Buying unregistered land - future value

The problem with buying untitled land that’s 18 months out is a lot can happen in 18 months.
Broadly speaking the land “should” appreciate. But by how much is anyone’s guess.
The bigger risk you take is a developer having some form of a sunset clause, which is not uncommon. If you’re not familiar with how this would work in this situation this is how it goes –
You pay a deposit on untitled land of say 10k.
18 months pass, your land isn’t titled. You push what’s happening etc. no response or excuses.

Suddenly the developer tells you sorry, you can’t have it. Enter the dreaded sunset clause that put a time limit on your contract’s validity. And they give you your 10k back. Then goes on to sell that block of land to someone else for the current market price,
Flabbergasted, given you’ve lined up a builder, chosen the house you want to build, paid a builder a deposit, sat patiently, organized finance etc.

Now 18 months later, you are back to square one with time and emotions sunk into the project. 10k that is objectively worth less today than it was 18 months ago and all the local land you had on your eye previously is sold and you have to make a decision to either start again or pay the current price for land or existing home with an 18month increase premium.


Housing now is up 20% and you cant afford a house anymore.

Now this might not happen. But it has happened so many times that you need to be aware of it. You need your contract checked for a sunset clause. This is your first red flag.

The reason developers do this is to get the ball rolling on development costs with your money, then repay you with the profit from land sold at a higher value after they invoke a sunset clause.

You could lose your deposit of the developer goes bust too.
You could also end up having a change in circumstance in 18 months and be liable to pay the contractual amount. Your finance clause won’t be active for the whole 18 months.

Separately, building costs may go up beyond the amount you have budgeted for and then not be able to get finance for the house and your stuck holding land that the bank will lend on. Depending on your contract, your developer may have first preference on purchase, which means you may not be able to reap the benefit of the increase in value as often the develop contract will either stipulate a purchase at original contract value or at a loss to you.

Either way, 18 months is extremely risky business.

Ideally you purchase titled land only, or you buy land that its titling in a couple months from a developer that has a track record of releasing land as per their promises and don’t include sunset clauses in their sales contracts.

Don't count your paper gains until you have the title in your hand.