Untitled Land? Delayed Title Allowances? Here’s What It Really Means

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All right, today we’re going to dive into delayed titles and delayed title allowances. So this is quite common at the moment in the market across the industry. The reason this is, is because the supply for blocks of land is low, so there’s a land shortage, in quotation marks, at the moment, and blocks are hard to come across, so a lot of land developers and estates, the blocks of land that are being sold, have delayed titles.

Now, what is the difference between titled and untitled land? Titled land means the block is there, ready to be built on, it’s been registered through Landgate and it’s ready to go. Untitled means they’re still developing the estate, building the roads, the block doesn’t exist yet, has to go through watercorp, synergy, landgate for the block to be titled.

Without titles you can’t settle, therefore you can’t start construction because the builder can’t start construction on your block until you own the block once you’ve settled, once titles have come through. Because there is not a lot of titled stock at the moment, a lot of land agents and developers and estates are selling untitled land.

So this could mean we’re currently in June at the moment and titles are due in December or January, February next year, which at the moment, that is the new norm. So don’t stress or worry or freak out. If you see that that is the new norm. With how things are going at the moment now with untitled blocks of land, the pros and cons slash the risks with it is essentially the titles being pushed out.

So when you get a block of land, you’ll get a title estimate from the land agent. Now they could say titles are due in December, 2024. The risk here is obviously if it gets closer to December and they’re like, okay, cool, we’ve got no limestone blocks and it’s, we’ve had a delay here, here and here, and now the titles are being forecasted for March.

Your builder has quoted your job in June. To go to site in December, which has now been pushed back to March building costs would have increased between now and then. And that’s when your builder can come back to you to pass on a price increase. That is the general gist of it. That’s why it’s so important to work with a builder who’s open and honest and transparent about how that works and what that looks like now with forecasting.

Delayed titles. A lot of builders have a delayed title allowance now. So general rule of thumb, roughly. The, each month your block is the titles are away. The general rule of thumb here is each month. Your titles is far away. So let’s say I’m June to December six months. That’s roughly two grand per month on a delayed title.

Allow it. So we’re forecasting honest and upfront prices are shifting this much here, here, and here we need to factor in roughly 2, 000 per month. So there’s no hidden surprises for you. You do not want to sign a prelim contract, getting to a build contract, titles get pushed back a little bit, then you’re ready to go to site, you’re locked in, finance has been approved, you settled on your block, you can’t get out of it, and the builder comes back to you and says, it’s an extra 15, 000 to build your house.

And you’re like, what? Where am I supposed to get that money from? What you want to do is have a contingency plan in place and work on the front foot, build in a delayed title allowance into your quote to factor in these prices increasing and changing. Now this is to help protect you, the client, to forecast, okay, cool, from now to December.

Prices is going to go up 8, 000 is the delayed title allowance. So we’re going to build 8, 000 into the house. You’ll see it written on your quote as a delayed title allowance. So it’s honest and transparent. You know that you have protection and a backup plan in your quote because you have delayed titles.

So we’re forecasting and being on the front foot with it. If your titles, you know, if it’s pushed into June, January or Feb next year, You know, it’s around December. It’s not too bad. If it gets pushed out to June next year, that is a huge difference. And that’s when the builder can come back to you to pass on a price increase.

So that I would say is really important to understand in this market at the moment, especially when you’re looking for blocks, you, when you’re looking for a block, that’s something that you want to understand. Obviously the price of the block, the site works of the block, and when are your titles on the block due?

The further the titles are out, the higher the delayed title allowance will be. You know, we have some clients that have blocks that are due to title in March next year, May, May, March next year. And those delayed title allowance sit between 12 to 16, 000. So you can see, all right, December was about 8, 000 now.

May, around May, we’re sitting in that 12, 000 to 16, 000 for that delayed title allowance. This is so important to understand and consider and have included in your quote because you do not want to get through the process all the way right to the end and then it’s being scheduled out in construction and the builder’s like, Oh, well he had delayed titles.

It’s now this much more to build to the price of your house. Work with a team and a builder who’s honest and upfront about it. Ask questions, ask the land agent questions about your titles. Speak to your builder about it, you know. You want to have a really good understanding of what that means, how it works, and it is not uncommon in this market at the moment.

To have delayed titles or a delayed title allowance. So they’re two very important questions to be asking when you’re going through the process to get an understanding of what that looks like and how it works for you. Thank you so much for tuning in to the home building like a boss podcast. I hope you enjoyed today’s episode and learn something new.

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