How do House & Land Packages work?
Many people understand the broad concept of a house and land package, but there’s plenty to know when it comes to this particular type of home buying. The process can seem quite complex and intimidating to some, so we’ve broken down what’s involved in the house and land purchase process to make it a bit easier to understand.
What is a House & Land Package?
As the name suggests, the purchase of a house and land package includes purchasing the land and the house in one bundle. In building terms, this means you will enter into two separate contracts, one with the land developer and one with the builder.
These contracts each require a deposit to secure the property and the cost may vary from developer to developer, and builder to builder, so it pays to do your research!
How do the payments work?
With both the developer and the builder, you will first place down a holding fee, often between $500 and $2,000 for each party.
The next step sees you place a deposit on a contract with both. The developer will usually require a 10% deposit, and most HIA affiliated builders will require a 5% deposit.
A developer will usually seek their 10% deposit 2 weeks after you place down your initial holding fee. You then won’t be required to pay the balance of your land until your lot titles which can be anywhere from 1 month to 18 months later.
Once you’ve placed your holding fee with the builder, they will start to prepare an HIA contract for you which can take anywhere from 3 weeks to 3 months depending on the complexity of your build. You will then pay your 5% deposit and wait for your land to title.
Once your land titles, you will be required to pay the balance on the lot. This is also the trigger for your builder to start preparing your home for construction and for the next 8-12 weeks your builder will apply for your building permit and all other requirements in order to transfer you to site.
Once the build starts and reaches slab completion, you will receive your first invoice and gradually pay the balance of the build as it progresses through to completion.
So what’s the benefit of a House & Land Package?
- Location, location, location!
As many builders are constantly talking to their prospective customers, developers are happy to work with them and as a result, builders get access to some of the best locations within an estate.
Many builders will understand the hidden costs associated with putting their product on a lot. As such, the packages being put together are designed to ensure a market competitive offering. This means overall savings for the First Home Buyer that they may not be able to get if they purchase the lot first and establish the house requirement after.
Many builders offer fixed price contracts with no hidden extras on their packages. This gives you peace of mind, especially when you are looking to manage your budget.
Unfortunately, not every home can be built on every lot. Many FHB’s get caught by thinking they are buying a lot for a bargain, only to find later that building on it is restricted to house types that don’t suit their needs or that has site costs so steep they would have been better off spending a bit more to save more overall.
While all of this has made the House & Land process clearer, it never hurts to learn a bit more. Click here to read about what to consider when purchasing the House & Land package that is right for you.
We have a team of dedicated PDX consultants that specialize in House & Land Packages, so feel free to get in touch using our online chat feature or contact us.