How can I avoid hidden transfer fees in a property purchase?

Buying a home in Melbourne is exciting, and a little nerve racking. After you have budgeted for the price, you still face a maze of extra costs that appear close to settlement. Some are predictable, others are not. This guide explains how to recognise the most common "hidden" transfer fees and taxes, how the rules in Victoria work right now, and where you can legally reduce, remove, or plan for them so your final figure does not blow out.

What Counts as a "Transfer Fee" in Victoria: First Principles

When people say "transfer fee", they often mean more than one cost. In Victoria you should look for three layers:

Government Charges Connected to Title Transfer

Government charges connected to the transfer of the title. These include land transfer duty, registration fees for the transfer and any mortgage, and e-conveyancing platform fees.

Third Party Certificates and Disbursements

Third party certificates and disbursements that must be ordered for the sale, especially for apartments and townhouses with an owners corporation.

Adjustments and Compliance Items

Adjustments and compliance items that can move money at settlement, such as council rates and water charges, and special Victorian rules about land tax and windfall gains tax.

The trick is to identify each item early and to decide whether it can be avoided, reduced, or simply budgeted with accuracy.

Land Transfer Duty: Exemptions and Concessions (The Big One)

In Victoria, land transfer duty is calculated on the dutiable value of the property. Buyers can often reduce or remove it by using specific concessions, if they meet eligibility rules. For 2025 there are several important pathways.

First Home Buyer Duty Exemption or Concession

If you are buying your first home and meet the rules, you may get a full exemption up to a threshold, with concessions above that. Check the SRO's current eligibility criteria before you sign.

Principal Place of Residence (PPR) Concession

Even if you are not a first home buyer, you may qualify for a PPR concession at certain values where you will live in the property as your home.

Off the Plan (OTP) Concession

For qualifying OTP contracts the dutiable value is reduced by the pre construction component. Victoria has extended the OTP concession to 31 October 2026, which can materially lower duty for Melbourne apartment and townhouse buyers. Carefully confirm the eligibility conditions and timing.

Action for Buyers

Run the numbers with the State Revenue Office's guidance as soon as you are interested in a property. If you suspect you qualify for any concession, have your conveyancer check the contract and the Section 32 for dates and details that can affect eligibility.

Foreign Purchaser and FIRB Fees: When They Apply and How to Avoid Surprises

If any purchaser is a foreign person for Victorian duty purposes, an additional duty applies to residential property. As at 2025, Victoria's foreign purchaser additional duty is set at eight per cent on top of ordinary duty, which is a large uplift if it applies. Avoid bill shock by clarifying foreign status at the pre offer stage.

Separately, foreign buyers generally need FIRB approval and must pay a federal application fee that scales with the price. From 1 April 2025 to 31 March 2027 there is a federal ban on buying established dwellings, with limited exceptions, so most foreign purchasers focus on new homes or vacant residential land. The ATO publishes the current residential fee table and processes applications.

Action for Buyers

Work out foreign status, the property type, and the likely FIRB fee before you spend on building reports. If you are not a foreign person, record that status in writing for your conveyancer; if you are, apply early and budget using the ATO's current schedule.

VRLT, Land Tax and the 2024–2025 Rule Changes That Protect Buyers

Two Victorian changes matter for settlement maths in 2025.

Vacant Residential Land Tax (VRLT) Expanded Statewide

Vacant Residential Land Tax (VRLT) expanded statewide from 1 January 2025. This is an annual tax on vacant residential land that may affect holding costs after you settle, particularly if the property will sit empty. It is not a settlement fee, but smart buyers factor it in when comparing properties.

No Land Tax or Windfall Gains Tax Adjustments at Settlement

No land tax or windfall gains tax adjustments at settlement for most sales signed on or after 1 January 2024. For contracts under the indexed high value threshold, s 10G of the Sale of Land Act bans vendors from passing their land tax to the purchaser; s 10H bans passing an assessed windfall gains tax. Any clause that tries to do this is void, and penalties can apply. This change removes a once common "hidden cost" line on the statement of adjustments.

Action for Buyers

Check your contract date and price. If your contract is captured by the reform, query any attempt to adjust for land tax or WGT. Ask for the Windfall Gains Tax property clearance certificate during due diligence so you know whether any assessed WGT exists for the land.

GAIC: An Avoidable Trap in Growth Area Purchases

Melbourne's fringe estates can be affected by the Growth Areas Infrastructure Contribution (GAIC), a state charge that can be triggered by certain events such as a transfer of title. Liability and exemptions are technical, and in some scenarios the charge can follow the land and be payable by a purchaser if not handled properly. Buying a block in a growth area without checking GAIC is a classic way to inherit a large, unexpected bill.

Action for Buyers

For any lot in a growth area, your conveyancer should search GAIC status and confirm whether an event of liability will occur on your transfer. If GAIC is payable, require the vendor to resolve it or price it into negotiations.

Registration Fees and Platform Fees: How to Price Them Accurately

Two government set charges will usually appear on your settlement statement:

Transfer of Land Registration Fee and Mortgage Registration Fee

Transfer of land registration fee and mortgage registration fee. In Victoria these are indexed each 1 July and are published by Land Use Victoria. Use the official Transfer of land fees calculator to estimate the exact amount for the year of your settlement.

PEXA Workspace Fee

PEXA workspace fee. Almost all Victorian settlements occur through the PEXA electronic lodgement network. PEXA publishes a fee schedule, adjusted annually, and the fee is separate from the statutory registration fees. In practice your conveyancer or lender pays it in the workspace and recovers it from you as a disbursement.

Action for Buyers

Ask your conveyancer for a line by line estimate that includes the PEXA fee, the transfer registration fee, and any mortgage registration. Re check figures in late June if your settlement straddles the new financial year, since fees update on 1 July.

Owners Corporation Certificates and Apartment Specific Outgoings

Buying an apartment or townhouse usually means an owners corporation certificate must be obtained and disclosed in the Section 32. Managers can charge scaled fees depending on the turnaround you request. For 2025–26, Consumer Affairs Victoria sets maximum amounts by fee units; for example, a standard certificate within six to ten business days is 9.64 fee units and faster options cost more. The 2025–26 fee unit is $16.81. There are also set fees for copies of records. These costs are typically passed through as disbursements.

Action for Buyers

If you are comparing multiple apartments, include owners corporation certificate fees and any owners corporation levies shown in the certificate in your budget. Ask for the most economical turnaround that still meets your auction or private sale timing.

Certificates, Searches and Inspections You Should Not Skip

Melbourne buyers sometimes try to save a few hundred dollars by trimming searches or skipping inspections. That often costs thousands later.

Verification of Identity (VOI)

Every party in a Victorian conveyance must have their identity verified. Your lawyer or conveyancer arranges VOI and may charge a small fee; it is a fraud prevention requirement, not an optional extra.

Council, Water and Titles Searches

These feed into the Section 32 and the statement of adjustments so that unpaid rates and charges are accounted for at settlement. They are routine and worth doing early.

Building and Pest Inspections

Consumer Affairs Victoria strongly recommends pre purchase inspections. If you are buying at auction, get reports before auction day because you cannot add a building condition without the vendor's agreement. For private sales, you can negotiate a building and pest condition.

Action for Buyers

Treat VOI and core certificates as standard. For houses and ground level townhouses, order a building and pest report. For apartments, focus on the owners corporation certificate and building compliance issues, then consider a tailored inspection of the lot and common property.

Statements of Adjustments: Where "Hidden" Numbers Creep In

Victorian settlements use a statement of adjustments to share rates and charges fairly between vendor and purchaser based on the settlement date. Typical items include council rates, water usage and service charges, and owners corporation levies. These are not junk fees. They are simply arithmetic, but because they move money by hundreds or thousands of dollars, buyers should review them carefully with their conveyancer.

Action for Buyers

Ask your conveyancer for a draft adjustments estimate before you commit. Confirm how unpaid or future levies will be handled and check that land tax is not being adjusted if your contract is captured by the 2024 reforms.

Practical Strategies to Avoid or Reduce Transfer Related Costs

1) Use the Duty Rules to Your Advantage

Confirm your first home buyer status, check PPR eligibility, and if buying off the plan, confirm the OTP concession window and whether construction has commenced. Capture the highest lawful concession and record it in the contract pack.

2) Match Your Timing to the Fee Cycle

If your settlement falls in early July, ask your conveyancer whether bringing settlement forward by a few days avoids the 1 July indexation of registration and platform fees. Small calendar tweaks can save money in a tight budget.

3) Pin Down Apartment Costs Early

For apartments, insist on a current owners corporation certificate rather than an old one. Ask the manager whether additional certificates apply if the lot is in multiple owners corporations, and choose a sensible turnaround time rather than an urgent premium without need.

4) Kill Unlawful Adjustments in the Draft Contract

If you see a land tax or windfall gains tax adjustment clause, point out the 2024 reforms and request its removal or deletion in the special conditions before you sign. This keeps your settlement clean and avoids later disputes.

5) Check for GAIC and WGT on Fringe or Rezoned Land

On new estates or land that has been rezoned, order the GAIC and WGT status checks. Require the vendor to deal with any liability or reduce the price. Do not settle until the position is clear in writing.

6) For Foreign Buyers, Budget the Federal Layer

Confirm early whether you need FIRB approval and whether the property is an eligible type. Use the ATO fee table to budget and avoid applying for something you cannot buy, like an established dwelling during the current ban window.

7) Know Who Pays the PEXA Fee

Practically, the subscriber who signs the relevant digital documents in the PEXA workspace pays the PEXA fee and recovers it from their client. Make sure your quote includes it so it does not feel like an add on on settlement day.

Melbourne Specific Tips That Save Heartache

Auction Culture

Many Melbourne homes sell at Saturday auctions. Because you cannot add conditions after the hammer falls, line up your Section 32 review, finance checks and building report earlier in the week. Bring a printed or digital list of your expected fees and your absolute ceiling.

Transport and Infrastructure Levies

New build areas can carry special charges or infrastructure contributions disclosed in the Section 32 or planning certificates. Ask targeted questions about levies and planned works that could affect rates.

Owners Corporation Behaviour

Read the minutes in the owners corporation certificate for upcoming special levies, façade works, cladding issues, or lift replacements, which can translate into adjustments or post settlement calls for cash.

What a Good Section 32 Review Should Catch

A Section 32 vendor's statement must disclose key information about the title, outgoings and restrictions. Consumer Affairs Victoria explains its purpose and why buyers should read it closely or seek advice. A careful review can uncover planned works, unpaid rates, owners corporation issues, GAIC flags, and zoning constraints that would otherwise surface as "surprise" costs.

Action for Buyers

Have your Section 32 reviewed before you sign or bid. Pair it with the CAV Due diligence checklist so you can ask the right questions about overlays, flood risk, or contamination that might lead to extra compliance costs after settlement.

Title Insurance: Optional Protection for Unknowns

Title insurance is a one off premium that can protect against certain pre existing and unknown title defects or fraud that routine searches do not pick up. It is not a government fee and it does not replace good conveyancing, but in some cases it is a cost effective back up. Weigh the benefit against price and your risk appetite.

Budgeting Template: The Categories to Price Before You Offer

Before you make an offer in Melbourne, price the following:

• Land transfer duty after concessions
• Transfer and mortgage registration fees using the Land Use Victoria calculator
• PEXA workspace fee
• Certificates and searches: title, plan, council, water, owners corporation
• Building and pest inspection where appropriate
• Adjustments estimate for rates, water and owners corporation levies to settlement
• If applicable: FIRB fee, foreign purchaser additional duty, GAIC or WGT status

Doing this early converts unknowns into knowns and gives you a clean ceiling for your bidding or negotiations.

A Quick Myth Buster List

"The vendor can make me pay their land tax at settlement." Not for most sales signed from 1 January 2024 under the threshold. Such clauses are void and can attract penalties.

"PEXA fees are the same thing as registration fees." No. PEXA fees are platform charges. Registration fees are statutory fees charged by Land Use Victoria. Both can appear on your settlement statement.

"Off the plan concessions finished." Not in Victoria. The off the plan duty concession has been extended to 31 October 2026. Eligibility still matters.

"VRLT only applies in the inner city." Since January 2025 the VRLT regime applies statewide, subject to rules and exemptions.

Your Prevention Checklist for the Week You Are Ready to Buy

• Send the contract and Section 32 to your conveyancer for a same day triage and request a draft adjustments estimate
• Confirm your duty concession pathway and update your budget
• If foreign status might apply, check FIRB eligibility and fees, and confirm the property type is allowed
• Ask whether GAIC or WGT could affect the property and order the certificates if relevant
• Price registration and PEXA fees using the current Victorian calculators and schedules
• Book inspections early for an auction campaign
• For apartments, request the owners corporation certificate with enough lead time to avoid paying for the fastest turnaround

Conclusion and Next Steps

You can avoid most "hidden" transfer fees in Melbourne by treating them as knowable, not inevitable. The rules change, and timing matters, but with the right checks you can remove unlawful adjustments, capture duty concessions, avoid fringe area traps such as GAIC, and budget precisely for registration and platform fees. That means fewer nasty surprises on settlement day and a calmer path to your new keys.

Get a Complimentary Section 32 Review

Before you bid or sign, send us the contract pack and we will spot the traps and map your exact transfer costs.

Pearson Chambers Conveyancing
Email: contact@pearsonchambers.com.au