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What is a display home?
By law, a display home is a house that is available for inspection to encourage people to enter into contracts for the construction of similar homes.
This means that even if you are looking at a builder’s own home or another house built by the same building contractor, you are looking at a display house. Big builders usually have several display homes that you can inspect in display ‘villages’.
Learn about house and land packages
If you are buying a house and land package, you should get legal advice before signing contracts, as they can be very complex. You may be entering into contracts with a number of companies.
You may be asked to sign two contracts: one to buy the land and another to build a house. Make sure you are not promising to hand over the land to the builder (also called your 'building contractor') before the plan of subdivision for your land is registered. Your lawyer must check that your obligations under the building contract do not start until you are able to provide the land.
If the plan of subdivision has not been registered, you cannot give the land to the builder to start work. This means you may face costs for delaying the project. It is also possible that a builder could end the contract.
By law, you can end the sale contract if the plan of subdivision has not been registered 18 months from the date of the contract. However, if you have also signed a building contract you will need legal advice about ending that agreement.
You are still required to pay stamp duty when buying off the plan. You should check how much you have to pay with the State Revenue Office.
Know your budget and what you want
Work out how much you can afford to borrow before you start. You can find information about home loans and mortgages on the Australian Securities and Investments Commission’s consumer website, MoneySmart.
Shop around and ask questions. The home on display may be top of the range. Most builders allow you to change the floor plan, fittings and fixtures to some extent. If you:
- want an exact replica of a display house, your building contract must include exactly the same plans and specifications as those used to build the display home
- don’t want an exact replica, get the exact cost of building the display home and the exact cost of building what you want. Changing standard plans can be expensive.
Do your own detailed estimate (including all your selections of fixtures and fittings) and add 15 per cent for unplanned costs.
Talk to at least three of the builders’ previous clients. A good builder will be happy to give you references.
Consider sustainability. Under the 5-star environmental standard, new homes must have:
- a five-star energy rating for the building fabric
- water-efficient taps and fittings
- a rainwater tank for toilet flushing or a solar hot water system.
You can find out more about sustainable building options at Sustainability Victoria’s Resource Smart website or the Building Commission’s Make your home green website.
Get your own building team
Your builder has a big team that involves plumbers, electricians, carpenters, and lawyers to draw up their contracts. Your own team should include a:
- building lawyer – to prevent any misunderstandings by making your contract clear before you sign. It won’t cost you as much as problems further down the track. The Law Institute of Victoria has a referral service that can help you find a building lawyer.
- independent building consultant – to check the quality of work meets your plans and specifications. You can find a list of building consultants in the Yellow Pages.
- building surveyor – to check work meets building regulations. Your builder can appoint a surveyor but we suggest you choose your own, so you can be confident of their independence. The Australian Institute of Building Surveyors has a directory of building surveyors in Victoria. For more information about the role of a building surveyor, view our Building plans, permits and surveyors page.
Understand preliminary agreements/documents
Some builders ask you to sign documents before the main contract, sometimes referred to as:
- a preliminary agreement
- a quote
- an order
- a preliminary contract estimate
- a provisional quote to build on your land
- an authorised tender acceptance
- a contract request.
No matter what the builder calls a preliminary agreement or similar document, if it is for domestic building work you have rights under the Domestic Building Contracts Act 1995. Before entering into any contract, it is wise to seek advice from Consumer Affairs Victoria or a building lawyer.
Preliminary documents may be used to get a soil report but some builders also include costs for drawing up plans and specifications.
Big building companies usually own the copyright to display home designs and plans. If you sign a preliminary document and:
- pay for particular plans, you cannot have the house built by a different builder
- decide not to proceed with construction, the builder may be able to keep some or all of your money.
If the preliminary agreement covers more than a soil report, we recommend you get advice and:
- choose your builder, all your fixtures and fittings (also called 'selections'), then include all works in one major domestic building contract
- list the details of your choices or selections (such as make, model, colour or style) in your contract
- do not agree to make your selections of fixtures and fittings at a later date (after you have signed your contract).
Control your costs
Make your selections of fixtures and fittings before you sign. Where possible, avoid prime cost and provisional sum items (fixtures and fittings included in the contract but not specifically identified, or items for which the price is not known). These can be very expensive and lead to costly and long delays if you have to wait for the items you want.
Put changes to the contract (variations) in writing, whether requested by you or the builder. This is not required by law when the builder reasonably believes the changes will not:
- require a new permit
- cause delay
- add more than two per cent to the original contract price.
A builder must have foundation data (information used to determine the depth of stumps or type of slab or strip footing required) to give you an accurate price. You should not have to pay extra to deal with problems that were apparent in the foundation data.
For more information, view our Foundations page and Paying for building work page.
Pay for progress
Under Victorian law, you pay a specific amount for each completed stage of building a house – base, frame, lock-up and fixing. Some builders will invite you to make different payments. This should only happen in unusual circumstances (for example, where you engage an architect to assess the value of the completed work for progress payments). Be very careful and get legal advice before you decide.
By law, your deposit for building a house can be no more than five per cent of the total contract price. Do not pay the deposit or any other money until the builder has given you the domestic building insurance certificate of currency for your property.
For more information about the building stages, deposits and other building payments, view our Paying for building work page.
Last updated: 09/05/2012