A house and land package is an attractive option when buying a home. There are a number of benefits such as low maintenance, being able to design the layout and finishes, and lower purchase price that seal the deal for many buyers.
As with any home purchase, there are considerations which may not be obvious at first glance. We have compiled a list of things to know when buying a house and land package, to help you avoid unexpected surprises.
1. Really Look at the Area
New home developments are often located in underdeveloped areas, and there can be a lack of services which may cause issues once you move in. Before signing the dotted line consider the services you use each week and assess their availability in your new location.
Factors such as schools, transport, commute times, and shopping centres are often overlooked, only to be a point of frustration down the track.
2. Unspecified Costs
It could be assumed that the price of a house and land package is a final cost, however there are a number of costs that come up through the building phase and catch buyers off guard. Research exactly what the package includes and be sure to double check what is not included.
Changes to any agreed finishes in the builder’s contract could result in higher costs, as well as hard land/soil (like clay), or if the location has a slope. Packages regularly list finishes such as landscaping, driveways, fencing, mailboxes, and clothesline as ‘extras’ and buyers will need to pay out of pocket at the end of the build.
3. What You See is Not Always What You Get
The display home is typically finished with the top-level options of the package, meaning building a home to the same standard usually comes with a higher price tag. Take your time considering finishes such as tiles, flooring, appliances, benchtops, light fittings, etc, and ensure you keep to budget.
4. Investment Drain
If you are purchasing the package as an investor, understand that you will be without tenants during the build – but will still need to cover the mortgage or interest repayments on the loan. This is one of the reasons investors prefer turnkey packages.
Oversupply is also a consideration, as too many empty properties can affect rental demand, as well as pricing – meaning some homes will spend periods of time empty. New homes purchased as investment properties are also eligible for tax benefits and depreciation, so be sure to discuss your options with your financial advisor.
5. Long-term Value
Even if you are buying your house and land package as your primary residence, you would be hoping for it to retain or increase in its value over time. House and Land Packages do carry the risks of being sold at inflated prices to cover marketing, development, and commission costs.
Another factor affecting the long-term value of the property is if the developer has released too many land parcels and created oversupply. This can happen anytime in the development of the estate, so it is best to know their plans for future releases.
