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Purchased unregistered land? Why choosing your builder now has great advantages
What does ‘Unregistered Land’ even mean?
When you buy unregistered land, you are essentially buying a “lot” within an unregistered plan of subdivision. The purchase of unregistered land occurs when a Developer or Owner subdivides typically a much larger lot of registered land. To do this they create an unregistered plan of subdivision which must be approved by the Local Council and any governing authorities. When you purchase unregistered land, you cannot settle on your “lot” until the subdivision (or stage within) has been registered.
1. Cheaper Stamp Duty
In NSW buying Unregistered land means that you will only pay stamp duty based on the total cost of the land contract, whereas purchasing an established home will require you to pay stamp duty on the total cost of the home (house+land)
2. Save Money
The cost of buying a block of unregistered land and then building your dream home can oftentimes be cheaper than buying an existing property of similar design and land size.
3. Your choice of Design
You can build a home that perfectly meets the needs of your family rather than buying a prebuilt home that is perhaps not quite right for you.
4. Potential Equity
You can lock in the price at the date of contract and if the value of the land goes up before land registration and therefore before settlement occurs, you can gain instant equity on your investment.
5. Time is Money
The other major advantage of purchasing unregistered land that is often not spoken about is that whilst you are waiting for your land to register you can spend that time researching builders. A smart choice is to select a builder prior to registration- that way prior to registration your builder can get started on your job by ordering any relevant reports, begin drawing your plans, start working on your consolidated tender, and potentially even begin to prepare your documents for council. Now in all fairness they will not be able to finalise any of these items for you until the land has been registered- as typically builders cannot access the site unless registration has occurred. Builders do need to be able to access the site to complete reports such as soil testing and land surveys, but if the builder has already started drawing plans and preparing your consolidated tender then once these reports have been completed it is simply a case of jumping back into your file adding the finishing touches and moving your job along to council application. Whereas, if you wait to choose a builder until after your land has registered they (the builder) will have to do everything from scratch. Those who choose a builder prior to land registering will have a leg up in the sense that their build will move along quicker and therefore potentially saving money in rent whilst waiting for the house to be completed.
6. Avoid the price rise
It is not uncommon for builders to increase the build price every 3 – 4 months. Now there are a variety of reason these price increases occur due to the fact building is such a fluctuating industry. Another potential benefit of choosing your builder now rather than waiting for your land to register is because again you have the opportunity to lock in today’s prices, and again potentially gain more equity, as by the time your land registers the cost of building may have risen several thousand dollars which often equates to increased house prices.
There are pros and cons to everything, and as always it is advisable to do your own research.
If reading this blog has sparked your curiosity and you’d like to know more one of our New Home Advisors are only a phone call away 1300 739 253, alternatively jump onto our contact us page and enquiry within.
