Are House and Land Packages A Good First Investment for First Home Buyers?

If you’re considering your first property investment, you’re probably deciding whether to buy an existing house or invest in a brand-new house that hasn’t been built yet. This latter option often involves a house and land package, wherein a developer builds estate infrastructure on empty land and then allows you to choose a plot of land and specify the house design you want. These houses are often customisable, allowing you to opt for the features you value most and create your dream home. Opting for a house and land package can offer substantial benefits and prove to be a sound investment.

Key Differences Between House and Land Packages and Existing Properties

When choosing your ideal home, understanding the distinction between home and land packages and existing properties is crucial. Home and land packages offer a unique opportunity to design your perfect house from the ground up, tailoring every detail to your preferences on a selected plot within a new development. This contrasts with purchasing an existing property, where the home is already built and may require renovations or compromises on layout and features. 

Here are some key differences between house and land packages and existing property:

Choosing between a house and land package or an existing property involves considering factors like customisation, cost, location, and readiness for occupancy. Home and land packages offer high customisation, potentially lower initial costs, and modern energy-efficient features, making them particularly appealing to first-time buyers who want to tailor their homes to their exact preferences while potentially increasing their investment value.

10 Reasons Why House and Land Packages are a Good Investment

1. Reduced Stamp Duty

A key benefit of opting for a house and land package is the potential for reduced stamp duty. 

It’s crucial to note that regulations regarding these concessions change from time to time, so double-check the information you find online.

Stamp duty concessions in WA
First Home Buyers buying in Western Australia will be eligible for stamp duty concessions if this is the first property they’ve purchased and if the land is worth less than $450,000. If the land component of the package is worth more than that, the rate of duty is $15.01 for every additional $100 over the $450,000 threshold. 

Stamp duty concessions in VIC
For investors in Victoria, the old rules still apply, so long as this is your first property purchase, the house and land package is worth less than $600,000, and you use the property as your primary place of residence for a period of 12 months that begins within 12 months of the completed build. Note that you cannot use the First Home Owners Grant in conjunction with the stamp duty concession—it has to be one or the other. 

Stamp duty concessions in QLD
For those looking to buy in Queensland, the First Home Vacant Land concession is available. To qualify, you must be purchasing your first property and intend to use the house as your primary place of residence within two years of the date of transfer. If the land is valued at less than $400,000, there is no stamp duty required, and with more expensive land comes progressively smaller concessions.

While stamp duty concessions for first home buyers aren’t as generous as they used to be, they are still helpful if you’re buying your first home. The primary requirement is that the property must serve as your principal residence. However, you can live there temporarily, such as for a year with roommates whose rent can help cover the mortgage. This arrangement can be financially advantageous if you’re willing to adapt. 

2. Claiming on Depreciation

Owning a new home offers significant tax advantages through increased depreciation claims compared to an established property. This includes deductions for the depreciation of fixtures, fittings, appliances, carpets, and blinds, as they naturally lose value over time due to wear and tear. If you rent out your property, these depreciation deductions can be claimed as a tax write-off against rental income, providing financial relief. To ensure compliance with the Australian Tax Office, you must obtain a detailed depreciation report from a qualified quantity surveyor. This report will accurately reflect the depreciating values of your property’s components for tax purposes.

3. Simplified Buying Process

Buying a new home and land package is streamlined, offering a significant advantage over traditional real estate transactions. This approach minimises the usual complexities involved with land ownership and construction contracts, leading to fewer arrangement fees and reduced paperwork. This streamlined process saves time and reduces the stress often associated with purchasing property.

4. Attractive for Quality Tenants

Another compelling reason to invest in a house and land package is the appeal of a brand-new home to potential tenants. New properties generally attract higher-quality tenants who value and are willing to pay more for modern amenities and pristine conditions. This enhances your ability to select from a better pool of applicants and allows you to command higher rental rates, boosting your investment returns.

Also, buying a home and land package presents a much easier process of preparing the house for rent. As it’s brand new, you’ll be able to skip a lot of the costly and time-consuming processes required with an older, existing home. For example, the house is unlikely to need any renovation or maintenance work, and there’s no need to carefully document the condition of the house prior to the beginning of a tenancy.

5. Prime Location and Community Lifestyle

The strategic development of house and land packages in locations with growing communities and essential amenities is another reason why investing in house and land packages is a viable choice. These areas are often close to employment centres, making them ideal for tenants who are looking for convenience in addition to a high quality of life. By offering a lifestyle that includes access to new community features like parks, schools, and shopping centres, your property can stand out in the rental market.

6. Wide Selection of Lots

A house and land package also gives you a degree of flexibility without overcomplicating matters. In most cases, you’ll have your choice from a selection of lots available in a new development. This allows you to select one that most closely represents what you’re looking for in land, and the fact that you have options is much more appealing than settling for whatever standalone lot that might be available while you’re browsing.

7. House Customisation

The same goes for your house. You’ll be able to select a design from a range of options, and better still, you can customise it to suit you. Whether you’re investing to turn the house for a profit later or to occupy it yourself one day, you have the ability to optimise it for a certain lifestyle. This is also far simpler and more affordable than hiring an architect to design a house for you. The hard work is done, but you still have options for personalisation.

8. Increased Energy Efficiency

Investing in a house and land package often means benefiting from the latest in energy-efficient design and technology. New homes in these packages are typically built with modern materials that meet current energy standards, which can significantly reduce heating and cooling costs. Features such as better insulation, energy-efficient windows, and advanced HVAC systems are common, which not only lower utility bills but also enhance the comfort of the home. 

Additionally, many developers are incorporating sustainable practices and renewable energy sources, like solar panels, which further boost the energy efficiency of these new homes and contribute to a smaller carbon footprint. This makes house and land packages a more environmentally friendly choice for eco-conscious buyers.

9. Potential for Custom Landscaping

House and land packages often have the unique opportunity to design custom landscaping. New developments usually require some level of landscaping, which presents a chance for homeowners to create outdoor spaces that enhance the appeal and value of their property. Whether it’s designing a vibrant garden, installing functional outdoor living areas, or creating eco-friendly landscapes, homeowners have the freedom to personalise their surroundings to suit their tastes and needs.

10. Long-term Growth Potential

Investing in a house and land package in a developing area holds excellent potential for long-term growth. As the neighbourhood matures and additional amenities and infrastructure are built, these areas become increasingly desirable. This desirability can significantly boost the market value of properties over time, offering substantial returns on investment. For those willing to invest in emerging areas, the financial rewards can be considerable as the community evolves and flourishes.

A Final Consideration

Before committing to buying a house and land package, you should do your due diligence. Make sure you fully understand all the additional costs involved (such as stamp duty) and seek the peace of mind that only comes from working with a trustworthy, reputable and experienced property developer.

Satterley has over 37 years of experience developing award-winning communities and delivering outstanding service to customers. Explore house and land packages in WA, Vic, or QLD to find your dream home, or contact our team today for more information.