave the blinds that have been perfectly made for that apartment, make sure its in the contract!

Fixtures

Items installed securely to the property that would be impossible to remove without damaging the item or structure of the property. These are mentioned usually on the front page of your contract, ensure you check these carefully.

Foreclose

The removal of the owner’s right, title and interest of a property or asset. This is usually due to a lack of due payments being made.

G

Gazumping

This occurs when your offer to purchase a property is accepted, but the property is then sold to someone else who may have offered the seller a higher bid.

Guarantor

Someone who agrees to take responsibility for the home loan if the main borrower fails to pay the lender per the terms in the initial loan agreement.

H

Holding Deposit

A holding deposit is a sum of money that is paid to someone selling their property or asset as part of an offer to buy. This occurs before the signing of any paperwork.

House

A building that allows humans to reside in. Unlike other types of property, a house tends to be larger – often with more than three bedrooms, and usually comes with the land below it.

Household insurance

Insurance that covers your house and other structures/belongings of your property against all risks, including theft, extreme weather damage, and fire.

I

Interest

The amount of money that a borrower regularly pays to a lender in addition to the main amount borrowed.

Interest Rate

The interest rate is the amount of money a lender charges a borrower as a percentage of the amount they were loaned.

Interest-only loan

A type of loan which ensures the borrower is required to make only the interest payments on the loan for a specified period of time.

Investment

An asset acquired with the intent of generating income or appreciation from it.

Investment property

Property that is acquired by the owner or the tenant under a finance lease to earn rental income, capital growth or both.

L

Land Tax

An annual tax levied by the government that landowners must pay on the assessed value of their land.

Landlord

The owner of a house, apartment, land, or real estate which is rented or leased to an individual or business.

Landscaping

The act of modifying the visual features of an area of land. For example, this can be done by planting trees, shrubs, flowers, grass and other plants, or even putting in new paths or stepping stones in your garden.

Lease

A contract where one party (the lessee) agrees to pay or make a series of payments to rent a property owned by another party (the lessor) for a set time period.

LMI

Also known as Lender’s Mortgage Insurance, this is insurance that a lender takes out to protect them from the risk of not covering the outstanding loan balance if the borrower can’t meet the loan payments and the property is sold for less.

Loan Contingency

A written clause in a legal real estate contract stating certain requirements the buyer must meet before the approval of the property sale.

LVR

Also known as the loan-to-value ratio, this is the amount of money that needs to be borrowed against the value of a property expressed as a percentage.

M

Market Price

The current price at which a property can be bought or sold. Market value is determined by supply and demand and can change very quickly.

Mortgage

If a buyer cannot pay for the property upfront, a mortgage loan is used where the property can be used as collateral if the borrower is unable to repay the amount that they have borrowed from the lender plus interest.

Mortgage protection insurance

Also known as mortgage guarantee insurance, this is an income protection policy that provides coverage for a borrower’s mortgage payments in the event of redundancy, illness or injury that prevents them from working.

N

Negative gearing

This occurs when the costs associated with the investment property are more than the income it generates.

Net income

Can be calculated as an income minus the cost of goods sold, expenses, depreciation, interest, and taxes.

No cash-out refinance

The refinancing of an existing mortgage for an amount equal to or a landlord amount of the remainder of the existing loan balance.

Notice of Termination

The notice given by the landlord or tenant when they want to end the rental agreement and vacate the property.

O

OC

An abbreviation for Occupation Certificate, this is a document issued by the local government agency or building department certifying that a building adheres to the national building codes and is in a suitable condition for occupancy. An apartment complex must receive OC before settlements can commence with purchasers.

Offer

When the buyer presents to the seller the amount of money that they are willing to pay for their property which they can then accept, reject or make a counteroffer.

Off the plan

This is when a buyer signs the contract to purchase an incomplete property that is still under construction.

Offset account

An everyday transaction account where the credit is offset against the amount owed on the home loan or mortgage loan to reduce the interest charged.

Open House

Sometimes also called an open inspection, is a scheduled time when a property is made available for viewing by potential buyers.

Outgoings

Expenses are associated with the upkeep and maintenance of the property that the tenant has agreed to pay on top of the rent.

Owner’s Corporation

The owners of a strata scheme who are responsible for the repair, maintenance and overall management of the common property.

Owner Occupier / Owner Occupancy

This term is used when the legal owner of a property, like a house or an apartment, occupies and uses it.

Owner’s Reserve price

The lowest amount that a seller is willing to accept as the final bid on their property.

P

Pre-approval

When the lender agrees, in principle, to the lending of a certain amount of money towards purchasing a property but hasn’t reached the full or final approval.

Private Inspection

These are not publicly advertised but to buyers who are screened before their appointment viewing to ensure that they can afford the property price and are serious about following through with the sale.

Property Management

They oversee and manages many aspects of different real estate properties, including land, residential and commercial properties.

R

Rates

All property owners pay rates to help pay for maintenance, services, facilities and open spaces. Property values are used as a basis by the council to calculate the amount each owner needs to pay.

RBA

The Reserve Bank of Australia, Australia’s central bank, provides a range of banking services to the Australian Government and overseas central banks and conducts monetary policy to achieve its goals of price stability, full employment and the economic prosperity and welfare of the Australian people. [edit]

Real Estate

Property consisting of land or the buildings on top of it.

Real Estate Agent

Also often referred to as real estate broker or realtor, they are a licensed real estate professional who represents the people who buy, rent, sell or rent out real estate properties.

Repayments

The amounts of money that must be paid at regular rates to repay a debt, in real estate, this is usually a mortgage payment.

Reverse mortgage

Usually used by older homeowners, this is a type of mortgage allowing them to make use of the equity in their homes and doesn’t require a mortgage repayment until they have vacated the property as it is secured by a residential property.

S

Settlement

The process of taking legal ownership of the property consists of a pre-settlement inspection, signing the transfer documents, registering the transfer of ownership with the relevant government agency and making final payment to the seller.

Settlement date

The agreed-upon date that the property sale is finalised. On this day, the buyer pays the vendor and takes property ownership.

Second mortgage

A mortgage loan that is placed on a property in addition to the original one without having to refinance the first.

Solicitor

A legal professional who provides information and assistance to their clients regarding legal advice on an issue or services like property rights and contract making.

Stamp duty

The government tax levied on legal documents during the transfer of assets or property ownership and is calculated as a percentage of the contract value.

Strata Scheme

A system of multi-level apartment blocks and horizontal subdivisions comprising of private residences and communal spaces with multiple owners.

Strata Plan

A plan representing the owned buildings and lots of the strata scheme. A lot boundary can be identified as horizontal or vertical where:

  • Vertical boundaries – the lines on the floor plan relating to structures.
  • Horizontal boundaries – structural surfaces like a floor or ceiling.

Strata Title

A legal document of ownership for property or land in the strata scheme.

Sunset Clause

A condition included in some property sale contracts, like those for off the plan properties, that places a time frame (sunset date) on the validity of the contract. It is designed to protect the buyer and seller.

T

Tenant

Also referred to as a lessee, this is a person or legal entity who pays rent to legally use and occupy a property under the terms of a lease.

Terrace

A relatively level paved or planted outdoor area adjoining a building.

Title

A “title” is a legal document showing legal ownership of a property and grants the exclusive use of the land, allowing you to build on it.

Townhouse

A self-contained property within a complex which usually has shared walls on one or more sides of the property. The buyer owns their dwelling but has shared ownership of the land and common property with other owners in the complex.

Trust account

An account that is managed by a real estate where funds concerning real estate transactions are held for or on behalf of someone else for a specified period of time and cannot be used for other purposes.

V

Vacancy

A property or lot that is available or unoccupied.

Vacancy Rate

All of the vacant or unoccupied rentals in a property such as an apartment complex at a particular time are expressed as a percentage.

Valuation

Also known as Bank Valuation, this is an estimate of the property’s value made by a bank to determine the risk in lending money for it.

Vendor

A person or entity who offers something for sale. In a real estate transaction, they are the person or entity selling the property.

Y

Yield

Also known as rental yield, this is the measurement of annual rental income on investment property expressed as a proportion of the property value.

Z

Zoning

A planning tool used by local governments to determine the nature of the land or property and its intended use.

Conclusion

If you would like some more clarification or information on any of these real estate terms or are looking for guidance on your property journey, Liviti is happy to help!

If there is a term we have missed please let us know so we can help you and future readers!

Give us a call at (02) 9056 4311 or leave an enquiry here to chat with one of our friendly and informative team members to answer all your property questions and get you in your dream home asap!

What is a studio apartment?

Daniel Chadrawy on March 16, 2022

If you’re on the hunt for a new apartment, maybe even your first apartment, then you may have come across a studio apartment or two. Studio apartments and one-bedroom apartments are some of the most popular apartment options for their smaller, organised and functional space.

So say goodbye to difficult roommates! A one-room apartment is a perfect place for home buyers looking to live solo in a convenient and optimal space without breaking the bank.

studios

Studio Apartment Meaning

#1 Studio apartment meaning & configuration

Contrary to common assumptions, a studio apartment isn’t determined by size. It is actually defined as a self-contained unit that has an open floor plan – meaning the bedroom, living room, and dining area are all in a single room space with no walls separating them.

Some floor plans of a studio apartment might have half walls or built-in bookcases to help divide the space. But don’t worry, the bathroom is an exception and will be a completely separate room.

#2 Studio apartment size?

The average size of a studio apartment generally varies between about 30 – 60 square metres, some might still include a balcony. And, the open floor plan is built effectively to utilise every part of it.

In order to create the illusion of a large room, you might find that some have higher ceilings and more or taller windows that let in lots of natural light.

#3 Common Studio apartment floorplan

There are a variety of studio apartment floor plan styles but generally, it consists of open plan living where the kitchen, living and dining areas are situated in one room. The bedroom is usually combined into the main living area with or without a partition to create privacy with the bathroom and laundry usually situated in a small enclosed space nearby.

just one room

Source: apartmenttherapy.com

#4 Studio apartment Price

The price ranges of studio apartments can vary depending on their location but regardless, they are the popular choice because of their affordability. Studios are generally less expensive than a 1 bedroom apartment although the rental income between the two property types can be quite similar.

Studio prices can start from as low as $395,000 so they offer an affordable entry point to home seekers.

Studio Apartments Vs. One-Bedroom Apartments

Often, on their apartment search, buyers get confused between a studio apartment and a 1 bedroom apartment.

You’ll likely need to pay a higher purchase or rent prices for a one-bedroom than you would for a studio. But the main difference between the two is that, unlike a studio apartment, a one-bedroom apartment will have a separate bedroom with a door and most likely more space for storage. Some one-bedroom apartments have a bathroom connected to the bedroom, which provides more privacy.

Other differences include:

  • Sizing – one-bedroom apartments tend to be slightly larger than studio apartments.
  • Extra space – the separate rooms in a one-bedroom apartment will likely allow for the opportunity to have more furniture since you’ll have more space to fill.
  • More privacy – rather than having everything in an open and common space like a studio apartment, each room in a one-bedroom apartment will be separate, including the kitchen.
  • For those who like to entertain – with the extra space and privacy, a one-bedroom apartment is the better option for those who like to host gatherings at their place.

one bedroom

Pros and Cons of buying a Studio apartment

Studio apartments may not be for everyone, but there are definitely several advantages to purchasing one.

We’ve compiled a list of pros and cons for you to take into consideration when looking to purchase a studio apartment.

Pros

Some of the advantages to buying a studio apartment include:

  • Living a minimal lifestyle free of clutter
  • Less property maintenance and cleaning than one bedroom apartments
  • Lower price point than a regular 1 bedroom apartment
  • Saving money on electricity bills
  • Central location at a lower price
  • Generally close to public transport
  • Good rental return potential

Cons

Some of the disadvantages to buying a studio apartment include:

  • Minimal privacy as it is one open space
  • Limited space and storage – would be difficult if you like to frequently entertain
  • Only suitable for a sole home buyer
  • Could have difficulty getting a home loan

right apartment

Things to consider when choosing a Studio apartment

What type of home loan?

The affordability of a studio apartment can come with stricter lending criteria. Since studios are typically smaller than a standard apartment, some lenders may not approve loans for properties under 40 square metres. However, depending on your budget and how much you plan on borrowing, some lenders can sway their guidelines for smaller properties.

What are the costs?

Studios are generally cheaper to buy and rent than a one-bedroom apartment. So if you’re looking to save money through the purchase price, rental costs and strata fees, then a studio apartment just might be the alternative for you.

Where is it located?

Location is everything so it would be beneficial for you to consider studio apartments in a convenient location for you. They are most popular amongst university students and young professionals living on their own due to their close proximity to the places that they frequent such as:

  • Place of employment
  • Universities
  • Public transportation
  • Shops
  • Family
  • Hospitals

These amenities are generally the more desirable and therefore the primary reason for choosing a studio apartment in a location that contains them or is nearby.

What apartment features are available?

Studio apartments have the prime features of :

  • Open plan living – to optimise living space
  • Floor to ceiling windows – to let in lots of natural light
  • Cosy intimate space in a single with easy maintenance
  • Minimalist interior design to avoid the smaller space from looking too busy

rent

Making the Most of Your Space

How To Organize A Studio Apartment

A studio apartment is best suited to people who strive to live a minimal lifestyle. When organising your space you will want to declutter and make sure you aren’t holding onto items that you don’t need or that don’t work with the size of your space.

Make trades and compromises. It would be a good idea to trade some of your full-sized furniture in for space-saving options that contain inbuilt storage.

For example, you could buy:

  • A bed that has drawers underneath it to maximise the storage space whilst maintaining a tidy appearance
  • Or a Murphy bed – you can store it away vertically against the wall when you’re not using it to open up the main living space even more
  • A coffee table that has cupboards, drawers or even open space underneath it
  • Furniture items that can double as additional space for storage – a storage ottoman can also be used as a footrest or a place to set your drink.

Furniture, rugs and dividers or privacy screens are perfect opportunities to both personalise the single room and separate each of the living spaces from one another. These additional touches create distinct areas in the single room without closing up any of the space to help you make the most of your studio apartment.

It can be very easy for a studio apartment to look cluttered so, in order to keep it organised, it’s most crucial to have a designated spot for each of your items.

Your Kitchen Area

The most common kitchen design in a studio apartment is where the cabinets and full-sized appliances are lined up along one wall. In larger studio apartments, you might also find an island or an ‘L’ shaped kitchen to maximise on both bench and storage space. But overall, these layouts are both functional and provide more open space to add to allude to a large room.

separate kitchen

Dividing It Up

Sliding doors

Sliding doors create a distinct separation between rooms, ultimately creating privacy without impeding on space like a hinged door would. They also speed up heating and cooling by reducing the size of the room. Sliding door materials vary from glass to wood and metal so they can ultimately work with any style and space.

bedroom space

Room divider curtains

Room divider curtains are perfect for creating separate zones within any space. They are a functional and versatile alternative to sliding doors as they are quite simple to install and remove, perfect for home buyers/renters! They can also add a visual and design element to a space to enhance colour and texture throughout the apartment. Best of all, you can personalise them however you like to make your studio apartment feel more like home.

bed

Source: curtain-tracks.com

Bookshelves

Bookshelves are another option to divide up the room as they can double as more storage space whilst also adding to the overall aesthetic of the apartment. Talk about a triple bonus! Whether you prefer a floor-to-ceiling bookshelf or a half of one to create partial walls, they are a great option to consider adding to your studio apartment.

additional storage space

What do you think?

It’s no secret studio apartments are gaining lots of attention and popularity, especially for sole home buyers or single renters. Their smaller open floor configuration makes the living space one of convenience and is also overall cheaper than its alternatives.

At Liviti, our property experts are dedicated to helping you find your dream property.

If you’ve decided a studio apartment is the one for you or you would like some more information, give us a call at (02) 9056 4311 or enquire here to book an appointment.

The Best Suburbs in Sydney to Buy Property

Daniel Chadrawy on March 16, 2022

The three most important factors about buying a home are location, location & location. In fact, finding the right location for your home already decides the majority of your success!

Sydney, as big as it is, is full of diversity meaning no two suburbs are the same. It can be helpful to have an idea of what you’re looking for in a suburb or criteria it must meet in order for you to live there. For some people, it’s all about affordability and for others, the final decider could be quality schools in the area or good and reliable transportation options.

We’ve compiled a list of some of the best Sydney suburbs to live in by region to make this decision a little easier for you.

best suburbs sydney

But first, let’s ask the big question:

What makes a suburb desirable?

Sydney suburbs that are convenient in terms of location, amenities and facilities like shopping, dining and transportation as well as visually appealing, are more popular amongst property buyers and investors. However, liveability is heavily dependent on the life stage of a buyer or investor, and greatly influences your reasons for moving to a specific area.

Some factors include:

#1 A high sense of neighbourhood safety

Suburbs with a high sense of neighbourhood safety and low crime rate are significant drawcards for young families.

By global standards, Sydney is an extremely safe city to live in. In fact, it was ranked the fifth safest city in the world in 2019 by The Economist Intelligence Unit, beating out ongoing rival Melbourne, which took 10th spot.

But within the city, some suburbs might be at lower risk than some when it comes to crime statistics.

So, it’s important to have some research on the suburb’s crime rate before deciding to move into your new home. For example, the northwest and southwest suburbs tend to have a lower rate of recorded criminal incidents by population, while the inner city suburbs have higher crime rates due to their central locations, according to ABS data.

family friendly suburbs

#2 Well-regarded local schools

For those with children or intending on having children in the future, you might look to live close to education.

Normally, a suburb that is in close proximity to schools or universities’ catchments tends to be more livable, bonus points if it’s zoned for a well-regarded public school.

With My School website, you can find the list of all high-performing schools in your target suburb, see their rank nationally and make the best decision for your children’s education.

#3 Exciting entertainment, dining & shopping options

When looking for a property to buy, most people tend to gravitate towards areas with local amenities nearby. Things like shopping centres, especially those with a wide range of retail and grocery stores, as well as a high density of cafes and restaurants make a suburb incredibly liveable.

Entertainment facilities are another thing to take note of. Exciting places to visit or bring the kids to can be a great break from your daily routine.

  • Is there a movie cinema nearby to unwind
  • Is there a fun karaoke bar to belt out your favourite song?
  • Is there any playground, swimming pool or kid cafe in the neighbourhood?

best suburb has entertainment, dining & shopping options

#4 Nearby health facilities

A popular phrase homeowners use often when deciding on a location are “just in case”. Therefore, the presence of hospitals, GP clinics and other medical facilities are essential for all stages of life.

These local health facilities can also include:

  • General practitioners and medical centres
  • Dentists
  • Chiropractors
  • Nursing homes
  • Psychologists
  • Pathologists

median house price

#5 Suitable for your age group & lifestyle

Younger people tend to navigate towards Sydney suburbs with a lower median house price. A place with a short commute to their work or study and plenty of urban restaurants and nightlife are big factors for young people when suburb hunting.

On the other hand, the older generation will be more inclined to purchase a property in calmer areas like the Illawarra region, where they can settle down, maybe retire in and live comfortably with their smaller family.

family friendly suburbs

#6 Easy access to employment hub

Let’s face it! You normally spend most of your time at your workplace of employment, and all you want is to reduce the travel time to and from your work.

Imagine living in a suburb that is located only 10 minutes from your employment, you can get those few extra minutes of sleep in the morning or squeeze in a quick morning exercise, all to improve your quality of living.

For that reason, suburbs with places of employment nearby tend to be more liveable than others. The inner city and suburbs with a short commute to Sydney’s CBD often attract more homeowners for their desired convenience.

best suburbs

#7 Public Transport and Walkability

The most liveable suburbs are found to be the ones with a good walk score and lots of transportation options.

Transport options

Walkability

Sydney’s inner-city suburbs have the highest walk score meaning most of your daily errands or activities can be completed on foot. This is a desirable trait of a suburb as it promotes healthy living through exercise and can save you lots of money on fuel and public transport.

Trains and Light Rails

Most suburbs have a train station but only a few have a light rail. Popular suburbs tend to be the ones that are near Sydney city and make it easy to get to. A good train or light tail line is crucial in this instance.

The most desirable one would have a short commute, without too many stops and without having to change trains or light rails. This makes sure that you get to your desired location quickly and stress-free.

Buses

One thing to be aware of is the close proximity of your home to the nearby bus stop. Often, properties with a bus stop on the same street are more desirable as it shortens the duration of your commute.

Ferrys

Some suburbs in Sydney like Manly and Parramatta are easier to get to via Ferry. Not only is it a quicker and more convenient mode of transport, but it can also guarantee you a gorgeous view of Sydney Harbour on the journey.

#8 Green Space & the Outdoors

Green, open spaces like parks and reserves are common factors in Sydney’s most liveable suburbs, providing fresh air and higher oxygen levels.

The convenience in terms of location offers a great opportunity to stay fit or to take a break from technology by immersing yourself in nature and is perfect for young families who need to release energy.

A green suburb can gain lots of popularity due to the amount of tree coverage it has as it provides shade, reduces air pollution and can increase property value. The best suburbs with the greatest percentage of tree coverage can be found in Sydney’s outer west.

green space in Sydney

#9 Area developments

When hunting for a location to live in Sydney, suburbs undergoing development or having plans to are the most attractive ones. This means that the location you are looking into is getting a lot of attention from the governments and investors alike, and have the potential to become a livable suburb in the future.

Often, people will migrate to these areas for their newer and more modern buildings, amenities and lifestyle. For example, Hurstville is currently evolving to become a more urban, innovative, accessible and green suburb, attracting an influx of homeowners to reside in the area.

modern apartment blocks

So, do more expensive mean better?

The median house prices in Sydney are sitting at $1.6 million, according to the latest Domain figure. However, these house prices can vary significantly from suburb to suburb.

Surrounding amenities, features and landmarks can be major contributors to a pricier area like the Northern and Eastern suburbs, where they are more likely to sell for over $1.6 million.

But that’s not to mean that cheaper locations can’t be rich in amenities either. In fact, the south and west suburbs of Sydney can contain much more affordable housing options, below $1 million whilst still containing all the convenient facilities you need in your life.

Not to mention, if you can secure a property in the suburbs that are undergoing great development in infrastructure and amenities, congratulation, you’re on your way to building great wealth through property.

So, when it comes to choosing a suburb that is desirable and livable, everyone might have a different definition and a different budget. It depends entirely on your personal financial situation, your desires and how they align.

upper north shore

Best suburbs to live in Sydney

Now that we understand what makes a suburb in Sydney desirable, we can look further into which areas and more specifically which suburbs in those areas are the best to live in.

Eastern suburbs

Home to some of the safest and most desirable suburbs in Sydney, this area is home to some of the priciest suburbs in Sydney. You can easily find spectacular water views, peaceful parks and schools, not to mention easy access to the Sydney harbour and the biggest employment hub.

Some of the top eastern suburbs include:

Double Bay
  • Ideal for Families, professionals and retirees
  • Under 30 minutes to Sydney CBD – via car, bus or ferry!
  • One of the most scenic commutes – passing Sydney Harbour Bridge and Sydney Opera House
  • Pet friendly AND family friendly – lots of schools and parks
  • Lots of high-end boutiques and dining options
Zetland
  • Ideal for University students, young professionals and families
  • New age modern suburb – new modern apartment blocks, new shopping centres
  • Within walking distance to Green Square Station which is just a short ride away from Central and Wynyard
  • Despite the apartments and high-rises, there is plenty of green and open spaces
  • Short trip to UNSW and Sydney children’s hospital

sydney's eastern suburbs' apartments

Inner West Sydney suburbs

Sydney’s inner west has undergone transformations and clean ups that have made it the trendy and welcoming area it is today. With tightknit communities, a wide range of cuisines and convenient public transport it is quickly becoming a central location to invest in.

Some of the best inner west suburbs include:

Dulwich Hill
  • Ideal for professionals, small families and retirees
  • Large public spaces – promotes a sense of community and welcoming environment
  • Dulwich hill train and light rail station
  • Suburb with one of the most diverse backgrounds in the inner west
  • Friendly dining and drinking options
Croydon
  • Ideal for families and retirees
  • One of the most family friendly and therefore safest suburbs in the inner west
  • A good mix of well-kept homes of character and modern apartments
  • More affordable than its nearby suburbs
  • Home to Centenary Park – big open space with sporting fields, a playground and off-leash dog area
  • Lots of churches of various faiths and religions and high quality schools
Newtown
  • Ideal for university students and young professionals
  • Strong international influence – variety of people, restaurants and overall atmosphere
  • Buzzing nightlife – rustic and urban restaurants, pubs, bars and live music!
  • Train station, bus stops and King St main road running right through it and nearby all the surrounding amenities
  • Under 20 minutes to Sydney CBD

sydney suburb in the Inner west

Source: Escape.com.au

Western Sydney

West Sydney suburbs has seen major improvements lately in terms of liveability. Containing some of the most affordable suburbs, it is increasingly becoming more populated with people being drawn to the shopping opportunities, entertainment facilities, dining options and schooling offered.

Some of our favourite western suburbs include:

Granville
  • Ideal for indepent youth, mature and established individuals, couples and families
  • One of the more affordable suburbs in Sydney
  • Family friendly
  • Quiet and convenient – many local amenities like shops and restaurants within walking distance
  • Easily accessible train station with frequent trains to the Sydney CBD
Parramatta
  • Ideal for young couples, young professionals, university students
  • Incredibly multicultural – ethnically diverse people and cuisines
  • Home to Western Sydney University Parramatta campus
  • Local Westfield with retail and grocery stores
  • No surprise that Parramatta park in this western Sydney suburb – large open spaces perfect for exercise and relaxation, has several historical buildings and hosts many events all year round
Liverpool
  • Ideal for families, professionals, university students
  • Lower median house price – property and dining
  • Incredible diverse – over 140 different languages spoken
  • Liverpool Westfield has retail and grocery shopping covered
  • Home to Western Sydney University Liverpool campus
  • 4 connected parks – sporting fields, paths for walking and running and a leisure centre
  • Under 30 minutes to Western Sydney airport

Western suburb in sydney

North Sydney

North Sydney could be classified as one of the most liveable suburbs in Sydney. The stunning views, beaches, amenities and overall vibe make this area of Sydney very popular amongst property owners and tourists.

Some of the best northern suburbs include:

Hornsby
  • Ideal for families, retirees, professionals
  • An upper north shore suburb
  • One of the highest all-round rated suburbs – affordable housing, safe, green, well kept
  • Most complete suburb in terms of amenities – rich in entertainment, dining, drinking and shopping options
  • Large amount of public green spaces
  • Numerous high quality schools
Manly
  • Ideal for professionals, families, surfers and retirees
  • Beachside suburb in northern sydney
  • Short and scenic ferry ride to and from Circular Quay
  • A wide choice of quality restaurants, bars, cafes and retail outlets

northern suburbs

South Sydney

Sydney’s south is perfect for families due to its number of open spaces, schools, affordability, convenience and accessibility to Sydney CBD, beaches and other suburbs. It’s constant improvements and upgrades see it gaining traction due to both its visible aesthetic, community and overall ambience

Our best suburbs in the Sydney’s south include:

Kogarah
  • Ideal for professionals, young professionals and families
  • Under 30 minutes from the Sydney CBD by car, train or bus
  • Large portions of greenery – Scarborough Park and Civic Avenue Reserve
  • One of the highest population : school ratios in Sydney – many quality primary, secondary schools and TAFE
  • A good mix of suburban houses and modern apartments
Hurstville
  • Ideal for families, professionals and young professionals
  • Follows “correct” suburb design – high-density apartments near public transport and lower-density residential areas further out
  • A southern suburb home to Hurstville Westfield and Hurstville Central – incredibly convenient amenities
  • Great for families – low crime rate
  • Placed in a physically ideal location – The Sydney CBD, other suburbs and many beaches are easily accessible by car, train or bus
  • Not shy of parks and reserves

southern suburb

Illawarra

Illawarra – probably the most laidback region in Sydney. Consisting of multicultural communities, this region is incredibly welcoming and accepting to all visitors and residents. With stunning coastal views and attractions, as well as great education options and entertainment, dining and shopping, the Illawara region is the perfect escape from the busy city life.

Some of the best suburbs in Illawarra include:

Wollongong
  • Ideal for retirees, families and university students
  • Home to Wollongong University as well as many other schools
  • It has many great beaches and views – Wollongong City Beach, Beach Cove, and Wattamolla Beach to name a few
  • Lower median house price
  • Home to Wollongong Central Shopping Centre, Crown Street Mall and many cinemas
Kiama
  • Ideal for retirees, families and established coupled
  • High demand market
  • Scenic seaside village – safe and peaceful area
  • Home to Kiama Blowhole – the largest in the world
  • Numerous shopping boutiques, restaurants and cafes – also live music at the annual festival and by the beach

beachside suburb

Whether you’re looking to live in an inner west suburb, eastern suburb, north shore suburb, west Sydney, Illawara or south Sydney, each area consists of some of the best suburbs containing a multitude of convenient facilities and benefits that will make it the perfect location for you.

For more information feel free to contact us at 9056 4311 or get in touch here. At Liviti we’re more than happy to give you the guidance you need to get your foot in the door figuratively and literally!

A Beginner’s Guide to Investment Property Tax Deduction

Lara Osborn on March 3, 2022

The way Australia’s tax system is set up makes property investment more attractive than any other investment forms.

It’s, in fact, one of the most tax-advantaged investments you can have.

This is because of the numerous tax policies that influence real estate investment and prices, where you can claim investment property tax deductions to maximise your return.

investment property tax deductions

Investment property tax benefits

The tax treatment for rental property investment in Australia is exceptionally generous.

Unlike most other countries, notably the United States and the United Kingdom, our income tax system does not impose a limit on the amount of deductions that can be claimed for investment costs related to rental properties and other capital gain investments.

By understanding the full potential of all tax benefits available, you might be able to earn more money from your investment property and get positive cash flow.

As a quick example, when you sell a property, the capital gain is only taxed at half your individual tax rate.

Therefore, to equip you with all the knowledge you need to know, let’s take a closer look at each of tax deductions and the value they can bring to you.

What can you claim on tax?

1. Advertising expenses

You may have to pay some advertising or marketing costs as a landlord to find a suitable tenant. If you’re using the internet, print media, brochures, or flyers to market your property, you can deduct these advertising costs from your income rental.

2. Property Management expenses

All property management expenses are tax-deductible. These fees might include (but are not limited to):

  • Utilities like electricity and gas
  • Phone and internet costs

If your tenants pay for utilities, however, you won’t be able to claim it as a rental property deduction.

Cleaning services are another expense that can be deducted from your taxes. If you and your tenant agree on a weekly cleaning service or if you need to employ one to have your house professionally cleaned after the tenant vacates, this would be a tax deductible for your investment property.

In addition, if your investment property is on a strata title, you can also deduct the cost of body corporate fees (apartments and townhouses).

3. Maintenance expenses

Maintenance refers to the process of repairing the wear and tear of the building. In this case, you may need to hire a professional to help you do the job.

These expenses might include:

  • Plumbing
  • Electrical
  • Handyman fees
  • Gardening costs
  • Pest Control

However, please keep in mind that the purpose of these expenses needs to be to maintain the property, not to improve it. For example, it’s okay to get tax deductions on plumbing service, not on updating a whole wooden floor.

4. Rates and Taxes

All rates, including water and council rates, can be deducted for the year they are paid. However, you can only claim them during the periods in which the house was rented. So, for example, if your property is rented for only 6 months during the year, you can only claim those rates for that same 6 months.

Land tax can also be deducted if your investment property is rented out. Land tax amounts, payment dates, thresholds, and some applicable exemptions and concessions can be varied by state and territory, so it’s important to check what applies to you.

5. Insurance Fees

If your investment property is covered by insurance, you can claim this costs in your tax return. If you are a landlord, you can get your property covered by tenant-related risks such as damage to the contents and buildings or loss of rental income.

taxable income

6. Loan Interest

This is also the most significant investment property tax deduction that you can claim.

If you have to take out a loan from the bank to purchase your investment property, you can claim any interest charged on loan as an investment expense.

For example, if you take out a $400,000 loan to buy an investment property and the interest on your repayment is $12,000 after a year, you can claim the interest because your loan was used for income-generating purposes.

However, if you use a portion of your loan for personal use, such as buying for a new car or a wedding, you will only be allowed to claim the proportionate portion that you used for investing purposes.

7. Legal expenses

While the legal expenses associated with purchasing or selling your investment property aren’t tax deductible, any legal or tax consulting services you seek to maintain your rental property are tax-deductible expense.

8. Agents and Admin fees

Same as legal expenses, you might not know that your rental agents’ fees and commission and other administrative costs are also tax-deductible.

For example, as a landlord, you might need to use stationery or postage to interact or communicate with your tenants or you may incur travel costs in inspecting and maintaining the property.

tax deductible expense

10. Depreciation deductions

Like any other tangible asset, your property and everything inside, like windows, furniture, carpets or curtains, are depreciable assets.

While you won’t be able to claim immediate deductions on these items in the future as their value is declined over a long period of use.

However, as everything depreciates at a different rate, plus it will depend on when your property was built and whether you have new or second-hand fittings, you need to claim depreciation on an investment property the smart way. Our best suggestion would be to have a quantity surveyor to help you with the work.

What can’t you claim?

1. Costs involved in the purchase or sale of the property

These costs include purchase prices, stamp duty on the purchase, legal expenses and conveyancing fees, first inspection fees, etc.

2. Any expenses relating to your personal use of the property

You can only deduct expenses for parts of the house that are used for investment. So if you are an owner of a 4-bedroom apartment but only rent out 1 bedroom, you can only claim tax deductions on the bedroom you put out for rent.

3. Any expenses tenants have paid

All rental bills you pay for might be deductible, but anything the tenant themselves pay for (like utility bills or strata rate) are not.

4. Borrowing costs

You can claim a deduction on any borrowing expenses associated with purchasing your investment property, such as loan establishment fees, title search fees and costs for preparing mortgage documents. However, if you use any of these fees for personal use, you can’t claim your tax deduction.

investment properties

Other tax discounts you can take advantage of

Negative Gearing

A negatively geared property loses money with respect to cash flow, which means your costs exceed the income. You might be thinking, so why is this an advantage?

Negative gearing allows income from the rent you receive to be offset or deducted against other forms of payment, such as your salary and business income. This reduces your overall tax bill and also helps to increase cash flow if your rental property is cash-flow negative.

It’s worth noting that there are some restrictions on how much you can deduct – generally no more than $20,000 per annum if single or $30,000 for those who are married or de fact.

For short, negative gearing allows property investors to make financial losses if certain criteria are met relating to their rental income and mortgage repayments.

Capital Gains Tax (CGT)

CGT is the tax you pay in a tax year on profits from selling assets, such as an investment property. If you’re an individual, the tax rate paid is the same as your income tax rate for that year.

Put it simply, if you bought and sold your investment property, your net capital gains will be added to your income and increase your income tax.

However, if you have capital gain and you’ve held that asset for greater than 12 months, and you are an Australian resident for tax purposes, you can reduce your capital gain by 50%. This is called the capital gains tax (CGT) discount.

As a result of negative gearing and the concessional treatment of capital gains, real estate is an artificially attractive investment class.

rental expenses

Conclusion

When it comes to the amount of tax that must be paid, the way an investment property is owned can make a big impact.

Therefore, it is critical for investors to carefully analyse how their properties are owned and the potential impact of land tax on their property’s return.

Talk to our finance team at Liviti today on (02) 9056 4311 or talk to a property expert today.