A house and land package bundles a section (land) with a fixed-price build contract from a developer or building company. You buy the land and commission the house build as a single transaction — often with a single lender providing construction finance for both.
House and land packages are financed with a construction loan: the bank settles the land purchase first, then releases funds in stages (drawdowns) as the build progresses. You pay interest only on the drawn-down amount during the build, then switch to a standard principal-and-interest mortgage on completion. New builds — including house and land — qualify for the new build LVR exemption (10% deposit for owner-occupiers).
Types of House and Land Packages in NZ
Developer-managed packages
A property developer owns both the land and the build contract. They sell you the finished product (or near-finished) — similar to buying off the plan. You may not choose the house design or builder.
Independent packages
You buy the land separately, then contract a building company (GJ Gardner, Signature Homes, Mike Greer, Fowler Homes, etc.) for a fixed-price build. You have more design input but manage two contracts.
Turn-key packages
The developer delivers a completed, ready-to-move-in property. You settle on completion. Similar to buying an existing property — single settlement, no construction loan required. Simpler but less flexible.
How Finance Works
Land settlement first
The bank funds the land purchase at settlement. Standard LVR rules apply for the land-only portion — typically 80% for owner-occupiers, but may be lower for bare land depending on lender policy.
Construction drawdowns
As the build progresses, the bank releases funds in stages (typically 5–6 drawdowns) aligned with construction milestones:
- Foundations/slab
- Framing
- Lock-up (roof and exterior cladding)
- Interior linings
- Practical completion
At each stage, the lender may send a valuer to confirm the milestone is complete before releasing the next payment. The total construction loan (land + build) must not exceed the bank’s approved LVR.
Interest during build
During construction, you pay interest only on the drawn-down amount. This means your interest costs start low and increase as the build progresses. Budget for this — many buyers underestimate the interest cost during a 12–18 month build.
Switch to principal and interest
On completion, the construction loan converts to a standard mortgage. You can then choose your rate type (fixed, floating, split) and term.
LVR Rules for House and Land Packages
New builds — including house and land packages — qualify for the RBNZ’s new build LVR exemption:
| Borrower type | Maximum LVR | Minimum deposit |
|---|---|---|
| Owner-occupier (new build) | 90% | 10% |
| Investor (new build) | 70% | 30% |
This applies to the total completed value (land + build). The bank will order a “as-if-complete” valuation before approving the full facility.
Fixed-Price Contract — Why It Matters
A genuine fixed-price contract means the build cost is agreed in advance and does not change (except for customer-initiated variations). This protects you from cost blowouts and makes bank finance straightforward — the bank knows the total cost from the outset.
Watch for: Contracts with “provisional sums” — line items where the final price is unknown (e.g. earthworks, site preparation). These are not fixed-price items and can blow out significantly. Ask the builder to minimise provisional sums and get engineer’s confirmation if site conditions are unknown.
Choosing a Builder
| Factor | What to check |
|---|---|
| Licensed Building Practitioner (LBP) | Mandatory for residential builds — verify at lbp.govt.nz |
| Track record | Visit completed projects; talk to previous clients |
| Master Build or Certified Builders guarantee | 10-year guarantee on workmanship |
| Financial stability | Builder insolvency mid-build is a serious risk |
| Fixed-price contract | Confirm all items are fixed, not provisional |
| Consent management | Who lodges building consent? What is the consent timeline? |
Risks to Understand
Build delays: 12–18 month timelines regularly extend to 18–24+ months. This delays your move-in and extends your interest-during-construction period.
Cost variations: Customer-initiated changes to the design or finishes after signing add cost. Provisional sum items are not your choice — they’re the builder’s estimate.
Builder insolvency: If your builder goes under mid-build, you may be left with a partially-built home and a construction loan still drawing. A Master Build Guarantee or Certified Builders Guarantee provides some protection — understand what’s covered.
Land settlement before build approval: If you’ve settled on the land but the building consent is declined or heavily delayed, you’re paying interest on the land loan with no build progress.
Frequently Asked Questions
Do I need a construction loan for a house and land package?
Usually yes — unless it’s a turn-key package where you settle on a completed property. For any package where the build happens after you’ve committed to purchase, a construction loan (or construction facility) is required.
Can I use KiwiSaver for a house and land package deposit?
Yes — if you’re a first home buyer and meet the eligibility criteria, you can withdraw your KiwiSaver for the land deposit. Check whether the First Home Grant applies — new builds have higher price caps.
What is an “as-if-complete” valuation?
Before approving a construction loan, the bank orders a registered valuation of the property as it will be when completed. This determines the maximum loan the bank will approve. If the valuation comes in below the total land + build cost, you may need a larger deposit.
What happens if my builder goes insolvent during the build?
Your construction loan is still drawn and you owe the bank what’s been released. You’ll need to find a new builder to complete the work — at whatever cost that involves. A Registered Master Builders Guarantee or Certified Builders Guarantee covers some scenarios; check the specific terms. This is a real risk — vet your builder’s financial position carefully.
Is a house and land package cheaper than buying an existing home?
It depends on the location and package. In greenfield subdivisions on city fringes, packages can offer value — you get a new home with modern insulation, fixtures, and warranties. In established suburbs, new builds typically cost more per square metre than existing homes. Factor in travel time and infrastructure when comparing.