When you are buying a block of land, it is always worth to consider the benefit and risk associated with its value in comparison with your goal and finance whether it is right choice for you.
you may decide either of registered or unregistered land to buy and both have a pros and cons of buying it.
If you decide to buy an unregistered land from the landowner/developer that subdivide the registered larger block of land through the unregistered plan of subdivision and development of it and later register before settlement of it.
The plan of subdivision must be approved local Council and registered by LRS and other relevant authorities before settlement. So basically, when you sign a contract to buy an unregistered land you are buying a lot in plan of subdivision.
Advantage of buying an unregistered land
- There will be a less stamp duty to be paid as duty is paid for the value of the property at the time of exchange of Contract.
- The total cost of buying an unregistered land from the owner/developer and building a house by using a different builder may be cheaper than buying an established dwelling which can be accomplished with signing a split contract.
- The value of unregistered land may increase during or before the settlement that purchaser can accumulate some equity on the property at the time of settlement as you may paid lass consideration amount at the time of signing a contract.
- Purchasers have an opportunity to customise their home building design according to their needs and lifestyle on fullest satisfaction, rather than buying a someone else’s prebuilt established dwelling .
- You may be entitled to apply for the Frist Home Owner ( New Home) Grant which is, in general, less in value of the land then the higher valued established dwelling but there is no grantee to be eligible to apply if you purchase has a higher value then celling fixed by NSW Government.
- In NSW , land value must be less then $600,000 when you are buying established dwelling and total combined cost must be less then $750000 , if you are purchasing vacant land and signing a contract with builder to build a house on such land .
Disadvantage of buying a Unregistered Land
Despite the benefit listed above, there are some typical risks involved with such purchase which must be considered before signing a contract to buy an unregistered block of land.
- The subdivision plan may not be registered or may take longer then expected to register by local Council and relevant authorities .
- If the subdivision plan is not approved or purposed plan is not viable economically, financially, or even sometimes environmentally vendor may cancel the plan and rescind the contract and may return the deposit to the purchaser .
- The of sale of unregistered Land usually allows the vendor ,a significant amount of time which is in same case is more than 4 to 5 years, to register the subdivision plan. During such a long period of time purchaser’s financial goal or needs may change and purchaser may not or cannot settled the land because of changing scenario but purchaser cannot rescind the contract which may lead to financial loos the purchaser unless applying alternative option on it .( Consult with your Conveyancer )
- The conditions of covenant or restriction on the purchased land may change during the registration period or before the settlement period by the local council and relevant authorities. Council also may impose the various restrictions and special conditions on the approval of such land which may not be suitable for the prospective purchaser to build their dream home.
- Contracts for Unregistered Land tend to be long and complicated. The Contracts usually have special conditions about relating to design guidelines, Re-Sale, on sale, future developments, restrictions, construction time limits etc.
- The condition of settlement period is usually contemplated within a 14 days after the notification from the vendors/developer's registration of the Plan of Subdivision. 14 days may not be sufficient to make arrangements for settlement funds. If the Purchaser is not ready for settlement, the Vendor can charge Penalty Interest, Costs, Damages, Losses, etc. so purchaser always be financially ready to settle anytime upon vendor request after the notification of registration of purchased land.
It can be challenging task to find a right block of land and erect a dream home on such land. So It is very crucial to examine the terms and conditions stipulated in the COS and of block of land and difficulty involved in the construction of building you’re a dream home because .
There are following point to be noted before buying a block of land.
a) Zoning of the Land
b) Quality and Condition of land to build a desired infrastructure on such land .
c) Bush fire and flood Zone
d) Easement and Restrictive Covenants
e) Due Diligences
f) Survey report
g) Planning Certificate from your Local Council
Once you signed a contract, you are bound by the terms and conditions of the stipulated in contract. Therefore, you should complete all your inquiries BEFORE signing the Contract.
Buying an unregistered land is one of the most important and valuable decisions you are made and could be an overwhelming experience without an experienced conveyancer to advise you .
For further information , Please send us an inquiry
email at info@kdlconveyancing.com.au
call us on 0451 585 152