House and Land vs Off-The-Plan?
If you’re considering purchasing a new property, but weighing up the benefits of House and Land (i.e. purchase land and fund construction) vs Off-the-Plan (settle on completion), I would suggest the following should be considered:
1. You will save stamp duties with off the House and Land options (as only required to pay stamp duties on the land value), but you will still need to cover holding costs on construction interest, which should break after approximately nine months of construction.
2. With the Off-the-Plan option, if there are delays with council or weather for construction etc, you're likely not be out of pocket for holding costs.
3. With House and Land you can have certainty your finance is in place prior to settlement of the land and commencement of the construction, which is not always with the case with Off-The-Plan, particularly for apartments, where the bank valuation after completion may affect the funding. This can also result in having to raise extra funds just to settle or face loosing your deposit.
4. Both options may also have pitfalls, as they may not include some items, such as landscaping or fencing. Off The Plan often do provide this but likely with no options to personalise either build design or your new garden.
David Lipschitz, Logic Finance