House and land packages explained: how they work and what to consider
Planning to buy a house and land package in Australia? Learn how they work, and the factors to consider, from upfront costs to location.
A house and land package lets you buy a block of land and build a new home in one deal. You sign two contracts, one for the land and one for the build, but the process is managed as a single purchase.
House and land packages are common in new housing estates across Australia. They offer a streamlined way to get into a brand-new home, but the two-contract structure means you need to understand how financing, costs and timelines work before committing.
What is a house and land package?
A house and land package is a property deal that bundles a block of land with a new home built by a developer or builder. You purchase the land and construction together, but they are covered by two separate contracts.
You sign the land contract first. Once the land settles, you sign the building contract with your builder. Construction starts after land settlement completes.
How do house and land packages work?
House and land packages work through a two-contract structure. Each contract covers a different part of the purchase.
- Land contract - a standard property purchase for the block of land. You pay a deposit, settle, and take ownership before any building begins.
- Building contract - a separate agreement with the builder to construct the home. This covers the house design, inclusions, construction timeline and any variations or upgrades.
After land settlement, the builder begins construction according to your building contract. Most builds take 6–12 months depending on the size and complexity of the home.
Most buyers finance house and land packages with a construction home loan. Unlike a standard mortgage, a construction loan releases funds to the builder in stages as the home is built. You only pay interest on the amount drawn down until the loan is fully drawn down.
How does a construction loan drawdown work?
Your lender pays the builder at the end of each construction milestone. These stages are set out in your building contract.
A typical five-stage drawdown:
- Slab or foundation - concrete slab poured, initial plumbing installed. Lender releases roughly 10–15% of the build cost.
- Frame stage - structural frame, roof trusses and window frames go up. Another 15–20% is released.
- Lock-up stage - external walls, windows, doors and roofing completed. Around 35% is released.
- Fit-out stage - internal plumbing, electrical, plastering, cabinetry and tiling. Around 20% is released.
- Completion - final finishes, cleaning and handover. Remaining 5–10% released after final inspection.
During construction, you pay interest only on the funds drawn so far. Once complete, your loan converts to a standard principal and interest home loan.
Worked example - construction loan interest during the build
Say your total build cost is $350,000. Here are your estimated interest-only repayments at each stage, assuming a 6.00% p.a. variable rate:
Interest payments grow as the build progresses. In the early months, they are much lower than your final mortgage repayment.
Please note that Unloan does not offer construction loans.
What questions should you ask before buying a house and land package?
Ask these questions before you sign any contracts. They help you understand the true cost and avoid surprises during construction.
- What is included in the advertised price? - Ask the builder for a full inclusions list. Some packages cover fencing, driveways and landscaping; others do not.
- Are site costs included? - Site costs cover earthworks, soil testing, retaining walls and slope work.
- What upgrades will cost extra? - Common paid upgrades include stone benchtops, upgraded flooring, extra power points and ducted air conditioning. Get a written quote for every variation before signing.
- What is the expected build timeline? - Most builds take 6–12 months after land settlement. Ask for a written timeline with milestone dates.
- Is the package fixed price or subject to cost escalation? - A fixed-price contract locks in the build cost. Without one, material and labour price increases can inflate your final bill.
- Does the builder have home warranty insurance? - In most states, builders must hold home warranty insurance. This protects you if the builder goes bankrupt or fails to fix defects.
What costs should you consider when buying a house and land package?
The advertised price of a house and land package rarely covers every cost. Budget for these additional expenses before you commit.
- Site preparation and earthworks - soil testing, rock removal, retaining walls and levelling. On sloping or reactive soil blocks.
- Landscaping, fencing and driveway - front and rear fencing, turf, garden beds and driveway. Many estates require landscaping within 6–12 months of handover.
- Upgrades to finishes and appliances - stone benchtops, premium flooring, ducted air conditioning and extra power points.
- Add up these extras before comparing packages. The cheapest advertised price is not always the cheapest total cost.
Additional upfront costs beyond the build
- Stamp duty - you typically pay stamp duty on the land value only, not the completed home. This can save thousands. Use the Unloan stamp duty calculator to estimate.
- Legal and conveyancing fees - you need a solicitor to review both contracts.
- Loan application costs - some lenders charge application or valuation fees. With Unloan, there are no application fees, no ongoing fees and no exit fees.
- Council and utility connections - water, gas, electricity and NBN connections
How much stamp duty do you pay on a house and land package?
You usually pay stamp duty on the land value only - not the total package price. Because the home has not been built at land settlement, the taxable value is much lower.
Worked example - stamp duty savings
Say you buy a house and land package worth $650,000. The land is $300,000 and the build is $350,000.
With an established home, you generally pay stamp duty on the full purchase price of $650,000. With some house and land packages, you may only pay stamp duty on the land component, depending on how the contract is structured and when the property is valued for duty purposes.
The examples below are indicative only and based on current state rates at the time of writing. Actual costs can vary depending on your circumstances, property details and any concessions you may be eligible for.
First home buyers may pay less or no stamp duty. Many states offer full stamp duty exemptions or concessions for new homes and vacant land.
Use the Unloan stamp duty calculator to estimate your costs.
Can first home buyers use grants for house and land packages?
Yes. House and land packages are one of the most common ways to access first home buyer grants in Australia.
Key schemes to check:
- First Home Owner Grant (FHOG) - a one-off payment of $10,000–$30,000 (varies by state) for eligible buyers building or buying a new home. House and land packages may qualify.
- Australian Government 5% Deposit Scheme - a federal scheme that lets eligible buyers purchase with a low deposit without paying Lenders Mortgage Insurance (LMI).
- Stamp duty concessions - most states offer exemptions or discounts for first home buyers. In Queensland, first home buyers pay no stamp duty on new homes or vacant land, depending on eligibility criteria and property value.
Grant amounts and eligibility vary by state. Check your state revenue office for current details.
Estimate how much you could borrow with the Unloan borrowing calculator.
How do construction home loans work?
A construction loan is a home loan designed for building. Unlike a standard mortgage, it releases funds in stages as the home is built.
During the build, you pay interest only on the funds drawn so far. Once construction finishes, the loan converts to principal and interest repayments.
What are the risks of house and land packages?
House and land packages carry risks that established property purchases do not. The main risks relate to construction delays, builder issues and cost blowouts.
- Construction delays - weather, material shortages and labour issues can push completion out by months. Delays extend the period you pay interest without living in the property.
- Builder insolvency - if your builder goes bankrupt mid-build, you may need a new builder to finish. Home warranty insurance covers structural defects but may not cover the full cost. Check your builder's licence and financial history.
- Unexpected costs - site conditions (rocky soil, poor drainage) can trigger variations. A fixed-price contract limits this risk, but read the exclusions carefully.
- Property value changes - if values fall during the build, you could owe more than the home is worth. Rising values can create instant equity.
How to reduce your risk
- Choose a licensed, insured builder with a track record of completed builds.
- Get a fixed-price building contract.
- Have your solicitor review both contracts before signing.
- Budget a 10–15% contingency above the total package price.
- Visit the display village and inspect recent builds by the same builder.
What is the difference between house and land packages and off-the-plan property?
House and land packages give you a standalone home on its own block. You buy the land first and then build.
Off-the-plan property typically refers to apartments or townhouses purchased before the developer finishes construction.
Unloan is a division of Commonwealth Bank of Australia.
Applications are subject to credit approval, satisfactory security and you must have a minimum 20% equity in the property. Minimum loan amount $10,000, maximum loan amount $10,000,000, and total borrowings per customer across all Unloan loans is $10,000,000. If you currently have an Unloan home loan with an active Lender’s Mortgage Insurance (LMI) policy the maximum amount you can borrow across all Unloan loans is $3,000,000. Please note Unloan currently doesn’t offer loans with an LMI premium. In some cases, depending on the property’s location or type, we may only be able to lend you up to 70% of the property’s value.
Unloan offers a 0.01% per annum loyalty discount on the Unloan Live-In rate or Unloan Invest rate upon settlement. On each anniversary of your loan’s settlement date (or the day prior to the anniversary of your loan’s settlement date if your loan settled on 29th February and it is a leap year) the margin discount will increase by a further 0.01% per annum up to a maximum discount of 0.30% per annum. Unloan may withdraw this discount at any time. The loyalty discount is applied for each loan you have with Unloan.
*At Unloan, we do not charge any annual, application, banking, account, transaction, late or exit fees. Government fees may also apply. Learn more about government fees here. Your current lender may charge an exit fee when refinancing.
Unloan is a division of Commonwealth Bank of Australia, and Commonwealth Bank does not provide tax (financial) advice under the Tax Agent Services Act 2009 (Cth). You should consider seeking independent tax advice from a registered tax agent, accountant or adviser before you make any decisions based on this information.
Applications are subject to credit approval, satisfactory security and you must have a minimum 20% equity in the property. Minimum loan amount $10,000, maximum loan amount $10,000,000, and total borrowings per customer across all Unloan loans is $10,000,000. If you currently have an Unloan home loan with an active Lender’s Mortgage Insurance (LMI) policy the maximum amount you can borrow across all Unloan loans is $3,000,000. Please note Unloan currently doesn’t offer loans with an LMI premium. In some cases, depending on the property’s location or type, we may only be able to lend you up to 70% of the property’s value.
Unloan offers a 0.01% per annum loyalty discount on the Unloan Live-In rate or Unloan Invest rate upon settlement. On each anniversary of your loan’s settlement date (or the day prior to the anniversary of your loan’s settlement date if your loan settled on 29th February and it is a leap year) the margin discount will increase by a further 0.01% per annum up to a maximum discount of 0.30% per annum. Unloan may withdraw this discount at any time. The loyalty discount is applied for each loan you have with Unloan.
*At Unloan, we do not charge any annual, application, banking, account, transaction, late or exit fees. Government fees may also apply. Learn more about government fees here. Your current lender may charge an exit fee when refinancing.
Applications are subject to credit approval, satisfactory security and minimum deposit requirements. Full terms and conditions are found on our Unloan Terms and Conditions. Modified Terms and Conditions will be set out in our Notice of Variation Agreement, if you are approved. This article is intended to provide general information only. It does not have regard to the financial situation or needs of any reader and must not be relied upon as financial product advice.
Unloan offers a 0.01% per annum loyalty discount on the Unloan Live-In rate or Unloan Invest rate upon settlement. On each anniversary of your loan’s settlement date (or the day prior to the anniversary of your loan’s settlement date if your loan settled on 29th February and it is a leap year) the margin discount will increase by a further 0.01% per annum up to a maximum discount of 0.30% per annum. Unloan may withdraw this discount at any time. The loyalty discount is applied for each loan you have with Unloan.
*At Unloan, we do not charge any annual, application, banking, account, transaction, late or exit fees. Government fees may also apply. Learn more about government fees here. Your current lender may charge an exit fee when refinancing.
