The prospect of creating your own slice of paradise may seem like a big task, but a house and land package is a popular way to crack into the property market and realise the great Australian dream of homeownership.
But what exactly is involved? Here, some experts share their insights and advice to help you consider whether a house and land package investment is the right option for you.
How does a house and land package work?
A house and land package allows a buyer to secure a block of land and the construction of a new home in a single, streamlined process.
The customer usually enters into two contracts; one with the builder for the new home and another with the land developer for the landholding.
“A buyer will have contracts for both land and construction because they are purchasing from two separate entities,” said Richard Rhydderch, Stockland’s General Manager – Residential Communities NSW.
“In Stockland master planned communities, the land is purchased from Stockland and the home is purchased from a Stockland-approved build partner,” Mr Rhydderch said.
He said house and land packages are popular options as buyers know what they’re paying for from the outset.
“From experience we know that it’s best to find the right plot before you push ahead with construction.”
What are the different types of house and land packages?
Turnkey vs. traditional house and land
As the name suggests, a turnkey house and land package is a home where you can literally turn the key in the lock and move in.
Also known as ‘move-in ready’ or ‘complete’ new homes, the turnkey option is often favoured by new homebuyers on strict budgets as everything you need should be included in the turnkey price.
“Turnkey homes are perfect for those prospective buyers who want a hassle-free process, relying on the property developer and the builder to work together and take care of both steps for you, rather than having to source a build partner yourself,” Mr Rhydderch said.
Alternatively, traditional house and land packages offer more flexibility and scope to tailor the floorplan and inclusions to be just the way you want them. However, designs are picked to suit particular blocks of land.
Satterley WA State Sales Manager Tony McEntee said house and land packages vary depending on the size of the lot and budget.
“This gives the buyer a range of options to consider from affordable packages right through to premium designs that are in-keeping with the look and feel of the suburb,” Mr McEntee said.
“House and land packages may include just the house on the lot, while others include additional inclusions such as fencing and landscaping. Some packages even include the clothesline and letterbox!”
When do you pay for house and land packages?
In most cases, customers will pay an initial deposit and be responsible for paying two contracts; one for the land developer and another for the builder.
After the deposit, the balance of the block is paid when the land settles and payments to the builder are usually set in a staged timeline, with funds released by the bank at certain stages when construction meets key milestones.
Frasers Property Australia General Manager Brand and Customer, Emily Wood, said for traditional house and land package, buyers can expect to pay a 5 to 10% deposit, before the balance of the land component is paid upon settlement of the land.
“Then, the building of the new home commences. This generally occurs over a series of stages, and there are progress payments that are paid at each stage through construction,” Ms Wood said.
“For turnkey house and land packages, buyers pay a 10% deposit and sign one contract with a builder. They then pay the remainder of the purchase price upon completion of the home.”
Mr Rhydderch said minimum deposits differed from state-to-state.
“In NSW, it is typically 10% of the purchase price on the land with the balance paid when the lot settles, but this can vary in other states,” he said.
“Usually with the home, customers pay progress payments that are set at critical points of the build process. Different builders have different critical points so customers need to discuss arrangements with their builder carefully.”
When is stamp duty paid?
One of the attractions of opting for a house and land package over an established property is that stamp duty is usually only charged on the land component of the transaction.
“Stamp duty is paid on the settlement of the land. No stamp duty is paid on the house,” Mr McEntee said.
“This is one of the key benefits and financial cost savings in purchasing house and land packages. This differs to an established property whereby you are required to pay stamp duty on the total value of the house and land.”
For a traditional house and land package, stamp duty is paid upon settlement of the land, while for turnkey homes, it is paid at settlement of the completed home.
In most Australian states and territories, stamp duty is calculated on a sliding scale which means the lower the value of your property, the less stamp duty you will pay. The way this is calculated varies from state to state.
Stamp duty concessions can lower or waive the amount of stamp duty you pay altogether. These concessions vary depending on where you live, with most states offering discounts for first-home buyers. Some states also offer concessions for owner occupiers or investors, while foreign investors may be subject to higher government taxes.
Mr Rhydderch said each Australian state has different stamp duty rates and rules.
“Generally speaking, a stamp duty obligation is determined by a property’s purchase price, type and purpose, for instance first home, primary residence or investment purchase,” he said.
“In almost all instances, prospective home buyers will need to pay the stamp duty no more than 30 days after the settlement of your property purchase.
“Buying off-the-plan may mean you’re eligible for a stamp duty concession subject to government requirements. These vary from state-to-state so we recommend you check your relevant market for the concessions applicable to your situation.”
Use realestate.com.au’s stamp duty calculator here.
What are the benefits of buying a house and land package?
Buyers have long loved house and land packages for the streamlined process and the ability to be guided by trusted developers and builders.
For the budget conscious, house and land packages also make sense to help stick to a strict financial plan.
“House and land packages mean buyers are tapping into expertise and experience,” Ms Wood said.
“They can be confident that experts have carefully considered the best design and floor plan to suit the size of the block, its aspect, location and orientation. In this way, the home can be designed to maximise space and natural light. There’s no need to search for the right floor plan or to seek design approvals, as these are already secured.
She said the tax benefits can also be attractive for investors.
“Additionally, if the purchaser is buying a house and land package as an investment, there are significant depreciation and tax benefits available, and because the property is new and has never been lived in before, it can be more attractive to tenants.”
Mr Rhydderch said house and land packages were popular amongst first-home buyers.
“Various concessions make house and land packages a particularly appealing option for first time buyers,” he said.