In a recent episode of the Home Building Hub podcast, hosted by industry experts Colin Bischof and Darren Brennan, the topic of discussion was nomination blocks in new home building. The episode aimed to educate potential home builders on the intricacies of buying and selling nomination blocks, including the benefits and risks associated with this process.
Nomination blocks, also known as nomination lots, occur when an original purchaser decides to sell a block of land before it has been titled or settled. The buyer, or nominee, takes over the existing contract under the same terms and conditions as the original purchaser, assuming the same contract price, finance conditions, and settlement date.
Benefits of Buying a Nomination Block:
- Price Advantage - Nomination blocks often offer the opportunity to purchase land at an earlier contract price, potentially saving the buyer significant amounts compared to current market rates.
- Timing - Buying a nomination block can save time for those looking to build a new home, as the expected title or settlement date may be closer than that of new land purchases.
Risks of Buying a Nomination Block:
- Unconditional Contracts - Most nominations are unconditional, meaning they may not be subject to finance conditions. Buyers should have their finances in order before entering into a nomination agreement.
- Potential Additional Costs - Buyers may face extra costs such as re-establishment surveys or developer approval fees.
- Legal Considerations - Buyers must ensure the nomination is allowed and legal within the original contract. Additionally, the seller remains responsible for the contract if the buyer cannot settle.
Best Practices for Purchasing a Nomination Block:
- Consult with Experts - Work with a conveyancer to review the contract, and engage with a finance broker to ensure you can secure finance within the required timeline.
- Verify the Contract - Confirm with the seller and conveyancer that a nomination is allowed and understand the original contract's terms.
- Timely Action - Once you've determined the nomination block is suitable and your finances are in order, act quickly as nomination blocks can be snapped up fast.
- Avoid Illegal Activity - Steer clear of any transactions that involve under-the-table cash payments or other forms of dodgy dealings.
The episode also highlights the importance of working with a reputable land agent for a more straightforward and secure purchase process, especially for first-time home buyers.
By shedding light on the complexities of nomination blocks, the Home Building Hub aims to guide potential home builders towards making informed decisions and avoiding potential pitfalls during the new home-building journey.
