Within a land estate you will be able to purchase a block of land on which to build a house. You can either do this ‘DIY’, where you purchase the land first, then you decide on a house and builder and any other inclusions you need.
The other option is to buy a ‘house and land package’ which typically is all inclusive with everything from the land to the house to the window-blinds.
Purchasing a house and land package is quite different to the process of buying an off the plan apartment or townhouse.
In these cases, you would sign one contract, pay your 10% deposit, and then 2-5 years later, your apartment is completed, and you pay the remaining amount and settle.
For house and land, it’s a 2-part contract.
- The first contract is to purchase land from the land developer – with a 10% deposit
- The second contract is to buy the house from the builder – usually a 5% deposit
Most of the time, the developer and builder are two different entities. The developer would provide design guidelines, which your builder will follow.
Depending on the land estate, your land could be ready to ‘buy and build’. I.e. You purchase your land and can settle immediately, and once council building approvals are in place (usually within 1-2 months) you can go straight to construction with your preferred builder.
Often, however, there could be a period of 6 months to 2 years between when you pay your deposit on the land in the estate, and when all the relevant infrastructure (for example, sewerage) in the estate has been developed.
Only after the infrastructure is in place, can the developer register the land titles. And only after your title is registered, can you settle on the land, pay your remaining land cost (and stamp duty) and then proceed to council approval and construction.
A single level house usually takes about 4-7 months to build with 5 key stages of construction completion:
- Enclosed (windows & doors)
- Fixing (internal fixtures and fittings)
- Practical completion.
House and land buyers typically apply for a combined loan for both the land & building the house. At land settlement, the remainder of the land contract price and stamp duty is due, and the bank will release this portion from your approved loan amount. Once construction commences, the builder will issue an invoice at the end of each construction stage (as outlined above). You will need to pay your portion first (i.e. the difference of the remaining build contract price and loan amount) if applicable, and then the bank will release their portion of the funding towards each progress payment.
House and land is a popular option for first home buyers and upsizers. For first home buyers, buying a house and land package can come with certain government incentives, such as first home buyer grants or lower stamp duty fees which are generally applicable to new or off the plan property.
Upsizers are typically those who are moving from an apartment or townhouse and need more room for a growing family.
For investors, it makes sense to add properties with higher land content as part of a diversified portfolio and tenants are likely to be families, and particularly young families.
More specifically, house & land can offer significant stamp duty savings, as stamp duty is payable on the land value only (not the house).
For example: NSW house & land vs new apartment
|House & Land package||New Apartment|
|Stamp duty payable||$8972 (on land value only)||$26,932 (on total value)|
At Ironfish, we have an in-house property selection and research team which monitors the market and identifies great housing estates and house and land packages for our home buyers and investors.
As part of our service to customers, the property team conducts a rigorous due diligence process, covering off all the above considerations, along with many more, to make the purchase of house and land as simple and convenient as possible and to provide additional peace of mind for buyers.
If you’d like to learn more about our pre-selected house and land package recommendations, simply register below.