What Do You Need To Know When Buying Land To Build A House On?

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    What Are The Advantages Of Buying Land And Building?

    The returns on an intelligent property purchase and construction project can be enormous. To begin, you get to settle into a house that was custom-made for you in a location you adore. Also, there will be no "wear and tear" on your home from prior residents, so you may bask in its pristine newness.

    There are monetary benefits to buying land and constructing a house as well:

    • Investing in a home in the correct location might result in significant growth in its value over time.
    • More incentives and subsidies are available for building a home than for purchasing an existing one.
    • Your initial borrowing amounts will be lower because they will be prorated based on your progress. Purchasing land, laying the pad (floor), installing the roof, securing the lockup, and finishing the structure are the most typical stages of construction. When purchasing an existing house, you do not take out a large lump sum mortgage, but rather draw down the funds as you need them.

    How Do I Choose The Right Block Of Land?

    what do you need to know when buying land to build a house on (3)Check The Area Has What You Need.

    If you're considering buying land and constructing a home, one of the best reasons to do so is the enjoyment you get from living in the neighbourhood. The beach or a scenic vista might be the initial selling points. Nonetheless, here are some things to think about before making a purchase:

    • ServicesWhat kinds of help will you require in the near future, and what kinds immediately? Be sure there are sufficient options for child care, school, medical care, shopping, and public transportation in the region. Find when these utilities will be installed before you make a purchase in a developing neighbourhood. Do they have in and out access to their roads?What kinds of buildings are permitted by the local zoning laws? Is this just a standard residential area, or are there going to be high-rises or mansions built there eventually? Due to the potential for dramatic changes in the area's character, it's wise to keep tabs on the zone. If you want to boost the value of your property by subdividing it or constructing a granny flat, you need also be aware of any zoning restrictions that may apply. Is it possible that high-rise structures will block your existing view in the future?

    Understand The Lay Of The Land

    The block's topography should also be taken into account, in addition to its size.

    • The cost of tree removal can add up quickly. Perhaps there should be limits on tree cutting, both in terms of quantity and variety.
    • Construction on a sloping lot can increase project costs and complexity. The cost of building can increase significantly if you need to level out an excavation made with blocks.
    • So, the ground is made up of rocks, then? More time and money may be needed to excavate areas where there is a lot of rock.
    • Nature's fury — is this a high-risk forest-fire region? Could there be flooding issues? Know this since it might affect your ability to get house insurance in the future.

    Do I Have To Pay Stamp Duty?

    Stamp duty is levied on the price of the land itself if it is purchased with the intention of later constructing a dwelling on it. When settlement occurs and the land is transferred to your name, your builder can begin construction. Make arrangements for settlement to coincide with the Council's approval of construction plans, if at all possible. That way, you can reduce your interest payments on loans. Request a pricing based on "completion" if you don't want to delay paying until your new house is finished being constructed. The function here acquires the site and takes out a loan to finance the construction. When your financing closes, the builder gets paid back for his expenses.

    As part of the overall purchase price your your land and home, you will be responsible for paying stamp duty along with the following fees and expenses:

    • the land's stamp duty and any applicable legal fees associated with the construction loan
    • Costs in Building Construction

    FAQs About Buying Land To Build A House

    If you want to build a new home, buying a new block of land that hasn’t been built on before is the most cost-effective first step. It gives you a blank canvas to build the perfect home to suit your needs.

    • Buying land and building a home takes time – anything from six months to a couple of years, depending on the type of land you buy and the home you want to build.
    • Buying an existing home is much faster but more restrictive. In a major city like Sydney, it is also highly likely to be more expensive – not to mention the fact that you’re buying second-hand.

    Many first home buyers, investors and downsizers in Sydney are opting to take advantage of the cost benefits of building a new home, knowing they’ll have something brand-new at the end of the process.

    To build a permanent residential structure like a home on land in NSW, you first need permission. Then, the local Council decides where you’re allowed to build, according to the zoning of land within their area. Land Zoning is the term used for the specific rules for building a parcel of land.

    For example, while some parts of Sydney are zoned as high density – meaning blocks of apartments can be built in that area – low density means only free-standing homes are allowed. Some areas, like industrial precincts, are where building a residential dwelling is impossible. Land zoned as rural – that is, for agriculture – also have rules as to how much of a given parcel of land can be dedicated to the home.

    On residential blocks, zoning also dictates factors like setbacks (that is, how close to the street you’ll be allowed to build the home and any attached structures, such as a carport) and how many storeys high a home can be. It will also impact a landowners’ ability to build a second dwelling like a granny flat on the site. The most cost-effective way to buy land to build a house is to purchase a greenfield block.

    Greenfield is the term used to describe new land that has been made available by the government for new housing. As cities and regions grow and established areas become more populated, greenfield areas are more affordable to buy and build a new home. In addition, as new infrastructure such as roads and rail connect these emerging areas, the land is released for purchase by aspiring new home buyers. Some of the most popular locations for greenfield land in Sydney include Austral and Leppington in Sydney’s southwest and Marsden Park and Box Hill in the city’s northwest.

    Another term you may come across is brownfield, which describes land that was previously developed but is not in use. Due to contamination and other site cleaning costs, this land can be costlier and more time-consuming to build on. A third way to buy land for building a new home is to purchase an existing home, demolish it and start again – what our industry calls a knockdown rebuild. This is more popular among people who already own the home they want to replace.

    Most of Sydney’s greenfield land is in emerging suburbs in and beyond the city’s middle suburban areas. Some of the most popular locations for greenfield land in Sydney include Austral and Leppington in Sydney’s southwest and Marsden Park and Box Hill in the city’s northwest. Rawson Communities has neighbourhoods in each of these locations.

    When you buy land and build a house, you need two separate loans – one for the land and one for the build. Please speak to a mortgage broker, such as our team at Mint Loans, about land finance. They’ll help you find the best option to suit your circumstances and structure the finance around the land registration process (more on that shortly). Generally, there will be three steps to pay for your land.

    • Secure the block – a $2,000 fee paid to take the land you want off the market while you get your finances in place to buy the block.
    • Deposit – upon signing the land contract, you’ll pay 10 per cent of the land purchase price, minus the $2,000 you paid to secure the block (not including the cost of the build). Even if you’re buying a house and land package, you’ll still pay for the land separately.
    • Final payment – when the land has been registered and is ready for building to start, the balance of the land cost is payable. This means that you now own the block and can build your home on it.

    If this is my first home, do I qualify for a first-time homebuyer's grant?

    The majority of state governments offer incentives to people who purchase brand new houses rather than pre-existing ones. New South Wales (NSW) currently offers a $5000 First Home Owner Award for brand new construction in place of the previous $7,000 grant that was in place until 2012. In other words, if you're not a next buyer but are looking for self-employed house loans for your second mortgage, you can still qualify for a $5,000 incentive for new homes. Similarly, the Australian Capital Territory's $12,500 incentive is limited to either newly constructed or substantially remodelled homes, while Queensland's $15,000 Great Start Grant is available to both groups.

    Things To Consider Before Buying A Block Of Land

    Taking the Law into Account

    It's important to think about the long list of legal commitments that comes with purchasing a piece of land. To construct on the land, for instance, you must first secure approval from the local Council. In addition, many developments include covenants that limit the use of particular construction materials. If you know about these constraints ahead of time, you can modify your plans to fit your financial situation.


    How close the property is to various amenities and services including grocery stores, schools, hospitals, parks, and other entertainment venues, as well as to various modes of public transit. Whether you plan to sell or keep the building, the improvements will raise the asking price.

    Providing Basic Needs

    Determine whether or whether your plot has access to necessary infrastructure like electricity, gas, the internet, water, and sewage. Find out if the necessary safeguards have already been implemented. If they aren't already included, you'll want to research how much it will cost to add them.


    Investing in energy-efficient materials and construction practises is good for the environment and your bank account. To maximise your investment, consider the land's orientation before making a purchase. For instance, if the house is oriented to the north, it will receive adequate sunlight and heat during the winter and be shielded from the sun during the summer. In most cases, the costs associated with heating and cooling a home can be reduced significantly by having it constructed with the most efficient orientation.

    Size And Shape

    what do you need to know when buying land to build a house on (2)

    The shape of the plot you settle on will have significant bearing on the layout of your future home. Purchasing a rectangular plot of land is a common practise, especially for future development or resale purposes. You should give some thought to your intentions for the land, though, before making a purchase. To what extent would you like to split this space? Are the lots the right size for your plans? Having this information before you begin your search will help you find the ideal building block.

    This Area's Topography

    While planning a building project, it's important to consider the site's topography and any additional expenses that could arise from it. For instance, is if block is steep, the costs associated with levelling it or building on it may be higher. Similarly, you'll need to include in the cost of tree removal or rock excavation as an additional expense.

    Topsoil Quality

    When investing in a piece of property, it is prudent to conduct a soil test. You can avoid buying a lemons with hidden problems by having the soil tested first. You can evaluate the block's stability and site retention with the help of a soil test, which analyses the soil's physical and chemical features. A solid foundation can be built for less money if the soil is in good condition.

    Plan for the House You Wish to Construct

    Establish who the home is intended for. Families with kids, for instance, would benefit from having a yard and several bedrooms, while retirees and young professionals would be more interested in a low-maintenance environment. Thus, you should check to see if the plot of land may be modified to suit your requirements.

    Properties in Close Proximity

    Finally, snooping around on neighbouring properties might give you a general notion of the problems prevalent there. It's important to find out whether there are any pending construction projects or planned developments in the neighbourhood before purchasing a plot of property there.

    what do you need to know when buying land to build a house on (1)


    The ability to settle into a home that was built specifically for you in a location you love, the possibility of significant growth in its value over time, increased incentives and subsidies, lower initial borrowing amounts, and the pleasure of living in the neighbourhood are all benefits of purchasing land and constructing a home. There are a number of factors to take into account before making a purchase, including proximity to essentials like child care, schools, hospitals, markets, and public transit. If you buy a piece of land with the goal of building a house on it, you'll have to pay stamp duty on the whole purchase amount. Construction can commence as soon as settlement is finalised and title to the land is given to you. If the soil is rocky, construction costs could go through the roof because of the extra effort and materials required to remove the rocks.

    Is there a first-time homebuyer's grant if this is your first house? State governments often provide financial incentives to residents who choose to buy newly constructed homes rather than used ones. While looking to purchase a plot of land, one must think about a number of factors, including the law, location, orientation, fundamental necessities, size, shape, and topography. In many projects, there are covenants that forbid the use of certain construction materials, and these are required by law. The convenience of the property's location within proximity to both private and public transportation networks should not be underestimated.

    A smart investment will be oriented so that it gets enough of sun and heat in the winter but is protected from the sun in the summer. The home's size and shape will have a major impact on the design of the interior. You should think about the site's topography and any extra costs you might incur as a result of it when you're making your plans. It is important to check the quality of the topsoil before beginning construction to ensure stability and site retention, and if the soil is in good shape, a sturdy foundation can be created at a lower cost. Find out who the house will belong to and if the land may be altered to fit your needs. The difficulties in the area can be gauged by doing some snooping on neighbouring properties.

    Content Summary

    • The land's stamp duty and any necessary legal fees related to the construction loan will be added to the purchase price of your land and home. Price Tags During Construction Do I qualify for a first-time homebuyer's grant if this is my first home? Most state governments provide financial incentives to homebuyers who commit to purchasing new construction rather than an existing dwelling.
    • To get the most out of your land acquisition, you should think about the direction it faces.
    • The slope of the land and the associated costs must be taken into account at the outset of any construction project.
    • It is wise to get a soil test done before spending money on a piece of property.
    • Soil testing can help you avoid buying a lemon with hidden faults.
    • A soil test, which examines the soil's physical and chemical characteristics, allows you to assess the block's stability and site retention.
    • Create a blueprint of the dream home you've always wanted to build.
    • Discover who will be living in the house.
    • That's why it's important to verify whether or not the land can be altered to meet your needs.
    • Before buying a home in a new area, it's smart to do some research on whether or not there are any upcoming building projects or planned developments in the area.
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