When purchasing a property off the plan, you will likely encounter two main types of contracts: a one-part contract or a two-part contract.
A one-part contract is commonly used when buying apartments and some townhouses. With a one-part contract, the developer or builder usually acts as a single party responsible for both the land and the construction of the property, and there is one single contract for the entire property. With a one-part contract, is it common to come across a 10-90 contract where you pay a 10% deposit at the time of contract signing, and then on completion of the building process you will be required to pay the remaining 90%.
A two-part contract is very common when purchasing house and land packages, but they’re also used across some townhouse developments including Addison Walk at Williams Landing. When purchasing a property on a two-part contract, there are two separate contracts you will encounter: a contract to purchase the land from the developer and a separate contract for the build with the nominated builder.
So, what are some of the key considerations when it comes to two-part contracts?
Stamp duty savings
With two-part contracts having a separate contract for the land and the build, you may be able to take advantage of stamp duty savings as you will only be required to pay stamp duty on the land contract as opposed to the whole package price. First Home Buyers may be eligible for further stamp duty concessions or exemptions depending on the property and their situation, learn more about First Home Buyer duty exemption, concession or reduction on the State Revenue Office Victoria’s site here.
Payment structures in two-part contracts
Something to be aware of with two-part contracts is that the payment structure differs from a one-part contract. With a two-part contract when purchasing an off-the-plan property, if you are financing your property through a mortgage, then once you have settled on the land you will initiate payments for the land portion of the loan.
Depending on when construction commences on the build, there may be a period where you are making repayments on the land portion of the loan before the building process has started. Once construction commences and as the builder progresses through the build, you’ll also make progress payments on the build portion of the loan to the nominated builder, in addition to the land payments. The progress payments for the build align with construction milestones and will occur throughout the build until construction is complete.
A key thing to consider with a two-part contract is that you will be required to make repayments on the land contract, and progress payments toward the build contract whilst not being able to live in the property. Whilst it is being built you will need to factor in these repayments to your current living situation. Once the property is complete you can then move into it or rent it out.
How to purchase an Addison Walk townhouse
When purchasing a townhouse at Addison Walk in Williams Landing, you will encounter a two-part contract.
The land portion of the contract will be signed is with us, the developer (Cedar Woods). At the time of signing, you will be required to make a 5% deposit with the balance due at the time the land settles.
The build portion of the contract will be signed with the builder for the project, Burbank Urban. At the time of signing, you will be required to make a 5% deposit, and progress payments will occur throughout the build until construction is completed.
Still have questions? Our friendly team are here to help. Reach out to our Williams Landing Sales Team below for more information
Disclaimer: The information used in this document is indicative only and may not represent the final detail or accurately represent personal circumstances of each person. Cedar Woods gives no warranty concerning the accuracy of the material or information displayed in this blog. Prospective buyers should make their own enquiries and rely on their own investigations and independent advice. All information in this blog is subject to Terms of Use accessible at www.cedarwoods.com.au/Terms-of-Use.
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