Announcement posted by Dream Design Property - DDP Property 12 Oct 2020
Untitled land is unregistered land sold prior to local council registration. A growing number of land developers and builders are conspiring to advertise high-risk house and unregistered land packages before the $25,000 Federal Home Builder Scheme finishes at the end of this year.
One of Australia’s leading property buyer representatives says state governments should make sale of unregistered lands for first home buyers illegal, or ensure the real risks of buying unregistered land are made clear to inexperienced first-time home buyers.
The dangers of buying unregistered land
Zaki Ameer, founder of buyer’s agency DDP Property, warns that when developers promote unregistered land it usually means there’s a hidden risk attached.
In most cases, council delay title processing on unregistered land past the date estimated. It can often be 12 – 18 months before developers transfer the title and are ready to build. Then construction delays, adding utilities and bad weather can add to that time.
“First-time homebuyers are paying 10% deposits now for packages where the land won’t be registered before $25K home builder scheme finishes at the end of this year. So, immediately, they’re giving back $25,000 on any savings they might have made on the package.”
Buyers are also locked into the contract until the full payment due date, which could be up to 48 months away.
Ameer says an even greater risk to inexperienced newcomers is that banks cannot value unregistered land, so they won’t lend on its full value.
“After paying out $60,000 or more for a deposit, most new buyers don’t have funds to cover a shortfall due to a lower bank valuation. Sadly, they have to forfeit their whole house and land purchase. They can lose their entire deposit and even be sued by developers and builders for the remaining amount of the land and build.”
Calling for the government to take action
Ameer says it is time for the NSW government to put an end to delayed settlements, and to tighten land sale regulations – especially to first time home buyers who can easily fall prey to colourful marketing tactics.
“It goes against the fundamental reason why the $25K Home builder scheme was introduced - to promote home construction, create jobs and stimulate our economy during the pandemic.
Instead, developers are not motivated to build and first home buyers are in a worse financial position”.
Example: Advertised unregistered land vs actual costs
Using high potential situation:
- Council title process is delayed past Home Builder Scheme cut-off at end of 2020
- Delayed registration means bank will only value land at a lower price so loan is not sufficient to buy the land, delaying both bank mortgage approval and first home buyer grant.
*Not including legal fees, Lenders Mortgage Insurance, Stamp Duty Concessions and DDP cash-back offer of up to $30,000.
Reference: See similar Marsden Park land promotions on realestate.com.au
Lot 4631 Proposed Road, Marsden Park
313sqm - $456,000
Unregistered Land (Late 2021)
Lot 5181 Land at Newpark, Marsden Park
330sqm - $440,000
FOR FURTHER INFORMATION, PLEASE CONTACT:
Head of Marketing
Dream Design Property
M. 0428 255 637