House and land packages are by no means a new concept, but they have grown significantly in terms of their popularity amongst both investors and owner-occupiers. Of those owner occupiers surveyed, it was found that 72% would like to have the opportunity to personalise the design of their home. House and land packages can take a significant amount of the stress away from buying a new home also, which can save a great deal of time and money.

This week we explore both the pros and cons of purchasing a house and land package for your next home or investment property.

The Pros

• Tax Benefits: House and land packages typically come with certain tax benefits, particularly at present with State Governments reducing stamp duty and providing other concessions for new property relative to existing. It’s important to recognise also that stamp duty is typically paid on the land component, rather than the house and land value, so this could create some significant savings for you here.
• Grants: For those looking to buy a house-and-land package as your own home, you may just find that you’re eligible for the First Home Buyer Grants in your state. In many cases, these are restricted to new properties, so be sure to ask your mortgage broker what you’re eligible for here.
• Simplifies the Process: A house and land package can take a significant amount of the stress and anxiety away from trying to build your own home from scratch by yourself. Many builders will take care of everything from the initial design to completion of the project for you limiting the amount of your time that you need to spend on the property.
• Master-Planned Estates: Many house and land packages are part of a master-planned estate, meaning that you’re going to be part of a new community, which may include parks, schools, shopping centres and other facilities for the residents of the estate. This gives you a unique opportunity to explore what the finished outcome is going to be like, what types of neighbours you’re likely to have and what the overall levels of demand might look like.

The Cons

• The Location: In some cases, house and land packages are located in outer suburbs where there is plenty of land available for the developer. They are typically on the city outskirts and may add significantly to your commute time, particularly if you work in the city. This is certainly not always the case, but it does highlight the important of doing your research and reviewing the location of the house and land package that you’re considering.
• Uncertainty: Like building any new home, the uncertainty of not knowing exactly what the finished product will look like, or if the valuation will stack up relative to what you’ve paid for it, can add some anxiety for some. It’s important to do as much research as you can into the quality of the fixtures and fittings being utilised, surrounding properties and facilities in the area, and the overall capital growth historically and expected growth looking forward.
• Hidden Charges: This does not need to be a hindrance providing you do your homework, but it’s important that you’re crystal clear with the developer / builder about what is and what isn’t included. This could be items such as landscaping that may have been carried out in a display unit, but comes at an extra cost for your property. Be sure to ask the questions upfront, and avoid any surprises later on.
• Time: Even a house and land package could take up some of your time in making minor decisions about the property. This could include what type of lighting to install in the kitchen, how high you’d like the ceilings to be or the overall colour scheme. Be prepared to invest some of your time in achieving the right outcome with your property.
• Land Size: In many costs, albeit certainly not all, the lot sizes for new house and land packages can be quite small. This can be particularly problematic if you’re looking for a home with a large frontage, and if you want to ensure that there’s enough space to fit a boat or trailer down the side of your property. These can be trickier to find, but they’re certainly available, so do your homework and ensure that there are no surprises with the size of the block you’re buying or investing in.

Remember, as with any property purchase, it’s important to do your homework and ensure that you have the right team of professionals supporting you on your property purchasing decisions.

Ally Home Loans Pty Ltd is your ally in finance for all of your home loan, investment property, business and commercial financing needs. With our wide range of lending solutions, expertise in financial planning and investment strategies, and extensive experience in working with both Australian residents and Australian expats, we are your partners for your lending needs.

Book an obligation-free, complimentary consultation here today.

Ally Home Loans Pty Ltd is an Authorised Credit Representative (Credit Representative Number – 494608) of My Local Broker (Australian Credit License – 481374). Important Disclaimer: Your complete financial situation will need to be assessed before acceptance of any proposal or product.