Most new home construction starts with property developers who acquire land, typically as farmland, or when it’s released by the government. The developers lay down infrastructure (roads, utilities, water and sewage) and then team up with building companies which could:
Build homes and sell them as complete house and land deals
Offer a number of standard or customizable home designs, so that buyers can choose the block of land they want and have certainty about the plan of their new house and the features included in it.
The house and land packages that we offer are “Turnkey”.
- This means that, upon completion, the house will be ready to move into as it includes fencing, driveway, landscaping, garaging, carpets, clothes line and letter box all within the listed price.
- This option also suits investors because a house and land package that is purchased will be completed ready for occupation by tenants.
The benefits of buying a new home are:
- The price is fixed.
- Buyers can ensure that they get a property that suits their needs.
- Buyers can plan their finances with confidence knowing that the maintenance costs of a new build will be very low and no major repair expenses will be required in the foreseeable future.
- Environmentally friendly materials and features are often part of the package, as sustainability has become a benchmark in the industry.
- There can be a sizeable stamp duty savings because the stamp duty payable on a new house and land package is based on the land value only.
- New homes attract better tenants.
Financing the Purchase of a House and Land Package
Financing 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 mortgage. Building the house requires a construction loan where an agreed amount is ‘draw down’ to make the progress payments required for each stage as the home is built.
- Progress payments are essentially a ‘drip feed’ of payments made to the builder over the course of construction to fund the works (e.g.: materials and labour). At key milestones along the way (there will be between 3 and 6 depending on the contract and examples of these “milestones” are when the slab is laid, when the frame is finished, when the roof has been constructed or when the lockup stage has been reached).
Usually a $1,000 deposit is required to reserve the land allotment – essentially this takes it off the market. Next, a Purchase Application Form is completed by the buyers and provided to Investlink to draw up the Contract of Sale. A blank copy of the contract can be provided for the purchaser’s solicitor prior to a sale.
After the contracts have been signed and exchanged, which can take a week or two, the balance of the deposit is paid. (For this to happen, the purchaser needs to have arranged for the loan to be unconditional at this point). The deposit is usually 10% of total purchase price including GST and it is paid into the Trust Account of the builder’s solicitor, where it cannot be accessed by the developer until settlement.
Settlement of the contract takes place when the land title is issued. The balance of payment is then due up to 4 weeks from exchange, or 14 days after the Solicitor / Conveyancer acting for the buyer has been issued with the title, whichever is later. The Solicitor / Conveyancer will contact the buyer’s lender to confirm settlement details and arrange transfer of funds.
When the land title has been transferred building can start.
*Note that the properties that we offer you to sell are “off the market”. This means that they are not publicly promoted, so they can be sold as yours exclusively and, in many cases, the prices are wholesale because builders don’t need to cover marketing costs.