Explore Options: House and Land Package or Buy Separately?

Are you in the market for a new home? If so, you may wonder whether you should buy a house and land package or buy the house and land separately.

Both options have pros and cons, so weighing your options carefully before deciding is essential.

What Is A House And Land Package?

In Australia, a house and land package is a real estate offering that allows buyers to purchase both a block of land and a new home in one process.

This package typically involves two separate contracts:

1. Land Purchase Contract: This is an agreement with the land developer to purchase the land. Buyers usually pay a deposit, commonly around 10%, to secure the land.

2. Construction Contract: This is an agreement with a builder to construct a house on the purchased land. The deposit for this part of the package is often around 5%.

The house and land package can be more streamlined than buying land and a house separately. 

Buyers often can choose from a range of standardised or customisable home designs the developer provides.

This package is particularly popular in new housing estates and can offer benefits such as stamp duty savings, potential government incentives, and the ability to tailor the property to personal preferences.

You can pre-calculate your stamp duty savings here.

Also read: 6 Types of Property Buyers: Which One Are You?

How Does Financing Work For House And Land Packages?

Financing a house and land package in Australia typically involves two distinct but interconnected steps, focusing on purchasing and building the land.

Here’s how it generally works:

1. Purchasing the Land: This step is akin to a standard real estate transaction involving a regular mortgage. The buyer secures a loan to pay for the land, often requiring a deposit and then mortgage payments as per the terms agreed with the lender.

2. Building the House: A construction loan usually finances the construction phase. Unlike a standard mortgage, a construction loan allows the borrower to ‘draw down’ the loan amount in stages, as needed during each build phase. This means the borrower pays interest only on the funds used at each stage, not the entire loan amount upfront. 

The common stages for drawing down include laying the slab, erecting frames, enclosing the structure (windows and doors), fixing internal fixtures and fittings, and reaching practical completion.

Also read: Step-by-Step Process for Buying a House in Installments in Australia

What Are The Benefits Of Buying A House And Land Package?

Buying a house and land package offers several benefits, particularly in the Australian context:

1. Stamp Duty Savings: One of the most significant financial advantages is the potential savings on stamp duty. Buyers typically pay stamp duty only on the value of the land, as the house has not yet been built at the time of purchase. This can result in substantial savings compared to buying an existing property where stamp duty is payable on the total value of the house and land​​.
2. Government Incentives: First home buyers may be eligible for government incentives, such as grants or additional concessions, often applicable to new properties or those bought off the plan. These incentives can further reduce the overall cost​​​​.
3. Customisation Options: House and land packages often allow buyers to tailor their new homes to their preferences. This can include choices in design, layout, fixtures, and finishes, offering a personalised home-building experience​​.
4. Environmental Efficiency: New homes in these packages can include environmentally friendly materials and features that align with contemporary sustainability standards. This benefits the environment and can lead to long-term energy and water usage​​ savings.
5. Convenience and Simplicity: Buying a house and land package is typically more streamlined than purchasing land and building a house separately. It involves dealing with fewer parties, and the package often includes assistance with obtaining necessary approvals and adhering to building regulations.
6. Investment Potential: For investors, properties with a higher land content can be a valuable addition to a diversified portfolio. New homes in developing areas can attract families and young professionals, potentially generating a steady rental income.
7. New Home Appeal: Buying a new home means modern designs, the latest building standards, and often lower maintenance costs than older properties.
8. Community Development: Many house and land packages are part of larger community developments, offering amenities like parks, playgrounds, and proximity to schools and shopping areas, enhancing the lifestyle appeal for homeowners​​.

These benefits make house and land packages attractive for many buyers, including first-home buyers, upsizers, and property investors in Australia.

What Should I Look Out For In Contracts And The Building Process?

Here are some of the things you should look out for in contracts and the building process in Australia:

Contracts

• Ensure you understand the contract’s terms and conditions before you sign it. If you don’t understand something, ask the builder or real estate agent to explain it and seek legal advice for detailed comprehension or your rights and obligations.
• Be sure that the contract includes all of the work that you have agreed to, as well as the timeline for completion.
• Ensure the contract includes a clear and concise description of the materials used to construct your home.
• Be sure that the contract includes a warranty for the work done. The warranty should cover defects in materials and workmanship.
• Make sure that the contract includes a dispute resolution clause. This clause should outline the dispute resolution process between you and the builder.

Building Process

• Get regular updates from the builder on the progress of your home. This will help you stay informed and identify potential problems early on.
• Inspect the work that is being done in your home regularly. This will help ensure the work is being done to a high standard.
• Be prepared to make some changes to the plans as the construction progresses. This is normal, and changing to accommodate unforeseen circumstances is often necessary.
• Be patient. Building a home can be a long and stressful process. Be patient with the builder and with yourself.

To avoid delays and future problems, it is always advisable to consult an expert conveyancing services for buyers to make sure the contracts and building process are meticulously taken into consideration.

Are There Different Types Of House And Land Packages?

Yes, in Australia, there are typically two main types of house and land packages available:

• Standard House and Land Packages: This option involves a two-step process. First, you purchase the land, usually with a standard mortgage. Then, you enter into a separate contract with a builder to construct the house, financed through a construction loan. This type of package offers more flexibility in terms of customising the design and features of the house. You can choose from various home designs and customise aspects like layout, fixtures, and finishes. However, this also means you might have to wait for the construction to be completed before moving in​​.
• Turnkey Packages: As the name suggests, turnkey packages are ready-made homes where everything is completed before you move in. This option is more like a ‘move-in ready’ package, where the house is fully built with all fittings, landscaping, and internal features like flooring and window treatments already in place. You simply ‘turn the key’ and start living in your new home. Turnkey packages are usually advertised with a single fixed price for the land and the construction, making the financial aspects more straightforward. This type of package is ideal for buyers who want a hassle-free process without the need to manage construction details or for those who wish to move into their new home as soon as possible​​.

Both packages have their advantages, and the choice largely depends on the buyer’s preferences, timeline, and level of involvement they wish to have in the home-building process.

Standard packages offer more customisation, while turnkey packages can offer convenience and immediacy.

To Buy a House and Land Package or Buy Separately?

Discover the flexibility in home buying with CJC Law. Whether you’re interested in a comprehensive house and land package or prefer to buy separately, our expert team guides you through every step.

Tailored advice, seamless transactions, and legal expertise ensure your investment is sound and your future secure. Choose CJC Law for a personalised approach to your property journey.