Most new home construction these days are done by property developers who acquire land when it’s released by the government. The developers lay down infrastructure (roads, utilities, water and sewage), then either:
- Build homes and sell them as a complete house and land deal
or
- Offer a number of standard or customisable home designs, so that you can choose the block of land you want and the features you’d like in your new home. House and Land Package
A potential benefit of buying your new home or investment property this way is that you can ensure you get a property that suits your needs.
As an investor in property, a major benefit in buying house and land is that you will only pay stamp duty on the value of the land only. This can save thousands of dollars on initial costs.
House and land packages are often tailored to appeal to specific groups of buyers. You might find the one you want in a golfing estate, retirement village or even an eco-village. Then there are the new sub-divisions, usually creating a great opportunity for the property investor.
Is buying a house and land package purchase any different to buying a house?
Financing for a house and land package usually consists of two steps: buying the land then building the house. The loans can be arranged separately, but are usually bundled together.
Buying the land is a standard real estate transaction with a regular mortgage. The second step requires a construction loan where you ‘draw down’ an agreed amount to pay for each stage as your home is built. That way, you only pay interest on the money you’re using at each stage.
A good Broker, such as those recommended by Lime, will make a very significant difference to your investment up front by structuring the construction loan in such a way that you will benefit greatly from the type of loan a normal lender is likely to offer which will almost certainly be just cost plus stamp duty plus legal costs. More can be done in structuring your investment construction loan.
Other considerations
As an investor, make sure you are fully aware of all inclusions. In most cases for property investment a full turn-key property (fully finished with window coverings) with landscaping, fences and driveways included in a FIXED PRICE contract is most desirable.
