You know you want a fresh, new home, but do you invest in a house and land package or opt for an off-the-plan deal for your next property move?

As a buyer there’s a lot to think about when it comes to making such a significant purchase, so here’s a guide that sets out the key differences between buying house and land or off-the-plan to help you make the best decision for your circumstances.

It pays to know what you’re buying when it comes to property purchases. Picture: realestate.com.au/new homes

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What you own after signing

One of the main differences between these two kinds of property purchases is what you own and when and can make a difference to buyers who want to know they’ve got something for their money straight away.

Off-the-plan: nothing until settlement

In an off-the-plan purchase the entire title is transferred once the building is complete and not before, which means it could be years before you actually own anything after you’ve paid a deposit.

House and land: land ownership is transferred after contracts signed

With a house and land package the buyer owns the land sooner but will wait a similar amount of time before the build is complete. The

Deposit amounts

Depending on the location and developer or builder you choose to go with, the deposits required for house and land packages and off-the-plan deals will differ.

Off the plan: usually around 5%

Canberra-based off-the-plan specialist Emma Baker, from InStyle Estate Agents, said off-the-plan buyers should expect to pay a 5% deposit to unconditionally exchange contracts.

“A lot of developers and agents are asking for a $1000 holding deposit to take the property off the market. This holding deposit is refundable if you do not proceed to exchange, otherwise it goes towards the 5% deposit,” Ms Baker said.

Some developers may request a 10% deposit, which will be held in a solicitor’s trust account until the project is finished, with the balance of the transaction due on completion.

Remember to check the rules in your state around how much deposit can be charged upfront.

House and land packages: can start as low as $1000

With house and land packages, the total deposit amount can also vary, said Metricon sales general manager Drew Glascott.

“A build deposit with Metricon is $1500, or $1000 with our HomeSolution range,” he said. “This gets the build process started, whilst the land deposit changes depending on the estate as different developers have different requirements.”

Whether you decide to buy a house and land package or go off-the-plan, it’s worth knowing what your signing up for. Picture: Getty

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Types of contracts

As with any contract, it is important to review the terms carefully when buying off-the-plan homes or packaged house and land so you are clear about what is included.

And it’s worth seeking a legal opinion before signing on the dotted line.

Off the plan: one contract

An off-the-plan deal generally comprises of one contract with the developer and must include certain information (which can depend on which state you’re in) around the deposit amount, the time between the buyer signing the contract and owning the property as well as the value changing between the time the buyer signing and owning the property.

In some states they also need to include items such as the property plans and schedule of finishes.

House and land packages: at least two contracts

Packaged house and land generally has two contracts – one for the land purchase and another with a builder for the construction.

Mr Glascott said Metricon has a streamlined option on house and land packages.

“We have a standard HIA contract that is part of every new build, as well as the Metricon contract that contains the specifics about your build, both are put together in the one contract to streamline the process,” he said.

How much choice is involved

Most homebuyers look to house and land packages or off-the-plan arrangements as a means of getting more bang for their buck.

Having less flexibility when it comes to designs or customising the properties can help keep prices lower.

Off the plan: limited options

Off-the-plan generally means just that – designs are largely set but there may be opportunities to personalise your home, especially if it’s an apartment by handpicking a floorplan and internal colour palette.

As part of the marketing for some developments high profile interior designers may be brought on board, which gives buyers an opportunity to live in a designer space for less than they would pay normally.

House and land packages: greater chance for personalisation

Packaged house and land may give you greater opportunity to personalise and ensure your home better accommodates your requirements, but developers will usually have a selection of specific house designs and floorplans to suit the sizes and configurations of different blocks. There will also be a range of options to choose from when decking out the home from the kitchen and bathroom fixtures to flooring and extra inclusions like air-conditioning or stone benchtops.

“Home and land gives you a great amount of choice and the chance to build your dream home,” said Mr Glascott.

“You make a selection from an extensive array of Metricon floorplans and options, that all offer something different. Picture Picture: realestate.com.au/new homes

Settlement process

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Off-the-plan: within two weeks

For off-the-plan homes, once a development has been built, a certificate of occupancy will be issued and if it’s a unit, the title plan will be registered.

Ms Baker said while your individual settlement date should be specified on your contract, you will be required to settle within two weeks of the registration of the plan.

“Settlement is called when the project is complete and the local government has recognised each of the townhouses or apartments in the project as individual properties,” she said. “Prior to this the project is recognised as one single address.”

House and land: once construction is complete

For house and land packaged properties, settlement can happen once construction is complete.

“The settlement process is standard across the board, when the home is complete the settlement and handover to the new homeowners will occur,” Mr Glascott said.

“It’s quite normal for minor items to require attention as a new home ‘settles’. This is why we return at the end of your nominated service period to conduct our New Home Service inspection.”

When the mortgage starts

One big consideration when considering these two scenarios is when the actual mortgage starts.

Off-the plan: once construction has completed

One of the primary drivers for buyers considering an off-the-plan purchase is the expectation that the property value will increase by the time construction has been completed.

With off-the-plan, buyers will generally pay a deposit and not make any further payments until settlement has occurred.

House and land package: mortgage interest is payable immediately

In most cases, if you invest in a house and land package you will pay an initial deposit and be responsible for paying two contracts; one for the land developer and another for the builder.

After the deposit, the balance of the block is paid when the land settles and payments to the builder are usually set in a staged timeline, with funds released by the bank at certain stages when construction meets key milestones.

“Generally whilst the home is being built, the customer pays the interest on the mortgage and then when the home is handed over they start the full mortgage repayments,” Mr Glascott said.

Stamp duty

Paying stamp duty will depend on the state in which you make your purchase, the price of the property and whether you’re a first home buyer, owner occupier or investor.

Most state and territory governments offer stamp duty concessions or incentives to reduce the stamp duty you pay on new builds.

In most Australian states and territories, stamp duty is calculated on a sliding scale which means the lower the value of your property, the less stamp duty you will pay. Stamp The
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