Taking your new home one step at a time: Buying land to build later.

Land + house = home. This equation can happen all at once, but there are good reasons for taking it one step at a time. 

Let’s look at the benefits and practicalities of how to buy land to build a house later.

Benefits of purchasing land now and building later

We’ve all been there. You love the house but aren’t keen on the location. Or, you find the ideal place to call home but don’t like the house that’s part of the deal. 

One way to ensure you get both the land and house you love is to buy land now, then build later. 

There are three big advantages to purchasing land to build a home at a later date:

1. Staged expense $$: It’s not always easy (or possible) to buy an entire home in one go. The combined value of the land and house can push your dream home out of reach. By buying land first, then building later, you create different stages for your expenses. Instead of one big financial hit, you’ve got at least two (and possibly more) payment milestones, which can allow you to save for each stage and budget more easily.
2. Government grants and stamp duties: Homebuyer government grants vary between states and over time, however there’s a chance that you’ll be eligible for a grant for both the land and your build. With stamp duty, for example if you’re buying land in NSW, you pay stamp duty on the cost of the land plus, if it’s your first purchase, the First Home owner grant (FHBAS) entitles you an exemption.
3. Manageable decisions: If you’ve ever experienced decision-fatigue or decision-overwhelm, you’ll know that minimising the number of decisions you need to make at any one time can be super helpful! By starting with decisions about land, then moving onto the house at a different time, you can put all your focus into each stage in turn.

Downsides to buying land to build later

Are there any negatives to taking your home-buying journey in two stages? Of course, every option in life comes with potential downsides. Probably the biggest factor here is that buying land to build a new house later will stretch out the timelines until move-in day. Another caution to note is to ensure you’ll be able to continue saving for your house once you’re paying off a loan for the land.

How to buy land? Let’s move onto a step-by-step guide to finding and buying your ideal block of land before building a house!

Step 1: Finding and buying land

Once you’re ready to look for your future home’s land, here are some factors to keep firmly in mind:

Location: This one probably goes without saying but take time to consider where you’d like to live. The first element to consider is the location of the specific block of land within a housing development. Would you prefer a north or south-facing backyard? How close are your neighbours likely to be?

Then, it’s important to check out the proximity to shops, schools, transport and other elements that are important to your lifestyle. Don’t forget to factor in future planned amenities, as a lot of new developments come with plans for new shopping centres, schools and even roads. Put on your imagination hat to picture what the area will look like in five or 10 years time.

Rawson Homes have developments in Caddens, Vineyard, Austral, Leppington and Strathnairn in the ACT.

Land size and orientation: Even though you’re not going to start building immediately, it’s worth thinking ahead by considering factors that will affect the build and your lifestyle once you move in. Sloping blocks require more site-preparation, which can add to the cost of your house, but can result in greater interplay between your inside and outside living areas. Corner blocks can provide options for extra light and ventilation.

Then, there’s the size of the land. Obviously, larger blocks will come at a higher price but it’s good to know there are great options for using double storey house designs to make the most of smaller or narrow blocks. Think about how important garden size, outdoor-living options and maybe space for a swimming pool is for you, knowing that this element might change depending on how close your land is to parks and other shared natural spaces.

Land details: Consider whether the land is ‘build ready’ or whether there might need to be significant site preparation. Are there trees that might need to be removed? Is the ground rocky? Is there good access for all the construction vehicles and equipment, once the time to build arrives?

Also check out what the soil is like and whether there are any risks associated with the block that might be costly (on a money or personal basis) later, such as it being flood-prone or in a bushfire risk area. Also, check whether infrastructure and services are already in place, including water, electricity, gas, sewerage and the all-important phone and internet connections.

Regulations: Check whether there are any restrictions or guidance provided by regulations. These can include local council regulations (including requirements for everything from zoning and setbacks to heritage overlays) as well as any guidance within a master-planned estate for the required look and feel of your home.

You also need to check whether there are any requirements to build your house in a particular time frame after owning the land. These requirements vary from state to state and change over time. 

Loan pre-approval: Don’t forget to start talking with banks, other lenders or a broker to ensure that you’re set up financially for a home loan. This means that you’ll be ready to go once you gaze upon your ideal block of land!

Need mortgage advice? Book an appointment with our finance partner at Mortgage Advice Bureau.

Step 2: Purchasing land 

How do you buy land? Once you’ve decided on your ideal block of land, there are some important steps to take before you start celebrating. Here’s our brief guide to purchasing a block of land.

Sign the contract: First, of course, carefully reviewing all the terms and conditions, including getting expert advice as needed. 

Deposit: The percentage of the total price paid as an upfront deposit will vary but this is an important step in ensuring the land is yours. 

Activate the loan: If you’ve taken our advice above (unless you’ve saved the full price of the land already of course), you’ll have arranged pre-approval. Now’s the time to activate your loan.

Settlement: Once the settlement date arrives (how exciting!), there will be signing and transferring of documents so that ownership is clearly yours.

OK, now it’s time to celebrate the purchase of your block of land!

Step 3: Choosing your house

Once you’ve bought your block, you can shift your focus to considering details of the house that will suit both your land and your lifestyle. 

Are you thinking of single-storey or double-storey? Does your land mean you need to consider homes that are suitable for a narrow block or corner piece of land? How many bedrooms will suit you both now and into the future? Do you ever work from home or have visitors coming to stay? 

The façade of your home is what you and your visitors will see, so do you prefer modern, traditional or a Hampton’s style frontage? Are you building in a climate that suits outdoor living and how important is having space available for a garden? 

Are you happy with pre-designed homes? Or would you prefer to see options that you can adapt or go for a fully individual style with a design that’s completely tailored for you? 

Now your land is settled, you’ll be able to fully focus on all these questions and more. Good, reliable builders will have information and resources to help you make a start, as well as individualised help once you’re ready to move onto this second stage of your overall plan to buy land first, then build later.

What are alternatives to buying land and building later?

If you’re not keen on the idea of buying a block of land now and then building at a future time, here are other options for owning your home:

Buying an existing home: This option is probably what you first imagine when you think of buying a home. After all, there are plenty of existing homes out there on the real estate market every single week! While buying an existing home might be perfect for you, we’re here to open your eyes up to other options - keep reading below!

Choosing a house and land package: Just like the name says, you can combine your choice of land and house all in one stage. The house and land will even all be on the one contract. Savvy builders will have carefully selected options for home designs that suit each block of land, making decision-making easy. Find out more about Rawson House & Land packages today.

Buying a ready built home: Ready built homes are usually available within new developments. They’re either already fully built or are very close to being completed (say, within three months). You get a brand new home that you can move into very soon. Find out more about ready built here.

Knocking down an existing home and rebuilding: This is called a ‘Knockdown Rebuild’ (or KDR for short) and is an option for those not content with the house that they’re currently living in but want to continue living at the same address, or purchased with the intent to knock the existing house down to build new. For those looking at this option, it would be beneficial to speak to a knockdown rebuild specialist (like Rawson Homes) to guide them through this process. Find out more on our Knockdown Rebuild page.

FAQs

Should I buy land first then build later?

Buying land first and then building later is an ideal way to buy a home, particularly if you would benefit from this big purchase being separated into two stages. Perhaps you're a first-home buyer with limited savings. Or you want to start the process but need more time to make decisions about the details and design of your home. No matter what your circumstances are, if your ideal block of land is for sale, buying it now secures your option to build a home once you’re ready.

Is buying residential land worth it?

The ultimate goal of buying residential land is to make your home there. So, yes, it’s always worth taking this important step towards your future home. If you’re thinking about land as an investment, value can certainly increase over time even if the land remains unused. However, this is not guaranteed so it’s well worth researching the area the land is in as well as price trends over time, and getting expert advice.

How long after buying land do you have to build NSW?

There is no set time requirement in NSW that stipulates how soon you have to build a home after buying land. However, it’s worth also checking any local council requirements as well as stipulations or guides that cover new housing developments.