Is it always better to buy Land(only) than H&L package?

Offcourse buying land(only) gives options to choose the builder but what else pros/cons?

 

I suppose H&L builders may be able to reach higher economies of scale.

 

Always better to buy land and choose your own builder to get the best tender.

The only thing good about a H&L package is that it may be the only way to get into the particular estate being sold by the builder.

@jaybean You can get volume builders to build for you, even if you are not buying in their H&L packaged estates. So even if you buy land first, you can still enjoy the "economies of scale" from any of the volume builders.

 

If you are new to building, look into Building brokers as well, they'll put the tender out for you and help project manage.

 

There may be rare exceptions but generally money is saved buying the land and researching your own builder and doing your own landscape driveway blinds etc.

On occasion developers discount the land but don't want to be public about it so use packages to hide the discount. This can be an exemption. If this is the case then either the market will not be one worth investing in or alternatively there are financial year drivers. ASX listed developers may discount if you agree to settle pre June 30!

 

There is no such thing as "always" in property - depends on the deal
Generally speaking h and l are a pretty bad deal so I would say yes is the answer to your question because then you will have more governance and control over what you put on there. You can shop around. Very often house and land packages have some real fundamentally stupid features so bad have you have options over your own design you can actually put inside access and be the only house in the block or the suburb that has that. That's just one example

 

House and land packages are sometimes sold as a single contract so you don't pay anything til completion of the home. It's easy not having to deal with progress payments and inspections but the contract price is usually higher as the builder is funding the construction.

Whether the h&l is separate contracts or not, there are no headaches of trying to find the right builder and determining the actual cost to build. A lot of builder's will not include site costs in their build price. So if the h&l is designed for that block, you know what you are getting. The biggest advantage is the paperwork process if the house is already designed for the block. The to and fro-omg between you and the builder is the absolutely most frustrating part of building. It takes longer than promised and does your head in.

Advantage for land only is that you can pick your dream home to build. You can choose everything to the finest details. But with that comes the dreaded paperwork and the mistakes both in the plans and pricing in the process -e.g. "Oh, did you not know that changing from semi frameless to frameless shower screen is an extra 2k?". Or "oh no, of course that tile is not in the basic package". That will be an extra 5k as it takes the tiler longer to lay those ones"...

 

The answer is depends.
If you need to pay LMI to settle the land then I would say you definitely need a house contract. Y?? Well simply put once you commit to LMI your basically committing to that lenders valuation. Who here has constructed?? If so then you will almost certainly know the large discrepancies you can expect.
So what happens when you settle the land with NAB pay 5k LMI, go get yourself a build contract and NAB says as complete it's worth 60k less than the land+build because they see no value in your higher ceilings, smic tap ware and upgraded joinery??

The answer is you have three options:
1 = Value shop and hopefully find one that comes in and then refinance the land and build with them. You have just cost yourself about 6k+ in Lost LMI and fees.
2 = Wait 3 months and try again when the valuation lapses
3 = Settle and sell the land because its all too hard.

If no LMI is required then it's less an issue as the refinance will only cost about 1k but then some Other issues open up...

Short and curly of it, buy land but best you have a fixed build contract when your ready to settle it.

 

Unless the package is offered as turnkey, most of the time "extra" site costs are not included. They may include so called "fixed costs" but usually this is before soil tests, there's a lot of fine print that can get you.

Pricing process for inclusions is the same for both.
For H&L. you think what you are getting is what you signed up for until you discover that the included tiles / blinds /carpets /tapware is just crap. And if you forgot to include frameless shower screens, you will also have to pay extra when reviewing the toilet inclusions.

Choosing your own builder, you can make sure every item and upgrade you want is priced in right from the start before you sign anything and also that the contract terms are in more your favour.

And you get to negotiate prices before you sign, for H&L, once you sign and put a deposit, there goes your negotiating power.

IMHO building is a pretty involved process and usually ends up over budget and over time. You can buffer for the over budget part, but for over time part, unless you choose your own builder, it is unlikely you will be able to negotiate reasonable build delay penalties with a H&L package.

 

Ohhhhh and don't forget if you buy just land and say "I'll worry about the build later" then best be sure you know with certainty you CAN build what YOU want later.

Friend of mine did this, found out the estates rules didn't allow for what he wanted. GFC happened and he had to sell for a 100k loss.

 

I think a hole house is better than H&L package and land

 

Needed to read this a few times.

 

The approach that worked well for me was to use a smaller builder. They are much more flexible. I was able to meet with their suppliers and adjust the price allowances before signing the build contract. Aim for a fixed price contract with a time constraint on the construction period.

Due diligence is essential. My builder collapsed about 2.5 years after I moved in. They grew too quickly.

 

How many times did you have to read it?

I'm still reading and it's still not making sense...

 

I think the key is to get rid of the L in hole.