How House and Land Packages Work in Melbourne’s North

A house and land package is two separate contracts: one to buy the land, one to build the house. You settle on the land first, then pay the builder in stages as construction progresses. Victoria assesses stamp duty on the land alone and ignores your building contract, which is why packages often cost far less in duty than an equivalent finished home.

What a house and land package actually is

It’s two contracts sold as one product.

That single sentence explains most of what confuses people about packages, and most of what goes wrong with them.

Contract one is a contract of sale for the land. You’re buying a lot from a developer or a vendor. It settles, you own dirt, duty is payable.

Contract two is a building contract with a builder. It’s a construction agreement with a price, a specification, a schedule, and progress payment stages. It is not a property purchase.

The brochure shows one price. The reality is two transactions with different parties, different timelines, different risks and different legal frameworks.

Some packages are sold the other way round, as a single contract for a completed home on a registered lot: a “turnkey” or “fixed-price completed” product. Those behave much more like buying an established house, and the duty treatment is completely different. Know which one you’re being sold. Ask directly: “Am I signing one contract or two?”

The stamp duty rule that makes packages work

This is the mechanism behind almost every package in Melbourne’s north, and it is published by the State Revenue Office in plain terms.

On first home buyer duty, the SRO states: “For vacant land, we assess dutiable value based only on the land itself. We do not include the value of your building contract.”

Work through what that means.

You buy a $400,000 block and sign a $450,000 build contract. Finished house: $850,000. Duty is assessed on $400,000.

At Victoria’s general land transfer duty rate of $2,870 plus 6% of the dutiable value above $130,000 for values between $130,000 and $960,000, that’s $19,070.

Buy an $850,000 established house instead and duty is $46,070.

Same house, same suburb, $27,000 difference.

For an eligible first home buyer it’s starker. The exemption covers dutiable values up to $600,000, with a reduced amount from $600,001 to $750,000, and the SRO confirms it applies to “vacant land intended for building your first home”. A $400,000 block is under $600,000, so duty is nil. Against $46,070 on the finished house, the gap is the full $46,070.

That is the single largest saving available to a first home buyer in this corridor, and it exists purely because of the order in which you buy things.

Two conditions on that

It depends on the land settling as vacant land, under a separate contract, before the house exists. If you sign one contract for a completed home, you’re buying a house, and duty is assessed on the whole thing.

And first home buyer eligibility has real requirements: all purchasers must be natural persons rather than companies or trusts, at least 18, buying at market value as their principal place of residence, with at least one purchaser an Australian citizen, New Zealand citizen or permanent resident. Previous home ownership generally disqualifies you. Check your own position against the SRO’s criteria.

The off-the-plan concession trap

Here’s where buyers get told something that isn’t true.

Victoria has an off-the-plan duty concession. It’s generous, currently extended to 21 April 2027 for contracts signed on or after 21 October 2024, available to all purchasers including investors, companies and trusts, with no value threshold at all. It works by subtracting construction costs incurred after you sign from the contract price.

Sales staff mention it. Buyers assume it applies to their package.

It usually doesn’t. The SRO is explicit: the property must be a lot in a strata subdivision that has common property, such as a shared driveway. The concession “applies to apartments, units and townhouses” and “does not apply to house-and-land packages if they are not part of a strata subdivision.”

A standard house on its own lot in a Wollert or Donnybrook estate is not a strata subdivision. The off-the-plan concession does not apply.

If someone tells you your package qualifies, ask them to point to the common property. Then ask your conveyancer. Don’t build it into your budget on a sales office’s word.

The good news is you don’t need it. The land-only assessment above is the better deal for most package buyers anyway.

The First Home Owner Grant

Separate from duty, and often missed. The First Home Owner Grant is $10,000 for eligible new homes in Victoria valued at up to $750,000. That rate has applied since 1 July 2013.

A newly built house qualifies as a new home in a way an established purchase never can. How the $750,000 value is calculated for a package, and exactly when in the process you apply, depends on your contract structure, so confirm it with the SRO or your broker rather than assuming. But if you’re building your first home in this corridor, this is $10,000 you should not leave behind.

How the money actually moves

The sequence surprises people who’ve only ever bought established.

1. Land deposit. Usually on signing the land contract.
2. Land settlement. You pay the balance, duty is payable, you own the lot. If the land is untitled, this doesn’t happen until the plan of subdivision registers.
3. Build deposit. On signing the building contract.
4. Progress payments. The builder invoices at defined construction stages: commonly base, frame, lock-up, fixing, and completion. Your lender releases funds against each stage after inspection.
5. Handover. Final payment, keys, occupancy certificate.

Two consequences worth planning for.

You’re paying interest on a growing loan balance through the whole build, while also paying rent or a mortgage somewhere else. That double-holding period is the most commonly underestimated cost of building. Budget for it in months, not weeks.

And the lender controls the drawdowns. If a stage inspection fails, or documentation is incomplete, the builder doesn’t get paid and the build stops. Keeping your broker and builder talking to each other is a real job, not an afterthought.

The gap between the two contracts, and who carries it

Here’s the risk that the two-contract structure creates, and almost no one explains it before you sign.

Once the land settles, you own it. You’ve paid the duty. Your land loan is live and accruing interest. And the house does not exist.

Everything between that moment and handover is a period where you carry the cost of an asset that generates nothing, while depending on a third party to turn it into a home. If the builder stops, you still own the land. You still owe the duty. You still owe the lender.

Three things follow from that, and they’re worth acting on.

Check what domestic building insurance covers on your contract. Victoria requires builders to hold insurance for domestic building work above a threshold value, and it exists precisely for the situation where a builder dies, disappears or becomes insolvent. What it covers, what the limits are, and whether your contract is above or below the threshold are specifics you should confirm against the current requirements rather than assume. Ask your builder for the certificate, in writing, before the first progress payment. Ask your conveyancer to confirm it’s adequate for your contract value.

Understand that the two contracts can be interdependent or not. Some land contracts are conditional on the build contract proceeding, and some aren’t. If yours aren’t linked, a problem with the builder leaves you holding land you have to settle on regardless. Ask your conveyancer directly whether your obligations under one contract survive a failure of the other.

Budget the carry, not just the purchase. Loan interest during construction plus your existing rent or mortgage, for the full build period plus any title delay. This is the cost that turns a comfortable budget into a tight one, and it’s the one most buyers leave out entirely.

None of this means packages are a bad idea. The duty treatment is genuinely strong and the structure is used successfully thousands of times a year in this corridor. It means the gap between the two contracts is where your exposure sits, and you should know who’s carrying it before you settle the land.

What you can and can’t negotiate

You can negotiate more than most buyers try to.

Usually negotiable: site costs allowance, inclusions and upgrades, landscaping and fencing, driveway, flooring and window coverings, the deposit amount, and sometimes the land price on slower-moving stages or remainder lots.

Rarely negotiable: the headline build price in a volume builder’s current promotion, the construction timeline, and estate design covenants.

The highest-value negotiation isn’t the price. It’s the site costs allowance.

Builders quote a fixed price that includes an allowance for site works: excavation, soil conditions, rock, fall across the block, retaining. If the real site costs exceed the allowance, you pay the difference, and that variation can run well into five figures. On a sloping or rocky block it’s the single biggest source of budget blowout in a build.

Ask what the site costs allowance is, in dollars. Ask what happens if it’s exceeded. Ask whether a soil test and contour survey have been done on your actual lot, or whether the allowance is a generic estate-wide figure. A quote without a lot-specific soil classification is an estimate wearing a fixed price.

What goes wrong, in order of how often

Titles don’t register on time. If your land is untitled, settlement waits on the developer. Your finance approval, typically valid three to six months, can lapse. So can your build price. This is the most common failure and it’s entirely outside your control.

Site costs exceed the allowance. Covered above. Second most common, and the most expensive.

Variations accumulate. Each one is small. Twenty of them aren’t. Keep a running total and insist on written variation pricing before approval, not after.

The covenant conflicts with the design. Estate covenants dictate minimum floor areas, facade materials, roof pitch, fencing and landscaping deadlines. Read them before you choose a house design, not after.

The build takes longer than quoted. Extend your double-holding budget accordingly.

Package or established: how I’d actually decide

Buy a package if you’re an eligible first home buyer whose finished build lands under roughly $750,000, you can genuinely wait 12 to 24 months, and you can carry rent plus loan interest through the build. The duty treatment and the $10,000 grant together are worth more than most buyers realise.

Buy established if you need to move within six months, your borrowing capacity is tight enough that double-holding is a stretch, or you’re not eligible for first home buyer concessions. In that last case the duty saving shrinks to the $27,000 range on the example above, still real, but a smaller reward for taking on timeline and site risk.

And if you’re looking at a package in Donnybrook, Kalkallo, Craigieburn, Wollert, Epping or Mernda specifically, the suburb-level numbers change the answer. We’ve broken those down in the posts below.

Send us the land contract, the building contract and the covenant before you sign any of them. Reading three documents together is the only way to see what the package actually costs.

Frequently asked questions

1. How does a house and land package work? It’s two contracts. You sign a contract of sale for the land and a separate building contract with a builder. The land settles first and stamp duty is payable on it, then the builder constructs the house and invoices you at defined stages, commonly base, frame, lock-up, fixing and completion, with your lender releasing funds after each stage is inspected.

2. What is a house and land package? A house and land package is a land purchase and a home build sold together as a single advertised price, but executed as two separate legal agreements with two different parties. Some are sold instead as a single contract for a completed home on a registered lot, which is legally a house purchase and attracts duty on the full value.

3. Is it one contract or two? Most packages in Melbourne’s growth corridors are two: a land contract and a building contract. Turnkey or completed-home products can be a single contract. This distinction determines how your stamp duty is assessed, so ask the question directly before signing anything.

4. Do you pay stamp duty on house and land packages? You pay duty on the land, not on the building contract. The State Revenue Office assesses vacant land on the land alone and does not include the value of your building contract. On a $400,000 block, duty at the general rate is $19,070, against $46,070 on an $850,000 finished house.

5. Can you negotiate a house and land package? Yes, more than most buyers attempt. Inclusions, upgrades, landscaping, fencing, driveways, flooring and the deposit are commonly negotiable, and land price can be on slower stages or remainder lots. The most valuable thing to negotiate is the site costs allowance, because exceeding it is the biggest source of budget blowout in a build.

6. Does the off-the-plan duty concession apply to house and land packages? Usually not. The State Revenue Office requires the property to be a lot in a strata subdivision with common property, and states the concession does not apply to house-and-land packages that aren’t part of a strata subdivision. A standard house on its own lot in a growth-corridor estate doesn’t qualify. The land-only duty assessment is the better saving regardless.

7. How much deposit do you need for a house and land package? There’s a land deposit on signing the land contract and a separate build deposit on signing the building contract, and lenders treat land lending as higher risk than established home lending. The requirement varies by lender and by whether the land is titled. Speak to a broker before signing, and ask what happens to your approval if titles are delayed.

8. How long does a build take? It varies by builder, design and conditions, and the quoted timeline is a best case. Budget for the construction period plus the wait for titles if your land is untitled, and remember you’re carrying both your current housing costs and loan interest throughout.

9. What is a fixed-price build contract? A contract where the build price is set, subject to specified allowances and variations. The important detail is what’s merely an allowance rather than a fixed figure, site costs in particular. If the actual site works exceed the allowance, you pay the difference, so a fixed-price contract is only as fixed as its allowances are accurate.

10. Am I eligible for the First Home Owner Grant on a new build? The First Home Owner Grant is $10,000 for eligible new homes in Victoria valued at up to $750,000, and a newly constructed house can qualify. Eligibility and how the $750,000 value is assessed for your contract structure should be confirmed with the State Revenue Office or your broker before you rely on it.