Australian Real Estate

Abutting
Properties that share common boundaries.

Abstract of Title
A short version of the full history of title to a property. This is sometimes called a title extract or extract of title.

Adverse Possession
If after 20 years (12 years in SA) of occupying another’s land, that person’s ownership rights are extinguished. The reason for this is that land is valuable and if it is not looked after, the law is not very sympathetic to this.

Agent
A person or broker employed to buy or sell a property. Fees and commissions are usually paid by the vendor.

Amortisation
To pay off your debt by regular installments over a period of time.

Appraisal
The amount that an appraiser says your property is worth. Be wary of an appraisal report supplied by the current owner of agent acting for the owner.

Balloon Payment
A large lump sum paid at the end of a loan to clear a debt.

Body Corporate
Generally for units where there are multiple owners. A Body Corporate manages the ongoing expences and day to day running of the building. They may pay for building insurance ground upkeeps etc. With different States in Australia having differing rules for body corporates it is often useful to employ professional body corporate management.

Capital Gain
Capital gains tax (CGT) is the tax that you pay on any capital gain you make and include on your annual income tax return. It is not a separate tax, merely a component of your income tax. You are taxed on your net capital gain at your marginal tax rate. This would apply to the sale of an investment property.

Clear Title
Land that does not have any liens debts against it, including a mortgage.

Collateral
Assets that secure a loan.

Conveyancing
If you want to buy or sell a home, land or investment property you’ll have to sign a contract. The legal work involved in preparing the sale contract, mortgage and other related documents, is called conveyancing.
Conveyancing work can be done by-:

Covenant
An agreement by one party to adhere to certain terms, conditions or restrictions regarding a property. A covenant is not usually valid unless noted on the title to the land. The nature of the covenant should always be established and the question asked: What effect will this covenant have upon the future plans for the property?
A lawful restiction on the use or improvements permitted on a property.

Decrement
A decrease in a properties size. This could be caused by erosion on a creek, river or beach.

Developer
A company or person who purchases a property to redevelop it and sell for a profit. In Australia some developers are cause for concern especially in fragile ecologies like the Gold Coast. In fact Gold Coast residents have joined together to form Save our Spit to fight against developers who try to influence governments to develop public open space at the Gold Coast Seaway.

Dual Occupancy
A block of land or existing dwelling which is zoned in a way which allows the owner to erect a building which has two distinct living arrangements (for example, a duplex or a house with a granny flat attached).

Easement
A right to use all or part of the land owned by another for a specific purpose. Your property may border a river or creek and may therefore have an easement to allow Council workers access.

Economic Obsolescence
A fall in your property value due to factors out of your control. For example when a rubbish dump is built next door.

Enduring Power of Attorney
Written authorisation for one person or person(s) to act legally on behalf of another. A person may become incapacitated or sick and require someone else to make financial and legal decisions on their behalf.

Fixture
Items such as hot water systems, built-in cupboards, bath, stove, etc. That cannot be removed from a property without causing damage.

Gated Communities
Restricted access to a fenced off development or mini-suburb.

Gazzumped
Gazzumped is where an agent who is supposed to help you buy an assett buys it themselves. This may occur through a shelf company or third party.

Gearing
Negative Gearing occurs when you borrow to invest in an income producing asset and the cost of borrowing exceeds the returns (income) from that asset.
Negative gearing on a rental property, for instance, occurs when the annual interest payable on the loan used to acquire the property, plus other expenses incurred in maintaining the property, exceeds the annual rental income the property generates.
Positive Gearing occurs when you borrow to invest in an income producing asset and the returns (income) from that asset exceed the cost of borrowing.

Home Equity Loan
A Home Equity loan could be a line of credit account secured by a first registered mortgage over your residential property.

Investment Property
Many investors will negative gear a property.
Purchasing a property for the permanenent rental market, has its merits. Currently there is high demand for rental properties in Australia.
Holiday rental is a viable alternative - you could purchase a property and achieve high returns by placing it on a Holiday Rental website like Gold Coast Accommodation online.com. The benefits of this is you can holiday in your apartment/house and get to enjoy it yourself. The holiday rental market is very strong in popular location like the Gold Coast.

Interest
When someone lends money to someone else, the borrower usually pays a fee to the lender. This fee is called 'interest'. 'Simple' interest, or 'flat rate' interest. The amount of simple interest paid each year is a fixed percentage of the amount borrowed or lent at the start.
Compound Interest is Interest which is calculated not only on the initial principal but also the accumulated interest of prior periods. This is sometimes referred to as the miracle of compound interest.

Land
The Australian Definition of Land is generally- "The giant carrot definition":

Whatever the surface holder owns they have up to the heavens and down below the Earth. EXCEPTIONS- Mines and Minerals are owned by the State and air space is limited to what is reasonably needed to make use of the surface.

Lease
A verbal or written document granting possession of a property for a given period without conferring ownership. The lease document specifies the terms and conditions of occupancy and rent payable.

Leverage
When you borrow money to purchase an investment to magnify the rate of your profits from
a) capital growth
b) your income from the investments
Invetors often leverage one property to purchase another
Tip - borrow only what you can afford in a worst case scenario.

Lien
In law, a lien is a form of security interest granted over an item of property to secure the payment of a debt or performance of some other obligation. A monetary claim against a property.

Mortgage
A temporary, conditional pledge of property to a creditor as security for performance of an obligation or repayment of a debt.
Remember to negotiate your mortgage - many banks in Australia will negotiate.

Mortgage Indemnity Insurance
Your credit provider can insist you take out or pay the cost of types of insurance specifically allowed by law. These are compulsory third party personal injury insurance, mortgage indemnity insurance or insurance over property covered by any mortgage. Otherwise, you can decide if you want to take out insurance or not.

Mortgage Offset Accounts
Suncorp (and most banks) have a system as follows:-
If you had $10,000 spread over three sub-accounts, and $100,000 owing on your linked home loan, you would only be charged home loan interest on $90,000. And, because interest is calculated daily, you benefit every day by keeping your income and savings in Everyday Options sub-accounts.
Offset accounts are great security giving you access to funds in an emergency.
Check if there are any charges for drawing from your Offset account.
Interestingly relatively few people in Australia (approx 15%) do have a mortgage on thier home.

Negative Gearing
In Australia, negative gearing usually refers to borrowing to buy a residential investment property (house, unit, etc) which is rented out. Almost everywhere rents are less than interest on property value, leading to negative gearing if the investor borrows say 80% or 90% of the cost. Loans of up to 100% are even possible.
Negative gearing is a form of financial leverage where an investor borrows money to buy an asset, but the income generated by that asset does not cover the interest on the loan. (When the income does cover the interest it is called positive gearing.)
Australia allows investers from all over the world to own property. Many investors by properties on the Gold Coast. If you are planning a trip to Australia to view the properties check Gold Coast Accommodation for places to stay and maps of the Gold Coast and visitor information. South East Queensland is Australias fastest growing area.

Neighbours
One of the most important aspects of purchasing a home is neighbours. Real-etate agents will show you the house at the best time of day for gaining a sale. Check the area at various times and days to ensure you are not moving next door to the neighbour from hell.

Open House
An Open House is when a real-etate agent opens up your house for an inspection for prospective buyers. It may only be open for an hour or two. This is often used as a lower pressure sales technique to achieve a sale.

Option Fee
A deposit you offer a real estate agent to hold an option period that allows you to consider your purchase without others being able to purchase the property. If you do not purchase the property this option fee is paid to the vendor.

Over Capitalised
You may have paid such a high price or over renovated so that the property is either worth a lot more than other similar properties in the area or worth a lot more than you can recover.

Principal
Principal is the amount you borrow. Check our financial calculators and see that principal is the first entry. Every payment you make on your home loan reduces this principal.

Rates
Rates refers to the annual, quarterly, half-yearly or monthly payments made to local shire councils for amenities like water, sewerage and garbage collection. There may be other levies for improvements to parks and roads.
Council Rates are a form of property taxation and property values play an important part in determining how much each individual rate payer contributes. There has been the situation where the rise of property values has forced the owner to sell their house as they cannot afford the council rates.

Repayments
A Repayment is an estimate of the minimum repayment you need to pay to pay off your home over the full term of the loan.
Why only an estimate?
Because small errors creep in that make the payment inaccurate especially with leap years and changes to monthly fortnightly or weekly payments.

Restrictive Covenant
A promise to refrain from doing something. This can be enforced against a third party.

Strata Levies
Strata levies can vay widely depending on the age and condition of the building and facilities. In high rises the maintenance of a lift can add to the cost of the levies. These levies can be anywhere from $ 300 - $ 3000 per quarter.

Tenant
The person who helps you pay off your property. In Australia most tenants go to real estate agents to find themselves a place to live or do business.

Australian Real Estate

Australian Real Estate Terminology

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