Many people dream of finding some vacant land and building a special home on it. But just as with buying an apartment "off the plan" in a yet-to-be-built apartment block, there are many factors to take into consideration and potential pitfalls to be aware of.
What does it mean to buy vacant land off the plan?
Buying vacant land to build a dream home can be an attractive proposition and an alternative to buying an existing house or apartment.
It is important not to be too starry-eyed about building your dream home on land offered as a pre-sale or "off the plan" - meaning before it is ready to be built on, before land titles are issued, and before construction of the subdivision and roads is complete.
Buying a property before the building is constructed or "buying off the plan" can result in a home that differs from your expectations in undesirable ways, such as the quality of construction.
Buying from a landowner vs signing up with Landcom or a developer
There are generally two ways to buy vacant land.
The first is that you can buy vacant land from its owner, be it a farmer or landowner, and then design a house to fit the land.
The second is that you sign up for a house and land package from Landcom or a developer, where a project home builder builds the house.
What are the risks of buying vacant land?
One of the risks of off-the-plan purchases is that often people can wait years before they are the actual owner of the land or building. Developers can take years to obtain approval from the council and finish the job. Look out for when the sunset date is, and how long you may have to wait.
On the other hand, a positive is that it can provide time to raise the money needed.
Get legal advice before signing any documents or paying any money. Look out for clauses that allow a developer to rescind a contract or delay building. The laws and regulations governing land purchases are complex and require specialist advice.
Things to consider when buying vacant land to build on
When looking for a vacant land to build a home on, it is important to consider the cost of connecting and maintaining services such as water, electricity, gas, telephone, sewerage, fire control and internet.
Don't forget builders will need access for heavy vehicles and construction equipment.
It would be wise also to consider the impact of climate change in the years ahead, with stronger weather patterns like storms, floods, drought and heat. (Please see Drought, flood, bushfire and insurance risk - the impact of climate change on property transactions.)
You should consider road access during possible future floods and check whether creeks, dams and flood-prone areas could restrict building.
Councils may require geo-technical reports on trees, rocks and soil stability before giving permission to build. You need to know the zoning for the property, as well as any council restrictions.
You should also check whether any future developments are planned nearby. You might find your ocean view will become a brick wall. Trees grow and can block views if the council prevents trimming.
Another thing to consider is distance to schools, shopping centres, medical services, clubs and community amenities.
Choosing the option of a house and land package through Landcom or a developer can remove a lot of these building considerations. There is a process of deposits and loans with time limits you need to be aware of.
NSW government information on buying vacant land
The NSW government offers advice on what to look out for when selecting a builder. However, you should have a lawyer check any contracts before you sign them. (Please see Buying Land and Building a Home, NSW Family and Community Services.)
The government also provides information on things to consider if you are buying a property off the plan. (Please see Buying off the plan, NSW Fair Trading.)
For more information, please see Buying off the plan? Be aware of the pitfalls and do your due diligence.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.