House and Land Packages in Australia — How They Work (2026)
House and land packages (H&L) are one of the most common ways Australians buy new homes — particularly in outer suburban growth corridors in Sydney, Melbourne, Brisbane, and Perth. Here is how they work and what to watch out for.
What Is a House and Land Package?
A house and land package bundles the purchase of a vacant land lot with a contract to build a specified house design on that land. You buy both together — from a developer (the land) and a volume builder (the construction) — typically within a display village or master-planned estate.
Two separate contracts:
- Land contract — between you and the land developer; settled (paid for) on completion of the subdivision
- Building contract — between you and the builder; construction begins after land settlement
The Finance Structure — Construction Loan
House and land packages typically require a construction loan rather than a standard mortgage. This is because:
- You cannot mortgage a building that does not yet exist
- Banks fund construction in progress payments (drawdowns) as building milestones are reached
- Interest is charged only on funds drawn, not the total loan amount
Typical construction progress payment stages:
| Stage | Approximate % of build contract |
|---|---|
| Slab/base completion | 10–15% |
| Frame completion | 20–25% |
| Lock-up (external walls, roof, windows) | 20–25% |
| Fit-out (internal linings, plumbing, electrical rough-in) | 20–25% |
| Practical completion | 10–20% |
During construction, you pay interest-only on drawn amounts. Once construction is complete, the loan converts to a standard principal and interest mortgage.
Land Settlement First — Then Construction
Phase 1: Land purchase The land contract settles in the normal way (typically 14–90 days after signing). Your land loan drawdown pays the developer. At this point, you own the land and owe money on the land.
Phase 2: Construction loan drawdowns Once council permits are obtained and construction begins, the builder invoices for each progress payment. Your lender pays the builder directly at each stage, increasing your total debt progressively.
Phase 3: Conversion At practical completion (the house is built), the construction loan converts to a standard home loan. Normal P&I repayments begin.
Stamp Duty Advantage
Stamp duty on house and land packages is typically calculated on the land price only — not the total package price (land + build). This is because duty is assessed at the time of land purchase — before the house is built.
Example:
- Land price: $350,000 → Duty on $350,000
- Build contract: $400,000 → No duty (construction contract, not property transfer)
- Total investment: $750,000
- Duty saving vs buying an established $750,000 home: Significant (varies by state)
Confirm current stamp duty rules with your state revenue office — concessions change.
First Home Owner Grant (FHOG)
In most Australian states, the FHOG is available for new builds — including house and land packages. Eligibility requires:
- You or your partner have never owned a property before
- You intend to live in the home as your principal residence
- The property is new (or substantially renovated)
FHOG amounts vary by state ($10,000–$30,000 in various states). Check current eligibility with your state revenue office.
Key Risks of House and Land Packages
| Risk | Explanation |
|---|---|
| Delays | Construction often takes longer than estimated (6–18 months typical); budget for extended rent period |
| Cost overruns | “Base price” advertising rarely includes site costs, upgrades, landscaping, driveways, fencing |
| Volume builder quality | High-volume builders prioritise speed; construction quality varies significantly |
| Design restrictions | Estates often have design guidelines limiting colours, materials, and modifications |
| Builder insolvency | If the builder collapses mid-build (has happened with several large builders 2022–2023), projects halt |
| Fixed-price contract risk | Fixed-price contracts protect you from price rises during building — but confirm this upfront |
| Land value vs package value | Some estates are in outer suburbs with limited historical price growth |
What to Check Before Signing
- Land contract: Settlement date, size (confirm surveyed), covenants and restrictions
- Building contract: Inclusions list (what is actually included vs extras), site cost allowance, upgrade pricing
- Fixed price: Confirm the contract is a true fixed-price contract (not “subject to site costs”)
- Builder’s licence: Confirm the builder is licensed in your state; check for complaints via your state’s building regulator
- Builder’s home warranty insurance: Required in most states — confirms insurance is in place before construction starts
- Estate covenants: What are you allowed (and not allowed) to build or do?
- Land registration: When is the land expected to be registered (titled)? Delays are common in new estates
Frequently Asked Questions
Can I use a different builder for a house and land package?
Most land developers in master-planned estates require you to build within a set period and may restrict you to preferred builders. Check the land contract’s building covenant carefully.
What if I can’t get finance at land settlement?
If your finance falls through at land settlement, you are in default of the land contract. The developer can retain the deposit (typically 10%). This risk is why formal pre-approval before signing any contract is important.
Can I use the First Home Guarantee (low deposit scheme) for a house and land package?
Potentially — check current eligibility with your lender and the National Housing Finance and Investment Corporation (NHFIC) as scheme rules apply to new builds in most cases.
Related Guides
- New Build vs Established Home — Which Is Better to Buy?
- Buying Off-the-Plan in Australia — Risks and Rewards
- Renovation Construction Loan — How It Works
- Property Types Hub
This article provides general information about house and land packages in Australia. Speak with a licensed mortgage broker about construction loan finance specific to your situation. Find one through MoneySmart.