Acquiring a house and land package presents a convenient and potentially more economical path towards realising the dream of constructing your own home. However, unforeseen challenges such as delays and unexpected expenses can disrupt this process.
To mitigate such issues, it is crucial to equip oneself with pertinent information. This includes understanding what to scrutinize prior to signing any contracts, discerning which builders are reputable, and exploring available financial assistance options, which can significantly influence the outcome.
Since World War II, housing estates have experienced a surge in popularity, primarily fuelled by the soaring costs of real estate. This trend prompted first-time homebuyers, especially those with growing families, to seek refuge from the inner city and pursue properties with ample space, colloquially referred to as ‘quarter-acre blocks’.
Over time, notable advancements have occurred, widening the appeal of house and land packages beyond just young families with modest financial means. Presently, the emphasis within housing estates has shifted from mere density to prioritizing the development of aesthetically pleasing and habitable communities.
These contemporary estates boast an array of amenities including sprawling parklands, meandering waterways, picturesque walking trails, and lush greenery-lined streets. Moreover, they are often strategically situated in close proximity to transportation hubs, educational institutions, and retail centers, enhancing their appeal and convenience to residents.
Who benefits most from house and land packages?
People who can benefit most from a house and land package are investors and those building or entering the housing market for the first time.
Having the house and land package combination minimises the work people have to do, and everything is packaged upfront, making it as easy and as stress free as possible for those looking to build.
McDonald Jones Homes, the largest home builders, has adapted its designs since the pandemic to accommodate demand for flexible living spaces, home offices and study nooks, and solar/electric vehicle chargers in garages. Open-plan living, an alfresco area for entertaining and a home theatre are now common design features in today’s floorplans.
House and land buyers are also looking for plenty of natural light within the home and a central kitchen with an island bench and butler’s pantry.
6 Steps you need to know about house and land packages
- Check what’s included in the package price – landscaping, driveways and fencing are not usually covered.
- Find out what grants and subsidies you may be eligible for and when they expire.
- Use a well-established company with transparent costs and itemised inclusions.
- Build in a buffer to allow for delays and unexpected costs.
- Check that the builder is registered and has domestic building insurance.
- Don’t hand over the final payment until all defects have been remedied.
What can go wrong with house and land packages
While house and land packages provide plenty of benefits – a seven-star eco home oriented to the block, a streamlined building process (no need to deal with council approvals) and more affordable pricing than a knockdown-rebuild or buying/renovating an existing home, there can be downsides.
Matt Turner, managing broker at GSC Finance Solutions, says the high cost of land and building materials means house and land packages do not currently provide as much value for money as they did before the pandemic, but this situation will likely be temporary.
Doing your due diligence will prevent some of the problems that can arise between signing the contract and moving in, but Turner cautions that some issues will always be out of your control.
- The builder could go bust. Although builders are required by law to take out domestic building insurance to protect their customers in case of liquidation, it doesn’t always happen.
- Fixed costs aren’t always fixed. Contract clauses can allow builders to pass on increases in the cost of materials to customers.
- Delays can drain your bank account. If you’re paying rent as well as making mortgage repayments on the land and the first stages of your new home build, but the promised completion date comes and goes, it can be costly as well as stressful.
- Promised infrastructure and amenities don’t always eventuate. Although developers have to deliver on the amenities outlined in their planning application to council, occasionally government funding is withdrawn for anticipated schools or infrastructure.
- Zoning laws can be changed. Changes to floodlines or zoning laws can mean your planned home falls through, which may not leave you out of pocket, but will set you back to square one. “We’re not seeing many really positive experiences with house and land packages lately – there’s been some huge delays – but I don’t think that’s going to be endemic of the industry going forward,” says Turner.
How can we help?
If you have any questions or would like further information or you are seeking property tax advice, please feel free to contact our office via email –info@investplusaccounting.com.au or phone 02 9299 7000 to either speak with someone or arrange a time for a meeting so we can discuss your requirements in more detail. You can arrange a free 15 minute no obligation chat to discuss your options. Please arrange an appointment with our office by clicking here
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