When it comes to buying a property, there are many very different housing options available to you. One such option which is worthwhile considering if you are looking to buy a brand new home is to buy a house and land package.
There are many benefits available when purchasing house and land packages compared to an established property and there are various factors that are worth considering first. However, house and land packages are becoming increasingly popular due to the sustainability benchmark as well as the exciting lifestyle options available for the entire family.
So what exactly is a house and land package? ‘House and land’ typically refers to a package deal that includes both a brand new home and the land that it is built on. House and Land packages are typically found within a new estate and there are thousands of developers throughout Australia who are selling house and land packages.
New estates have plenty of lifestyle appeal to buyers and are becoming increasingly more sustainable to appeal to modern day living both now and in the future. Property developers will generally build new infrastructure such as new schools, shops, neighbourhood centre, roads and more to accommodate the local community and attract more families to live here.
Property developers generally offer either of the following:
Build homes and sell them as a complete house and land package deal
Provide a number of standard or customisable home designs, allowing you to choose the block of land you want and what features you would like your home to include.
House and land packages therefore allow you to buy a home that suits your requirements in an area you want to live within your budget. And the great thing is that if you buy house and land packages today, you can use the settlement time to save up more funds, whilst potentially see your home increase in value by the time completion arrives.
There are plenty of great reasons why you should consider buying house and land packages. Here are some of the benefits:
It’s new – No one has lived here before so you can make it your own. If you’re an investor, then rental tenants are often happy to pay a premium to live in something that is new, and you will tend to attract better quality tenants.
Lower maintenance costs – As this is a new build, you can expect lower maintenance costs and no major repair expenses in the foreseeable future, unlike an established property that might need new plumbing or some renovation works to bring it up to date.
Builder’s warranty – Your new property will come with a builder’s warranty which means that if anything goes wrong, or any fittings and fixtures are faulty, this will be covered and fixed by the warranty.
Choice – Ability to choose the design, layout and inclusions as well as the block of land to live on.
Convenience - Close to transport, amenities, shops and parks.
Stamp duty savings – As this is a new property, you might be eligible for stamp duty savings, which could save you thousands of dollars.
Depreciation and tax benefits available – As an investor you can take advantage of the many tax benefits including depreciation savings, with year one allowing you to claim the highest amount.
Sustainable - Environmentally friendly materials and features tend to be used within new house and land estates, with sustainability a benchmark in the industry.
First Home Owner Grant - Another great reason to buy a house and land package, especially if you are a first home buyer is the first home owner grant. The First Home Owner Grant differs per state, but you could receive $10,000 from the government in NSW or even $20,000 in QLD if you are eligible. Bear in mind though that this only applies to new builds such as house and land packages. Purchasing an established property does not allow you to receive the grant, so it makes sense to make your first home a new home.
As with everything in life, you also need to take in the risks when buying house and land packages.
No income during the construction phase – If you are an investor, you will not receive any rental income during this phase. Instead, you will be paying the interest on the land and construction loan.
Slower capital growth – Depending on where you buy, you might experience slower capital growth. Generally, the further away you are from a city centre, the slower the pace of growth. However, keep in mind that properties grow in value over time so you should hold on to the property for approximately 10 years to see the full benefit. In saying that, you still need to research the local area and find out if the suburb will grow.
Location - If you purchase within a new estate that is within the outer ring suburbs, you might find that employment and public transport is virtually non-existent leading to long commutes. Over time, this travel cost could add up and become expensive.
Dodgy developers – You also need to watch out for dodgy developers and builders. This can be avoided by doing your research first and working with a company like iBuyNew who can guide you on who are reputable developers that can be trusted. Key questions to ask would be:
How many years’ experience does the developer have?
How many house and land packages have they sold so far?
Can you speak to past clients?
Check the builder’s warranty and insurance cover
Harder to rent out – As an investor, you might find that your house and land package might be harder to rent out as they generally appeal more to first home buyers or home owners. Again this is dependent on what amenities are close by to appeal to rental tenants.
Delays in construction – You might experience a delay in construction which could lead to higher holding costs as you are paying the interest on the land and construction loan. To avoid this, ensure you work with a reputable builder.
Today, many house and land packages are being created within brand new estates throughout Australia. These new estates are set to house a brand new community and often will be completed in a number of stages, allowing the developer to achieve higher profits. Typically, the earlier you get in, the cheaper the price, whilst the last release will usually have the highest price. It therefore pays to get in sooner.
A house and land package generally involves two steps. You first need to buy the land and then you build the house. The loans for this can be arranged separately, but they are usually bundled together.
The purchase of the land is a standard real estate transaction using a regular mortgage. However, the building of the house requires you to take out a construction loan. For this, you ‘draw down’ on an agreed amount of money to pay for each stage as your home is built. This means that you will only pay the interest on each stage.
As with any property purchase, there are factors you need to bear in mind. These include:
House and land packages are a great way to build your dream home as an owner occupier as well as providing strong opportunities for property investors. However, it pays to do your due diligence.
At iBuyNew we have over 50 new house and land estates to choose from across New South Wales, Victoria and Queensland. To find out more about what house and land packages are currently available to buy, it’s best to get in touch with our Property Consultants who will be able to assist you further.
Contact us today by calling 1300 123 463 and one of our experienced team will be happy to help you further with your house and land package enquiries.