Investing in Property in New South Wales vs. Queensland - Deposits & The Law
Dilleen Property Group 2021
As you may or may not be aware, Dilleen Property currently has a particular focus on the Brisbane market for our clients. Often clients ask what the difference is between the New South Wales (NSW) laws and Queensland (QLD) laws when purchasing a property, particularly in terms of how the deposits work.
Let’s get this straight. NSW and QLD have different laws in terms of purchasing property, and you should certainly be aware of these differences if you are a property investor wanting to diversify your portfolio into different states across Australia.
New South Wales
When you negotiate a property in NSW, you will have the locked-in price, and generally, you will put down 0.25 percent of the purchase price as a holding deposit to secure the property. For example, let’s say you purchase a property worth $1,000,000. If you work out 1% of the purchase price of the property it would be $10,000, and 0.25 percent of $10,000 is $2,500.
This fee is your holding deposit and it is to be paid before the paperwork is signed. This holding deposit signifies to the agent and seller that you are a serious buyer. In NSW there is a 5 business day cooling-off period. During this period say for instance the pest and building report states that the property is full of termites or has major structural damage. You may wish to negotiate a price reduction or you may wish to forfeit your holding deposit. If you do forfeit you will in most cases lose this holding deposit.
Queensland
On the other hand, if you purchase a property in the QLD market you will generally put down a $1,000 holding deposit. In QLD there are also two fundamental clauses: the 14-day pest and building clause and the 21-day finance clause. These clauses mean that you have a longer amount of time to approve your pest and building report and get your finance approved than in NSW. These dates can also be extended depending on the terms and conditions, and the seller. To be granted an extension you must speak to your lawyer as soon as possible to organise this.
Should anything go wrong during the 14-day pest and building period or the 21-day finance period, such as the property is not up to your standards or your finance has not yet been formally approved you will not lose the $1,000 holding deposit. Instead, you will receive this fee back into your account if you pull out of the contract under the 14-day pest and building clause and 21-day finance clause in QLD.
The two key differences between the deposit and the laws are that one deposit is usually non-refundable and the other is refundable. It should be noted that at the end of the day there is no right or wrong answer when it comes to which state you choose to invest in. However, from my personal experience, investing in the QLD market is made more stress-free due to these two clauses that are in place.
Disclaimer: This is not intended as legal, financial, or investment advice and should not be construed or relied on as such. Before making any commitment of a legal or financial nature, you should seek advice from a qualified and registered legal practitioner or financial or investment adviser.
