Titled vs. Untitled: Land Explained
Whether you’re looking to build your dream home or purchase vacant land as an investment, untitled land can be an affordable way for first home buyers to enter the property market.
However, understanding the difference and benefits between the two can be a little confusing for some, so we’ve broken it down and explained what’s involved with each.
What is a land title?
A land title or certificate of title is a formal document that outlines who the land belongs to. Put simply, once land is titled, you can start building your property on that piece of land.
What is titled and untitled land?
Titled land is land with an official record of who owns it and registered with the Land Registry. Conversely, untitled land is unregistered land that is sold prior to council registration and is typical of new estates or new land releases.
When you buy untitled land, you are essentially making an off-the-plan concession that requires you to sign a contract before the land purchase can be finalised. Usually, you are asked to pay the developer a deposit, typically 10%, upon signing the contract, however you don’t fully own the land until the Certificate of Title is issued in your name. To put it in simple terms, the sale contract is more of a conditional promise by the developer to deliver a block of land at some point in the future for an agreed price.
Once the contract is signed, the land must be prepared for council registration by the developer. In some cases, this stage takes a while. This is due to potential delays in construction, contractors and poor weather for example.
The benefits of untitled land
While it can sometimes be a lengthy process to get land titled, there are benefits to purchasing untitled land:
- You are likely to pay less stamp duty with unregistered land than an established property simply because stamp duty is calculated on the value of the land, and land value increases dramatically along with suburban development
- It’s very hard to find titled land for purchase in and around major cities so untitled land is a great way to get your foot into an emerging market
- After paying the initial deposit, the remaining balance is not due until the land is completed which means you’ll have more time to save or to bolster your cash flow for further investment
- With new home building, most land value increases by the time you come to settle your land purchase. You’re provided an asset worth more than what you paid for
The benefits of titled land
Overall, buying a titled lot is a quicker and simpler process. It is also much easier for the builder or developer to give a more specific timeframe of completion:
- The approvals process can start straight away
- As a purchaser you can take ownership quickly and efficiently
- As soon as the tile is cleared builders can begin to work, meaning the build can commence sooner
The choice between titled and untitled land comes down to time. If you do not have the time to wait for your land to title, then purchasing titled land is likely to suit you better. However, for those who want some more time to save up and work with their builder to ensure all details of their home are perfect, buying untitled land definitely has its benefits.