Buying a block of land is a major milestone in anyone’s life. Whether you’re a first-time buyer purchasing a block for their first home, someone looking to get into the rental market, or downsizing for your retirement, purchasing property is going to represent a big moment in your life. Naturally, it’s a big decision and can be a nerve-wracking, stressful process even for those seasoned in the property market. In this article, we’re providing some advice on the Queensland property market and some tips for buying land in QLD.
What is the process for buying land in QLD?
Purchasing land is something most of us will only do once or twice in our lives, so it’s completely understandable if you’re wondering how the whole property purchase process even works. Let’s break it down into steps to give a basic overview of the buying process and how most land transactions will go down.
Buying through an auction
Auctions are where numerous bidders will make offers (or bids) for a property, with the eventual highest bidder. The exchange process is immediate, with your deposit needing to be paid on the day.
Usually, there is no cooling-off period with auction purchases, so be sure to have a thorough understanding of your finances before the auction. It’s easy to get carried away in the heat of the moment so have an absolute limit in mind before bidding starts.
Buying through a private treaty
This refers to when you make an offer directly to the owner or through a real estate institute. You can do this on your own or with the assistance of a real estate agent. If the offer is taken up, you’ll then negotiate a price and the conditions of the sale. You’ll then sign a contract and pay a deposit (usually 10%) to secure the land.
Cooling off period
In Queensland, you have a five-day cooling-off period from settlement to back out of the deal. This only applies to land bought through a private treaty, as auction sales don’t have a cooling-off period. There are conditions though, and should you decide to pull out of the agreement during the cooling-off period, you’ll have to pay 0.25% to the vendor as compensation.
Contract of Sale
This is the key piece of documentation when purchasing real estate. It’ll detail the purchase price and date, and the parties involved (you and the vendor, any solicitors, agents, conveyancers or others involved in the process). The contract will also outline any conditions that are part of the sale.
It’s recommended you hire a conveyancing solicitor or lawyer to look through these papers before you sign, as it can be complicated, especially for first-timers.
Other costs on top of the purchase price
Money is the key factor in any land purchase. It’ll determine what you can afford, and underestimating costs can come back to bite you. On top of the purchase price of the land itself, here are a few key things to factor into your budget.
- Stamp Duty (transfer duty)
- Legal Fees for the conveyancing process
- Soil Tests
- Valuation Fees
- Land Tax
Crucial elements to consider before buying land in QLD
As previously mentioned, purchasing land isn’t something to go into lightly. When looking at blocks of land, here are a few things to keep in mind.
Zoning of the land
No matter how wonderful your block of land looks, be sure to check whether it is in any flooding or bushfire zone. Talk to the local council and developer about whether the property is in a high-risk area, as this is a serious red flag. Not only does it put you and your family at risk, but it can also make obtaining financial support (home loans, grants, etc.) much more difficult.
Utility service connections
Are the services, like electricity, gas, water and sewage already connected or is this something you’ll need to organise yourself? The answer to this question will make a difference to your budget. If you’re required to install them, do some research into how much this is likely to cost you.
The best choice of location to purchase land in will depend on a few factors. First, what are you purchasing the land for? Is it for renting or to live in yourself? From an investment perspective, certain areas are more likely to experience capital growth than others
- Amenities in the area: Is there a good school nearby? What are the parks, dining options and entertainment?
- Public Transport Options: Is there a train station or bus line nearby?
- Safety: What’s the crime rate like in your area? Even if you’re not personally planning to live in this location, your potential tenants will likely do their research.
- Future developments: This can be either a pro or con, depending on what exactly the development is. Being close to a new train station or shopping centre could increase the value of your investment, whereas being next to a highway or the new sewage plant is going to make your home less attractive in the future.
Quality of soil
Performing due diligence before purchasing a block of land could be the difference between buying a lemon and avoiding a huge financial mistake. Soil tests are a must when looking at the new land, as this is how you’ll learn vital information regarding the land’s structural integrity and whether there are any major issues.
Water and sewage facilities are essentials for any property and most lots need approval for this before development can begin. If you need to create a new connection, disconnect existing connections or alter any existing easements or increase your demand, you’ll need approval.
Block elevation and slope
Not all blocks are flat, especially in many Brisbane suburbs. The elevation and slope of your land will influence your building process, as your builder will need to devise a suitable foundation and house design to suit the block. Steep blocks are quite common, so you’ll have a few options up your sleeve.
The proximity of nearby properties
When buying a block of land, it’s worth looking beyond your lot and at the neighbourhood as a whole. If you think the houses are a little close for your liking or see any issues with the other homes, consider whether you will have a similar issue. Also, be sure to ask if there will be any future developments or proposals that could affect the area. It would be a kick in the teeth to buy a place for its quiet natural surroundings, only for them to start building a highway next to your house within a year.
Consider the type of home you want to build
Do you have a specific design in mind for your dream home? If so, the block of land you’ll buy will need to be able to accommodate it. For example, if you want a sprawling acreage home then a narrow block won’t do the trick. Likewise, if you’re looking to build a duplex to rent out, a block of land in the middle of nowhere is not going to draw the demand as a block near the city or public transport.
Having an energy-efficient home design will help decrease your carbon footprint and energy bills. The orientation of your vacant land can play a crucial role in making your home more eco-friendly. A northern orientation will maximise your home’s use of natural light and also the thermal efficiency of your house.
Last but not least, legal considerations
Few things will bring everything to a grinding halt like the law. Before purchasing a block of land, look into what the local council guidelines are and whether there are any deal breakers in there. Likewise, investigate whether your local area has any building covenants or agreements that place restrictions on building design or materials you’re allowed to use. You’re going to become very aware of these restrictions sooner or later, so you might as well find out about them ASAP so you can adjust your plans and budget accordingly.
How long after buying land do you have to build with the Queensland Government’s first home vacant land concession?
This can vary a little, depending on circumstances, but if you receive any government grants, odds are there will be some time limit as part of the conditions. The first home vacant land concession is a great opportunity for first-time buyers to take some of the pressure off their purchase. From the settlement of the property, you’ll have two years to build a home, move in and be a permanent resident. The key conditions are as follows:
- Your block of land must be worth $400,000 or less.
- You must not have claimed the first home buyer’s grant before.
- Whoever makes the claim must be over 18 years old
- Only one home can be built on the land (this rules out those looking to build units, etc).
- The purchase price must be of market value and that market value needs to fall between $320,000-399,999.
- There cannot be any building on the land when you purchase (this rules out knockdown rebuilds).
Is buying land a good investment?
Buying land can be an incredibly good investment, but it’s important to note that there’s always an element of risk, no matter how much of a sure thing it may seem. It’s equally as important to note that not all land is the same. If you’re looking to buy land with the hope of capital gain, you’ll need a strategy. When you purchase real estate or property, it pays to do some research on the market and see what areas are doing well and which have promise.
Is it a good idea to buy land for an investment property?
Buying land can be great for an investment property providing you do your research. Whether it’s a good idea to buy land for an investment property will depend on the block of land and the strength of your strategy. Entering the property market is never easy, but with a lot of hard work, patience and persistence, an investment property can be a solid, long-term plan.
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