What are the advantages of House and Land packages?

Simplicity. The biggest advantage of the house and land package is Simplicity. The house and land solutions take out a lot of decision making through the building process.

There are thousands of different plans and layouts that are available to you when looking at building a house. With a house and land package they are reduced between 1 and 3 options that you can choose from.

Only have to deal with one person. There is generally only 1 person you need to work with. That person will sit on both the development and builder side and address all your questions.  

The builder knows the development. Builders will generally offer a house and land packages in areas that they are familiar with. This means that they already have a good idea of any potential problems there may be with the block.

Faster Build time. This is because the builder will have time between when you agree to the contract and settlement to get all the selections lined up. Once the land settles, they can lodge your plans into council for approval, this will save at least 1 month in your build

Work better with minimal deposit. This is because your bank or lender will not complete 2x valuations and loans on your project. With a house and land package you can take both contracts to your broker or banker and get the finance approved together. This is an advantage because if you buy a block of land then the valuation comes in lower for the build you can potentially get stuck with the block. Doing it together allows you to ensure your finance is approved across both the steps.

What are the disadvantages with a house and land package?

⛔️Contracts can be convoluted; price can be inflated – There are a few different ways you can come unstuck with inflated prices. Generally, the people who own the blocks are the ones getting packages put together which allows them to charge whatever they wish irrespective of what the market is going to do. Essentially, they have a monopoly in that pocket.

It’s important to understand what the market is doing in and around the area you are looking at to ensure you don’t overpay for your project.

Other problems are built in commissions so if you are buying from anyone other then the builder or developer expect there to be some sort of commission built in. If you are buying from a 3rd party then its best to understand how much they are paid. This could also lead into problems with valuations depending on how the commission is calculated.  

⛔️Not always a fixed price– the price that is marketed is generally there to capture your attention and as you get deeper into the details it becomes apparent that your actual cost will be a lot higher then you had anticipated. This is a common experience many people have. To avoid this problem, spend the time to understand what’s included. Many house and land packages will not have a fixed price for slab design, this means that once the soil test is completed which is after you’ve committed there may be an increase in cost.

⛔️You may have to compromise. If you have a specific idea on what you want in your home, then the house and land package will limit you with options. Generally, the developer or builder will only offer a couple of designs as part of the packages. There will also be limited changes allowed to these designs.

⛔️Inclusions are basic. You must be diligent to understand what you are getting in the initial price. There are going to be options to upgrade the inclusions however there will be an additional cost.

⛔️Because of the location and land you may be stuck with a builder; This is an important consideration, you may love the block of land but because of the package you may end up being stuck with the builder that is subpar. The package does not allow you to decide based on the builder’s merits but more about the land and house itself. This can be dangerous because the things you need from your builder (quality of workmanship, communication, warranty insurance, congruent) are not attracting any focus through this process.

Can I change things in a house and land package?

You will have a level of flexibility with what you can change in the package. There are some package options on the market where you cannot even choose the paint colour. Thankfully the majority of house and land packages will allow you to make minor cosmetic changes. When it comes to moving walls, increasing or decreasing the size of rooms this is a massive no no. Anything where there is a structural change to the plans will be met with fierce resistance.

Best course of action here is to ask the question early in the process to fully understand the level of flexibility you are going to get. This will end up saving you a lot of time and heart ache in the long run.

Is it cheaper to go with a house and land package?

It may initially seem like the house and land package is a cheaper option then to buy a block of land and build, but once you get the full picture and compare a like for like there is no difference in the price if anything the package can in some instances be more expensive because there may be commission added in.

Many of our customers will look at a house and land options in an established area because the price between buying an older house and having a brand-new home are so close. Its not until you look through the finer details that you will be able to make in informed decision.

Generally, the soil quality in established areas can be at a lower level then a new development, these costs are not apparent until you’ve made the decision to progress further. This is one example of potential area’s your cost could blow out. Unfortunately, with a house and land package you are already committed to the builder with both contracts. If you had purchase just the land then it would give you an opportunity to go to market and find a builder that may be better suited to helping you on your project.

Is my frustration with finding the right block leading me to consider a house and land package?

This is a common step most people go through, there is a reason. In the process of looking for the right block of land you will be presented marketing material on house and land packages nonstop. Below is an example from Realestate.com.au where looking for land in Stafford I was presented with ads about a house and land solution in Kedron Brook. Sometimes you may think, is it worth the hassle of finding the right block? or would it be easier to just buy a house and land package?  

How does a House and land package work? 

The agreement

The house and land package solution are an agreement between the developer (sells land) and the builder. Their agreement outlines that either party can market the package to secure a sale. Essentially, they are collaborating to help each other’s business.

The agreement is not always exclusive, which means that if the developer gets a client that wants to just buy the block of land without the house then they will sell the block outside of the agreement and if the builder gets a client that wants just the house without the block of land then

The contracts

There will be 2 separate contracts with a house and land package, there will be a contract for the block of land which you will start to pay for once settled, then there will be a construction contract which will be a progress payment basis and paid directly to the builder.

Marketing

The marketing is the glossy pictures you see on realestate.com.au, Domain or google. Their role is to attract people to the solutions. Once you have connected with an agent they will talk about things like inclusions and price. Its very important you ask all the right questions to quickly establish whether its worth pursuing. Below are examples of questions to ask:

  • What level of changes can I undertake? Can I move walls and change design, how much will it cost to make these changes?
  • How many other layouts can I choose from?
  • Is the price inclusive of fixed price foundation?
  • What are the inclusions in this property?
  • What commissions are you getting paid?
  • Can I buy the block of land then decide to build at a later date?

The build

The build phase is exactly the same as any other build project, you will have a land loan set up with an amount the bank is lending towards the construction, then as the builder gets to the stages e.g. Frame they will issue an invoice which will get paid by you or the bank.

Conclusion

Ultimately it will come down to your individual needs, if you are after a solution that is easier and simpler and are happy to pay a little more for the convenience then the House and land solutions may be the right solution for you. However if you want to get your home exactly the way you want and decide on a builder based on their merits then it may pay to do the house and land separately.