We’ve covered a lot about choosing a suitable house plan and an appropriate block of land. This time, let’s look into the whole package. Buying a house and land package can offer great value for families looking for a particular type of communities, such as a golf village or an eco-friendly estate, but be aware of the drawbacks before making the big decision.
What is a house and land package?
House and land packages are new properties sold off the plan, with a range of customisable home designs to choose from. These properties are usually situated in land estates, where property developers purchase land released by the government and set up infrastructure and facilities to create a new community.
Benefits of Buying a House and Land Package
- Simplifies the process of buying land yourself and choosing a suitable design. The house plan is intended to suit the block with appropriate sun orientation and driveway placement.
- Easier process. Most home buyers will enter into a land contract with a land developer and a building contract with a builder. There are two ways a home builder can simplify this process for you. The builder can wait for you to settle on the land, then conduct soil tests and feature survey, so they determine site costs and finalise the contract. Alternatively, the builder can fix the site costs to produce the building contract around the same time the land contract is ready. This method is not always applicable for all new home builds, but it is more efficient as the lender can obtain finance for both house and land at the same time.
- Save thousands of dollars.
- Reputable financial organisations or lenders should be able to waive some of the associated fees for both of the described situations above. You only have to pay stamp duty on the land’s value as the house has yet to be built, and you can also claim various depreciable assets including the cost of the building, the cost of the fixtures and the construction itself.
Considerations in Buying a House and Land Package
- Small lot sizes.House and land packages may include attractive inclusions, but many new estates feature small lot sizes. Depending on your budget, you do have the option of choosing other available lots by the developer. Make sure the block of land will meet your needs in years to come, especially if you plan on starting a family.
- Peripheral location. New estates are often constructed in the outer suburban areas, where employment opportunities and public transport may be limited. The development may be marketed as being a commutable distance from the city. In reality, it could be two hours of driving (or more with traffic). Are you willing to withstand the long commute to work each day?
- Lower yield. Selling for profit might be difficult in the short term if your house and land package is part of a new estate. Home values in outer suburban ring usually rise at a slower pace due to weaker economic drivers and lack of infrastructure. As the developer continues to offer new homes in the neighbourhood at competitive prices, capital growth is even harder to come by.