How to buy house and land packages in Australia

While the ‘house and land package’ seems self-explanatory, understanding what is and isn’t included in the deal is important so that securing your dream home or your investment property will go off without a hitch. 

In this article, we look at what a house and land package is, how you can buy one, and what are the things you should look out for during the process. 

What is a house and land package?

Oftentimes, property developers acquire large blocks of land and then put up some parts of this land for sale. Then, developers can offer two different types of house and land packages for the buyer to choose from.

The first is the standard house and land packages. You first buy the land and then build your house with a construction loan.  

Meanwhile, a turnkey package is exactly what it sounds like – it’s a ready-made house where you can turn the key in the lock and move right in. This type of package is also known as ‘move-in ready’ or ‘complete’ new homes. No further work from your part is required, because your home is ready for you to move in with a fully fitted kitchen, bathrooms, flooring and more.

Remember that when you purchase a house and land package, you will be limited with your home design options.  Usually, property developers will show you a range of customisable home designs that you can choose. You will also be given the option to add on extras to your property, but be careful with any upgrades you select as these can quickly drive up the cost of your new home. 

How do these packages work? 

For both standard home and land and turnkey packages, a home buyer will have contracts for both land and construction, because they are buying from two separate entities. In both offers, the builder and developer will work together at all phases of the construction of the home with no conflict of interest. This makes it a more simplified process compared with buying a parcel of land from a developer and then having to find a builder yourself. 

The major difference between the two types of packages comes down to the finance arrangements.

If you choose to buy the land first and then build your home, as mentioned, you will have two contracts. One for the mortgage on the land and another for the building contract. The loans may be bundled up with one lender or they may be separated, depending on the circumstances. 

Oftentimes, a construction loan is drawn down in stages of an agreed loan amount, meaning the buyer will only pay the interest rate on the amount as it is used. The general construction stages include: pouring the concrete slab, erecting the walls and roof, securing the house and the completion of the project. 

Things are a little more simple with turnkey packages. Usually, turnkey packages are advertised with a single fixed price for land and construction, with the two contracts parcelled together. And because there is a fixed price for the house and the land, the finance is released to the property developer. Then all you have to do is to move into the property when it is finished. 

This means you won’t be bothered by unexpected problems, such as builders asking for more money midway through construction because they underquoted. The upfront costs and the expected time frame for building your house will be explained to you when you decide to buy, making it an easy choice for many first home builders. 

How to buy a house and land package

One of the biggest upside to buying a house and land package is the convenience it offers home buyers. But to boost your chances of a successful build, here are some steps you could take: 

1. Do your research 

Perhaps the most important step of purchasing a house and land package is doing your due diligence before going forward with any transaction. Have a solid understanding of what type of house you’re looking for, your preferred size of land and any additional features you want in your home (e.g. landscaping, driveways, fencing etc). This could help narrow down your choices and help you make a decision. If you have locations you are interested in, see if they have the amenities you will need, such as schools, public transport, retail centres, and hospitals or medical facilities. For example, if you’re an active person, you will also want to live in a place that has plenty of parks and recreational areas. 

This step will also involve doing your research on potential developers and the builders they work with. Shop for the best price that will also fit your preference and review the previous building projects they have completed to get an idea of their quality of work.

2. Contact a developer 

After doing your research, you can set up a meeting with a developer that offers a house and land package that suits your needs and preferences. All builders and houses differ, so make sure you carefully look at their costs, the estimated build time and any hidden costs in the contract. 

Know the developer and what they’ve delivered before. You can ask to visit a range of display homes on your target estate. Make sure to ask for the specifics on what is and isn’t included as part of the deal – display homes feature the best fittings, finishes and appliances which may not be included in the standard package. Also communicate what you want with your layout, as this can be an issue for builders. 

If you’re unsure on how to review documents related to the transaction, ask for professional help from a financial adviser. 

3. Do checks before committing to a developer and builder 

Before sealing the deal with a builder for a house and land package, enquire about examples of houses that they have worked on in the last two years. It would be helpful to also talk to its owners, as it will give you an insight on the process and how happy they are with their home. 

Aside from doing these checks, make sure that your builder is also licensed and they have builder’s insurance. Additionally, make sure that they have checked the lot for suitability. 

4. Cover all your financial bases

To proceed with your purchase of a house and land package, you will have to prove that you can afford to repay the money you will borrow. The usual financial documents require your last two payslips, your most recent tax return and your savings history to show that you can pay your deposit. 

Next, be mindful of costs that are not included in the package. When purchasing a house and land package, costs such as stamp duty, taxes and registration fees are not included in the set price. As with all property purchases, buyers also need to have a legal representative to work together with the developer and builder to make sure that all council and regulatory requirements are met. You will need council-approved building plans, a building contract, quotes for other work and building specifications. These costs are included in the contract when you buy a turnkey property.

5. Consult a solicitor before signing the contract 

Congratulations! You’ve found a package that suits your needs and preferences. But hold off on signing that dotted line before your solicitor can check the contract for workmanship warranties, builders insurance, plans and specifications and any cost differences (known as variances) which may arise.

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