Published 14 Dec, 2022
Updated 28 June, 2023
A lot of decision making goes into buying a newly-built home. There are multiple facades, materials and colour schemes to choose from, but before all that, there’s one big question to ask – do you want to buy vacant land and build yourself, or purchase a home and land package?
New homes provide many positives over existing houses; being the first owner, often moving into emerging neighbourhoods at an entry level price, government incentives and the luxury of customising your dream home.
At a time when housing prices are high, mortgage rates are increasing, and the cost of construction is rising, it’s important to make the decision that’s right for you.
Shane Harding, Landen’s Head of Property, breaks down the differences between buying land and beginning your own building journey, purchasing one of our home and land packages, or potentially buying a turnkey property from Landen.
Why buying a vacant land could work for you
Starting with a blank canvas obviously offers buyers more freedom and flexibility to design and build a forever home without restrictions imposed by existing structures that need to be demolished or quirky lot layouts.
There can also be considerable cost savings, says Shane.
“One of the major ‘pros’ of buying land is that stamp duty is applicable only on the land component. Buying an established home will mean a higher purchase price and therefore a much bigger stamp duty bill,” he explains.
“The other benefit with land is you have time to make decisions at your pace, which might not be the case with a packaged product. When you have your own land, you can pick your own builder, or choose our builders and engage them when you’re ready – you have more flexibility.”
How a home and land package could be your best bet
Convenience and peace of mind lead many buyers down the home and land package path. Many of the big decisions are made, so don’t have to worry about coordinating with builders, and contractors, therefore taking significant stress out of the building process.
Although many elements are predetermined, Shane says home and land packages still allow homebuyers to put their personal touch on the home.
“It takes away the stress of trying to find a builder and starting from scratch with a house. Then with the price, especially in the current market, when you buy land only you generally don’t know what the finished price will be. Plus you’ve got to factor in any inclusions,” he says.
“With a package, you know what your full price on the land contract and build contract is because you’ll have the full specifications. Then if you have the budget to upgrade, you can. It just gives more certainty on a finished product and the finished price.”
Lenders also look more favourably upon packages, compared with land only, especially for borrowers with a higher Loan to Value Ratio.
“The banks will generally want to see you have a contracted builder in place. If you’re going with land only and don’t have a builder yet, although you get more flexibility or time to build later on, banks tend to scratch their heads and wonder what the final cost is going to be. They just feel it’s riskier for them. Put simply, they’ll generally favour a mortgage coming across their desk with a package in place.”
When a turnkey property simply makes sense
The primary perk of a recently completed ‘turnkey’ product, is that your home is move-in ready. There’s no lengthy waiting period, no long paper trail with two separate contracts or staggered payments.
“A buyer puts a deposit down on the property and it’s usually a 21-day settlement and that’s it. We’re finding there’s an appetite for these finished homes so we’re building a percentage of our stock out on that basis,” Shane says.
While a finished home means a bigger stamp duty bill, because it’s a completed product, he explains that the convenience and the speed of receiving the keys can outweigh the tax for many.
“For many homebuyers and even investors, a turnkey property is still their preferred option. The reason being, some buyers are renting and with rents rising they can struggle to get two loans approved,” he says, adding that many eligible first-home buyers can access government incentives when buying brand new.
“They’re actually in a great position. On one hand, they might lose the ability for customisation, but most builders today have really good designers on board picking quality finishes which attract buyers.”
Additional benefits of buying a turnkey new home include the peace of mind of a fixed price, there’s no stress around making design and layout choices if it’s not your thing, there will be no renovations to consider for several years, and investors can start earning an income almost immediately.
If you are currently browsing the market for a turnkey home or a block of land, contact Landen’s sales team to help you with suitable options for your budget and preferences.