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A Simple Guide to Purchasing a House and Land Packages

How do House and Land Packages work and how do Investors and first time home buyers benefit? Read on to find out why they offer good value.

What is a House and Land Packages?

A House and Land Package is a process when a block of land is chosen by the client who then selects one of the builders standard plans or has a custom plan designed.

The client might already have purchased a lot of land – or a company like ours can help, not only find a suitable plot of vacant land to purchase but also select a builder to design and construct a house for the client.

The builder will usually have a selection of standard house designs to show the client that fits his or her budget. Price variations occur according to the size of the dwelling, whether it is a single or double story home, and also the materials and design used, to name but a few.

Are there different types of House and Land Packages?

Split Contracts are most common, which means there are separate contracts for the land and the construction of the house. It is a one process package deal with two contracts. We at Investn can help you find the land, or you come to us with the land already purchased.

A Single Contract means there is one contract for the land and house. Your choices regarding land are limited as the builder usually owns the land or has an option to purchase it. Our staff at Investn can help you find the right builder who suits your needs and budget.

How you can choose the Perfect House and Land Packages?

If you are going to be an Owner-Occupier, you need to choose land where you want to live. As a first-time home purchase, you can tailor your budget.

As an Investor, you have the choice to look for property promising a high yield or look at growth corridors. You need to keep future tenants in mind to optimise your cash flow.

What is included in a Turnkey House and Land Packages?

Absolutely everything is included – lock, stock and barrel! The home will be ready for occupation as soon as you get the keys from the builder.

You may want to choose fittings and fixtures like floor coverings, blinds, fencing and turf but it is far better financially, and for finance approval, to have a full turn-key contract with your builder.

Some builders charge extra for interior design elements, as well as driveways, landscaping etc. The advantage of a turn-key property, fully fitted, is you know your costs up front.

What is the Process when purchasing a House and Land Packages?

  1. Finding the Land: You find your own land or we find it for you.
  2. Service Deposit: A $1,000 deposit is made for our services.
  3. Survey and Soil Test: You give us any disclosure plans and covenants from the land contract plus a survey of the land and soil test. We can help you with this. You will pay for the soil test if you already own the land.
  4. Budget and Design: We receive a brief from you on your budget, your design preferences and specifications.
  5. Tendering: The tendering process begins.
  6. Selecting Construction Tender, Arrange Finance and Minimizing Coast: We can help you source vacant land and turn-key construction tenders from several builders in NSW, Queensland and Victoria. We help you review and select the winning construction tender.
    As with everything, do your due diligence. The costs of building on different blocks can vary considerably! There are many issues that affect costs like covenants on the estate, the results of soil testing, retaining walls, engineering, the lot size and landscaping.
    Make sure, when you arrange finance from a broker or lender, they know the construction loan process. (Many do not). Buyers must have a legal representative to make sure all council regulations are met and also to liaise between the developer and the builder.
    The experience of builders involved in this specialised area; construction times; and differing warranties also impinge greatly on the final cost.

Deposit required for house and land packages

We help you clarify your understanding of the deposit and costs required for a house and land package. You will usually need a 10% land loan deposit and a 5% deposit for the construction loan.

With turn-key packages you most probably will need a 5% deposit. Payments to the builder are usually made in stages of five progress payments from the bank, as the work is completed.

The five stages are: Deposit, Frame, Enclosed building, Fixtures and fittings, and Completion.

Any money you are obliged to contribute will need to be paid to the builder first, before the bank starts drawing down on your loan to pay the builder.

Stamp duty on house and land packages

The question of whether you pay stamp duty and other taxes is often asked. The answer depends on what state you are building and what the incentives are for first home buyers building their new home.

Stamp duty and registration fees are not included in the package. Investors only pay stamp duty on the land purchase price. This means a large saving for them if they purchase a split contract home. 

Other considerations to bear in mind before purchasing

Testing soil quality is important as poor quality will mean more engineering costs for a stronger slab. A plot might look level but without testing, it is impossible to see if the land has been filled and levelled.

Variations to the plans are always costly and should be avoided if at all possible. Always compare like for like with different builders when costing the build. Prices can vary greatly!

Benefits of house and land packages

The Benefits of a house and land package is attractive. They offer great value as you have a choice of home designs; for investors you can claim depreciation resulting in extra cash flow, less hidden costs and fewer maintenance costs as new homes come with a warranty.

We at Investn can guide you every step of the way on this exciting journey to home ownership. Simply contact us on 1300 446 445.

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