May 2011 Ask a Builder
Sunday, July 3, 2011 at 1:26PM It seems that older properties in established suburbs are cheaper than the new ones in developing suburbs - shouldn't I be buying these rather than new homes?
Most people prefer to live in a brand new home. The reason some new properties may seem more expensive is that they offer a higher quality of living, the latest in construction methods, building design, facilities, technology and amenities. Ever increasing land and building costs means each new project usually costs more than the last one.
Renovating old homes can be a great way to have the best of both worlds – a home with modern function in an established area.
You should bear in mind that an older property does not usually come with the same warranties and guarantees, and will need upkeep or renovation before a new one. All of these calculations need to be taken into consideration.
As a home owner, you need to think about what it is you may want out of your home and consider that a new home provides an open slate to influence the design and end up with the house you truly want rather than a compromise of what is on offer.
As an investor, you need to look at what tenants are demanding, such as open plan living, cool, energy efficient homes, and the level of community in the area the home you are looking at provides.
Explain what advantages exist with regard Stamp Duty and construction?
Stamp Duty is a Territory Government tax on the transfer of property and is charged in all Australian States. In the Northern Territory, if you purchase an established property, full stamp duty is payable on the total purchase price of the property.
If you purchase a house and land package, you only pay Stamp Duty on the value of what physically exists at the time of purchase “ad valorem”, i.e. if construction has not commenced, you pay substantially less Stamp Duty. This saving is usually some thousands of dollars.
Stamp Duty payable is calculated proportionately on the level of construction completed at time of purchase. Therefore if you purchase halfway through construction you will still receive roughly half the maximum saving. The earlier you buy the less Stamp Duty you pay and the more you save.
Importantly if you choose construction, you will need to balance these considerations of stamp duty with the holding costs that are typically payable during construction until the home completes. If the construction period is lengthy, than the savings in stamp duty may not be enjoyed or it may end up costing more!
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