Owning your own home is the Great Australian Dream, and what better way to enter the property market than building your own new home. If you want your own brand-new home, you may find a house and land package might be right for you. We'll cover everything you need to know about house and land packages, so you can stop renting and start owning!
What is a house and land package?
House and land packages provide a turnkey solution provided by New Home Builders, which provide a predefined home designs on a specific lot of land. Often at a fixed price.
One of the main perks of selecting a house and land package is that you can ensure it suits your lifestyle needs and has the aesthetic features of your dreams.
Where are house and land packages typically located?
Land developers will acquire tracts of land either in growth areas and build new communities. Within these new communities is where you will typically find packages available for purchase
There are two types of new home and land packages
- A specific design is selected to be built on a specific lot of land. This package is already set in stone and is commonly referred to as a 'spec home'.
- The most popular type is a builder will select multiple lots of land in a new community and package their home designs and offer them at a fixed price. The great thing about a typical house and land package is they provide some flexibility for being able to upgrade the package, but at an increased price.
House and land packages provide an avenue of making the new home building process more manageable and affordable. There are thousands of floor plan designs to choose from across the major builders, and the packages vary to suit different lifestyles and budgets.
This is why House and Land packages remain a popular choice for new home buyers in Australia.
What are the benefits of a House and Land Package?
- Clarity on cost
- Stamp Duty discounts may be available
- A new home in a new community
- Your builder is likely to have experience in the area.
It's arguably the easiest and fastest way to enter the property market on your terms whilst providing you a tailor-made home to suit your lifestyle.
Some of the benefits of house and packages are:
Let's take a look at these in more detail.
Clarity on cost
Prices are always fluctuating in the property market, but the Australian dream will continue to live on as people want to transition from renters to owners. One of the significant benefits of a house and land package is that the price is clear upfront. This is appealing to all buyers as it provides a level of security of knowing what you will pay at the beginning of your journey. (Providing you don't upgrade things along the way!)
Stamp Duty Discounts might be available
Normally you would pay stamp duty on the house and again on the land, but with packages, you only pay stamp duty on the land. This could end up saving you thousands. To double-check any stamp duty discounts, you may be eligible refer to your state's guidelines.
A new home in a new community
Arguably the main benefit of house and land packages are that everything is brand new! This means you have low maintenance costs and no need for repairs when you move in.
New homes tend to be more energy-efficient as builders will install the latest and energy-efficient appliances. When you choose a reputable builder, you will have the confidence knowing you won't need repairs for many years to come.
Many houses and land packages are in master-planned estates, so not only is your house brand new, your surroundings will be too. You get the exciting opportunity to be part of a new and emerging community filled with modern facilities like parks, medical centers, and shopping areas.
Your builder will have experience in the area
The chances are that the builder that you choose to partner with will have experience in the area. They will be able to offer insight on custom new home designs that will suit your block best. This will help you narrow down the range of possibilities, saving you time and money!
A cost-effective way to enter the property market
The advertised cost of a house and land package may have caught your eye. Compared to already established houses in the same area, building a new home on a lot of land can offer better value. If you are looking to invest in a new home, this may provide a significant opportunity for capital growth.
Where to find house and land packages?
House and land packages are available across all of Australia. You will find thousands of them listed across Melbourne, Sydney, Perth, and Brisbane.
Often, they are in areas where the government has invested in infrastructure and amenities, encouraging growth. You might already have an estate in mind. If not, you can find new home packages listed on any major real estate listing website.
We recommend shopping around and visiting the display homes that interest you. Doing this will allow you to get a feel of the design and layout up close. Walking through the display home is the best way to gain insight into your unique style and lifestyle requirements, which is essential when it comes to building your own forever home.
Every builder and house is different, so it's your responsibility as the buyer to find out what is and is not included. You will find that most builders offer several inclusion packages, typically you will have the option to choose from their standard set of inclusions or the choice to upgrade to a premium set of inclusions.
Standard inclusions usually include a fully fitted kitchen and bathroom, windows and doors, built-in robes, allowances for electrical points, stairs, and tiles. Additional extras will cover things like interior design elements as well as driveways, landscaping, and fencing. Although these items may also be included on occasion.
A reputable builder will provide you with a detailed breakdown of your costs, materials, and other information on fixtures and finishes.
It's essential to gain a full understanding of the inclusions and what will cost you extra. This will ensure that you can afford the house of your dreams and avoid nasty financial setbacks in the future.
Is buying a house and land package different from purchasing an already established home?
The main difference between buying house and land packages and a pre-existing property is the financial arrangements.
The 'house and land package' process consists of two steps. The first step is to buy the land and then, of course, build the house. This means you will have two contracts, a mortgage for the land, and a construction loan for the new home. Depending on the situation, the loans may be bundled together or arranged separately.
Purchasing the land is completed with a typical real estate transaction.
A construction loan is a little different. It requires you to 'draw-down' an agreed amount to pay for each of the six stages, as your new home is built.
How to find a house & land package?
Five places you can find the best house and land packages are:
- Builder websites
- Land Estate websites
Finding a house and land packages is only one aspect; purchasing a house and land package is another, and it's also a little different from paying for an already established property.
Your first step is to obtain pre-approval; this will ensure you have a clear budget to work with and will help you decide on the house and land package that is right for you.
When you apply for a loan, the lender will need to obtain a copy of the building contract and the plans.
The lender will then have their valuers estimate the on-completion value of the property. Usually, the value is calculated by adding together the purchase price of the land plus the cost of construction.
Provided you have a good credit history, you should be able to borrow up to 95 percent of the property value. However, please note, if you borrow more than 80% of the property value, you will be required to pay lenders mortgage insurance - this can be a substantial amount.
So how does a construction loan work?
Once you've been approved, the construction loan is provided in six stages.
Stage 1 - Clearing the site
Preparing the land for construction.
Stage 2 - The base stage
Laying down the foundation for the house
Stage 3 - Framework Stage
The internal and external support structure is completed.
Stage 4- Lock up stage
Once the walls, door, and windows are installed, the property is ready to be locked up!
Stage 5 - Fit out stage
Plumbing and electrical and other fixtures and fittings are installed.
Stage 6 - Practical completion stage
All finishing touches are completed, ready for you to move in!
At the end of each stage, the bank will ensure a progress payment to your builder. You will be required to approve invoices your builder provides. Once the builder has been paid for the completed stage, they will move on to the next stage of construction.
Construction loads are typically interest-only over the first 12 months and then revert to a standard principal and interest loan.
Are there any grants for a new house and land package?
- You must be at least 18 years of age.
- You must be an Australian citizen or permanent resident
- It's only available to first home buyers.
- You must live in the house for at least six months once it's built.
- The maximum purchase price is between $575,000 and $750,000
- A discount on stamp duty
- Regional property concessions - you may qualify for a larger grant if you're building in a regional area.
- Saving for a deposit is a long journey, and building a house is a significant investment. In some cases, FHOG can be used towards your deposit. It's best to talk to your lender for financial advice.
- As a first home builder, you may be eligible for a First Homeowner Grants (FHOG). This will vary depending on the state or territory you decide to build in, so it's a good idea to do some research to find out what is available to you!
The FHOG is a one-off payment funded by the government to help new homeowners enter the property market sooner. Each state and territory have their own rules, but generally, the following conditions apply:
Depending on the state or territory you decide to build in, you could be eligible for:
Things to remember when building a house and land package
Clear communication with your builder
Ensure you have a conversation with your builder about the construction schedule. Your builder will provide you with an outline of the build process so that you have clear understandings and expectations about the build process. Remember, some things are out of everyone's control, such as bad weather, so be realistic to prevent frustration.
It is a good idea to spend more time in the design process to ensure you are 100 percent happy with your final design choices. Any changes during the construction stage, big or small, will cause delays. Often changes are not allowed structural after a contract has been signed with a large builder. Be sure to check with your builder on how and when they accept any changes.
Delays can happen
Building a new home is a process of many pieces of the puzzle coming together. Sometimes your land titles may be delayed or held up, which results in your start date being pushed back. Situations like these can cause you to get into your new home a little bit behind schedule. Knowing this from the beginning will ensure you go into the building process with open eyes.
What should I ask a builder?
One of the most significant decisions you will make during the new home building process is finding the right builder. It's vital to surround yourself with a team that you trust to ensure you have a positive experience.
Like with the most significant decisions you will make during the building process, it is essential you do some research to gather as much information as you can before you purchase house and land packages! We've compiled a shortlist to help you get started.
Please consider the following:
Visit their past and current projects
If you can visit some of the builder's recent projects, this is always a great way to see the finished product. This will give you an insight into the type of materials that are used and the results you can expect.
It's also an excellent opportunity to meet with the builders' sales consultant and engage in a conversation to gain a better insight into the building process.
The great thing about most established builders they will have display homes which you can experience the final product.
Ask for a timeline
As mentioned earlier, you are subject to the vagaries of weather so that the building schedule can be impacted by delays. It is essential to have clear communications with the builder about the project timeline. This will ensure that you and the builder share the same expectation about the timeframe of completion, and future frustrations are avoided.
If you are choosing to build with one of the more established building companies, you will find they often have fixed time frames depending on the floorplan design you choose.
Make sure that the quote includes is transparent, and you have a clear understanding of all your inclusions and extras. Major builders will ensure that they take their time to go through this process with you, use this opportunity to ask lots of questions. This will be one of the most significant financial investments of your life, so you must understand every financial aspect of the build.
What are other considerations when buying a house and land package?
Have extra funds available
Occasionally, there are shortfalls in the valuation of the property, so you might need to obtain additional funds. It is a good idea to keep contingency funds on hand to cover any unexpected costs.
When building a new home stamp duty is only applied to the land and not the house; however, remember to include conveyancing fees, legal fees, and bank fees in your budget.
Site costs are the costs associated with preparing your land to make it safe to build on. A vital requirement of the building process as it ensures the structural integrity of your new home.
Site costs will cover site preparation, earthworks, and ensure the foundations are well-engineered.
The great thing about many house and land packages is if they are advertised as Fixed Cost, this typically means the site costs have been budgeted for in package price. Meaning the builder has enough experience in the new community you have chosen to be able to quote the price upfront for you and provide peace of mind when building your new home.
Mortgage Brokers For New Home Builds
Leading mortgage brokers that can assist you with finance for your house and land package purchase: