Traditional House and Land Packages
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What to consider when purchasing a House and Land Package
With Australia looking to build its way out of the economic turmoil caused by COVID-19, home hunters have some big incentives to buy in new estates. These can be located on the City’s fringe or within an already established suburb or even in sub regional or regional locations.
These incentives include developer incentives and of course the current Government incentives being First Home Owner Grant and also the new $25,000 Home Builder grant. Investors! Beware – both of these do not apply to you – only to owner occupiers who will reside within the property when constructed.
How do I choose?
It is not always easy navigating a market where streets may not yet even be built! We wish to list some suggestions that the experts in this field say as to why and how you should consider a new estate or even maybe a vacant lot within an already established area – and construct a newly built home or investment family home.
The benefit of New Estates
New housing estates are no longer boring! Today’s new estates offer features hard to find in some previously established residential suburbs or locations. The major estates all have their own Building Guidelines which clearly indicate to you the standard of construction required within the estate, and the design and aesthetics that are required for that particular estate. You will be required to sign a form to agree to adhere to these guidelines, so ensure that you read and understand these requirements. Project builders and local builders will be have knowledge of this and their designs will be compliant.
Sustainability standards require all new home to achieve a 6.5 energy efficient rating and some estates also insist on the inclusion of solar systems to cut down your energy bills. Many require residents to install rain water tanks. Almost every new estate has a sophisticated watering management scheme to maintain drought resistant greenery and planting in their parks and in neighbourhood streets. This maintains a high level of presentation and the area always looks clean and fresh and green even in the hottest months of the year. Underground power is also always required – gone are those ugly overhead power lines that we so regularly see in older established suburbs.
Dwelling Design
New home designs are factoring in separated living and sleeping spaces – media rooms or rumpus or multi purpose rooms are an example of this. Separated sleeping zones also area popular with couples who have old children. Work and study areas are now being included. Loving spaces both external and internal are designed for more flexibility as the family grow both in size and also grows older in age.
Suitability of design: Buying a new home is a chance to get the home that perfectly suits your needs, especially matching your budget.
Location, Location, Location!
This has to be the top priority for selection of your new home. Pinning down your current daily needs and then also projecting this for the next 10 years is a good way to start. This assists you re the selection of a suitable location: eg schools and early and higher education, medical facilities, retail and business/commercial, social opportunities for when you are a little older, sporting and recreational facilities for all the family, and please do not forget the travel time to your employment …… consider all these things!
Choice of Lot
Consider the lot size and the orientation of the lot – choose a larger sized lot is your budget will allow this, choose a lot with a wider frontage, choose a lot where your living areas will have a north or a north-easterly orientation. Consider some views from the lot, natural breezes and maybe a lot in a no through road. All these things are important for you as you reside there, plus will be important when you re sell your property.
The most important thing is price! – buy within your budget!
Median value of the Suburb or Location
Be sure to know the median value of your potential property on completion – Look at comparable sales in the area. Don’t have the best house in the worse street! Don’t build an expensive home in an area where the majority of homes area of a much lesser value.
Method of Purchase
Buying off the plan:
Two contract purchase
If you are buying something that is not yet fully constructed – maybe even the lot is not yet fully constructed or has title – or maybe the lot is constructed, but you are buying a home that is yet to be constructed – this is called buying “off the plan”.
Depending on your circumstances and your individual situation, this dictates the method of purchase.
“buying off the plan” prior to construction means that you will purchase with two contracts – Land contract for the purchase of the land only, and Building Contract for the construction of the dwelling on the land.
The high benefit of this method of purchase is the savings on payment of Queensland Stamp Duty. You need only to pay Stamp Duty on the land price only – not the total price of the property – thus saving you many thousands of dollars!
Re your finance: you need to organise a construction loan with your lender. And you will required to sign a legal build contract – this maybe a HIA Building Contract, a Master Builders Contract or a QBCC construction contract.
One contract purchase:
For Self managed Super Fund buyers or buyers of an already constructed home (a ready built turnkey house and land package or an already lived in family home) it’s a little more simple. Just one contract is required for both the land and the house, there will be a fixed price indicated for the purchase which includes both house and land together and one payment only is affected and then you move in! You will be required to pay Queensland Stamp Duty on the total price of both house and land as a package.
COSTS:
PLEASE CLARIFY / CONFIRM THE INFO BELOW WITH YOUR LENDER OR BROKER AS LENDING CONDITIONS CHANGE FREQUENTLY AND DIFFER WITH DIFFERENT TYPES OF LOANS – this is just general.
House and Land package:
Owner occupier – You will usually need a 10% deposit for your land deposit if you are buying land separately. You will usually need a 5% deposit for the construction loan.
Investor – you could be required to have at least a 20% deposit calculated on the total value of the package.
For already established and previously lived in properties – your loan will be for the total property and the bank will usually require a minimum of 10% deposit.
Buying a Single Residence House and Land Package as an Investment property
- Ensure that the location offers all the necessary infrastructure and services and amenities that your tenant would require within close distance to the dwelling location – especially emergency services
- Always confirm the rental income to ensure comfortable level of loan serviceability
- Always buy in high demand housing locations, especially high demand for rental properties!
- Always confirm that the design and floor plan and size of the home is suitable for family living (greatest percentage of tenants are family groups)
- Ensure that your home fits comfortably into the “average price range” of the area – you do not want the best house or the biggest house – the majority of tenants require a comfortable middle sized family style home
- Ensure that the rental to be paid is average for the location
We draw your attention to the unique property type that we offer that is especially attractive to investors – this is the dual occupancy with a secondary dwelling attached. This property has two tenants who reside privately and individually in the dwellings – these tenants do not need to be connected or related to each other – you have two individual dwellings – so you have two independent tenants – so you receive two incomes! Your home is located on just one lot of land hence just one rates notice to be paid – this type of property may cost a little more to construct but the income is very much higher than the normal single residence family home, and your outgoings are very much less.
This type of housing is very strong with investment purchasers due to the higher income yield. But beware – some councils do not allow this type of property to be constructed or they may enforce restrictive tenancy laws. Please ask us for our advices regarding this. (Refer to website information on Dual Occupancy)
My Property Shop Australia will always provide you with the correct and appropriate information – please just ask us.
We pledge to you our total disclosure of all known information relating to the type of housing or property purchase you are considering.
