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The Difference Between House & Land and Off-The-Plan Purchasing 

 May 30, 2022

Lately, there has been a lot of media coverage surrounding the current state of the building industry. With discussion centering around the demise of many large players in the industry to rising material costs and supply chain delays. So, we thought it would be a great opportunity to reduce any uncertainty centered around the off-the-plan process and purchasing a new home with Cornus Developments. 

Now, we do say we are a trusted, reliable and experienced developer, but with so much uncertainty in the world, it’s understandable for you to have hesitations. We want to debunk some of the mysteries behind off-the-plan purchasing and provide you with some confidence in purchasing. And why it’s a smart decision to place your trust with an established developer. 

What Makes Cornus Developments Different?

Firstly, we can’t just run with your money. You can sleep soundly at night knowing that your deposit is placed into a lawyer’s trust account. However, this is not the case when purchasing a house and land package, where the deposit gets paid directly to the company, meaning that if something were to happen and your build wasn’t completed and you wanted your deposit back, you may not be able to receive it. The reason why there is this distinguishable difference is that all apartment developers in Melbourne must hold their purchaser’s deposits in a lawyer’s trust account. 

Secondly, at Cornus, we engage with a builder who exclusively builds our projects which allows us to control the process and mitigate the risk. We have the flexibility to adjust plans and the confidence in knowing they don’t have many open-ended contracts that they are awaiting payments for. Many developers engage with builders who have many large and costly projects with other developers. This can create much uncertainty regarding completion dates and outstanding debts from other contracts. 

What’s the difference between entering into a house and land package and an off-the-plan apartment project?

Entering into a house and land package is a unique buying experience as each is purchased from a separate entity, meaning the land is purchased from a developer and the house is purchased through a builder. When purchasing the land the deposit is held in a trust account until the land transfer takes place. The deposit paid to the builder is paid directly to the builder. When you enter into this contract, there are two separate contracts, one for the sale of the land and a second for the construction of the home. When engaging in a house and land package the biggest differentiating factor of this type of contract is the finance. This type of package means you’re required to take out two loans, a mortgage on your land and a construction loan. It’s also important to note that when you enter into a house and land package, the builder must purchase a Homeowners Warranty Insurance, which covers the purchaser for any costs associated with the build. However, this is usually purchased after construction commences, so, if you have paid a deposit and the builder folds, you will not receive your deposit. 

When entering into an off-the-plan apartment contract, purchasers engage with the developer or a real estate agent acting on behalf of the developer. When you pay your deposit with Cornus, your deposit is paid into a lawyer’s trust account that is untouchable. Regarding off-the-plan home loans, your repayments only commence once the project and settlement are complete, as opposed to a house and land loan, where purchasers must commence loan repayments during the construction of the home. This is a distinguishable difference between the two types of purchasing.  Off-the-plan purchasing locks in the price with only a 10% deposit that doesn’t require any further repayments until the completion of the build, whereas a house and land package requires loan repayments throughout the building process. Regarding off-the-plan purchasing, it’s always best to understand the developer, ask lots of questions, ask for project updates and understand your contract. You can also view our comprehensive beginner’s guide here. 

How has COVID affected the building industry?

The roll on effect of covid is now coming to fruition with the construction industry facing some of its biggest challenges. It’s been reported that building costs have risen by 9% which is the highest annual growth since the implementation of GST. This faces a challenge to many builders who have signed contracts with purchasers, as the price they originally signed on for does not reflect the rising costs.

Regarding house and land packages, many builders are withdrawing their contracts due to rising construction costs and leaving their purchasers stuck with the land and no home. 

At Cornus, we ensure our builder cannot withdraw from their contract by subsidising the builder for any cost escalation relating to material price increases. 

Despite some of the negative commentary surrounding the property market, there are a lot of positive aspects that buyers should still get excited about, such as the large off-the-plan stamp duty savings and low interest rates. If you do your diligence, research your developer or builder and understand your contract, the buying and building process should be a seamless and enjoyable experience. If you have any questions regarding the current climate within the industry, speak to your sales team member. If you’re looking to purchase a home from a trusted and reliable source you can contact Cornus sales on 1800 267 687 to discuss our current projects or fill in the form below. 

Disclaimer: The information and materials on this website, associated websites, blogs, social media, any other affiliated content or materials, are general in nature only and readers, viewers and consumers are advised to perform their own research and investigations and obtain their own financial, legal and other advice. This information and these materials do not form any representation by any vendors or agents of any vendors and may include third-party opinions that do not represent the opinion of any vendor or agent. The information and materials do not constitute legal, financial or real estate advice and must not be regarded or relied upon as such. None of it forms part of any contract of sale or vendor statement. Usage of this website and any associated website is subject to further terms and conditions.

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