Buying your first home? Here's what you need to know
Buyers | 25 June 2020
By the settled.govt.nz team
Looking to make a change and get out of the city? Are you ready for a quiet country property where the kids, chooks and maybe even a couple of sheep can roam? Buying and looking after a lifestyle block might look like an easy life, but it can be a complex business.
If you’re looking for some fresh air and open space or even just some peace and quiet away from the city, a lifestyle block can be a great option. While there’s no official parameters or land classification on what a lifestyle block is, a good rule of thumb is that the average block is just under 4 hectares.
If you’re unsure whether a property is a lifestyle block, you can enter the address at QV.co.nz and look for the property type. Some councils also provide this information.
Before you start your search, you should consider your core reason for buying. Lifestyle blocks can vary enormously in their offerings, so it makes sense to consider what you really want out of a potential new home and lifestyle. Do you want enough land to grow your own orchard? Are you after a pond to home ducks and fish? Perhaps your search is location-based and you’re keen to take advantage of the local countryside.
Whatever the reason, it’s rare that a property can cater to many different needs. If your wish list is too extensive, there’s a chance you may end up with a property that is too much for your needs. You don’t want to set out to look for a lifestyle block with room for a few sheep and end up with a small farm.
If the property you like is being sold by a licenced real estate agent, remember that you can ask them anything you like about it and they need to disclose any potential issues they know about. Generally, real estate agents work on the seller’s behalf to get them the best possible sale price and conditions of sale. It’s important to remember this when you’re talking to a real estate agent about a property that you’re interested in. If you’re not sure what to ask the real estate agent, you can find some helpful questions at the bottom of this page.
Rural real estate agents have expertise in selling rural properties, and they’ll be able to help you figure out what information you need to make a well-informed decision.
It’s also a good idea to get your lawyer or conveyancer on board early to check titles, consents, the sale and purchase agreement and other information that you gather in the process.
If you’re looking for a specific type of property or if this is an investment for you, it might pay to hire a buyer's agent. They can help search for properties and find out all the information about them, then bid at an auction or negotiate with the seller on your behalf.
It’s always important to do your research when buying any kind of property, but rural ones come with extra things to consider. It might be tempting to focus on your dream wish list, but you should also compile a list of issues that are specific to rural properties before you start your search.
These are some issues to think about:
It might feel like you’re getting away from it all when moving out of town, but rural developments can be subject to rules that restrict what you can do. Ask your lawyer to check whether there are any land covenants (conditions tied to the ownership or use of the land) on the property that might have an impact on future business or any planned building projects. You don’t want to invest in an alpaca herd for your new dream property only to find that it’s not allowed to carry any livestock or discover that your subdivision plans are not permitted by council rules.
Rural properties, like all properties, can also have easements on the title that relate to access, water or power. Easements on your property title can provide someone else the right to use your land for a particular purpose. Ask your lawyer to check the title and let you know what the easements are if any, and how they will have an impact on your rights and responsibilities as an owner.
An example of an easement is if the title allows a neighbour access to a piece of their land through your property. You may want to check with your lawyer whether you have any right to limit the type and frequency of the neighbour’s access if you buy it and who is responsible for its maintenance. Be aware that there may be ‘unofficial’ easements operating — the current owners may have an informal arrangement with their neighbours, but this doesn’t need to remain when the property passes into new ownership.
GST could apply to the property you’re buying — ask your lawyer or accountant about any GST implications. Inland Revenue’s property tax decision tree is a good place to start when trying to figure out your tax obligations.
Things that you may take for granted when living in urban environments like water, sewage and access to a property can be more complicated in rural areas. Many lifestyle blocks are not connected to sewage schemes and instead rely on septic tanks or other sewage disposal systems.
If you’re buying a block with an existing dwelling, you’ll need to understand what type of septic system has been installed, whether it has the appropriate permits or consents, for example, a Code Compliance Certificate (CCC), and if there are any ongoing maintenance obligations. You may also want to ask if the current owner will empty the tank as a condition of sale. If you’re looking at a bare block of land, you should make sure you know whether resource consent will be required for sewage disposal and what the current council requirements are. It may also be necessary to ensure that any current resource consents are transferred to you on settlement.
You’ll also want to check the water sources for the property. If it has its own bore, are there limits on the amount of water you can draw from it? You’ll need to ensure it is enough for your needs and provides a guaranteed source and investigate the process for ensuring it is safe to drink and meets New Zealand standards. Speak to your local council or local public health unit for more information about safe drinking water for your household. You can find the Drinking-water Standards for New Zealand 2005 (Revised 2018) on the Ministry of Health site here.
When it comes to access, you may have identified that there are easements attached to the property and you share a private road with other properties. It’s a good idea to understand what your responsibilities will be and whether that includes any potential costs for maintaining it.
You may want to ask the real estate agent these questions to help you decide if the property is right for you: