How to actually prepare for an open home
Buyers & Sellers | 20 June 2018
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 buying a lifestyle property can be a complex business.
There’s a lot to love about living in the country, but you need to do more preparation for buying a place there than buying a pair of gumboots and comparing the merits of ride-on mowers.
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 four 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 ‘Building Type’. Some councils also provide this information.
It’s always important to do your research when buying any kind of property, but rural ones come with a whole extra set of things to think about. It might be tempting to focus on the dream wish list, but you should also compile a list of issues to be aware of (and people who can help you learn about them). Some issues to be aware of might be:
More land means more responsibility, and this can be tough to maintain. You’ll be responsible for mowing the lawn, clearing debris and maintaining your garden, among other strenuous tasks. Make sure that you’re up for the challenge, or that you’re able to afford help with more difficult jobs.
If the property you like is being sold by a licensed real estate agent, remember that you can ask them anything you like about it. 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.
Rural real estate agents have special skills in this area, 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 on board early to check titles, consents 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 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 if there are any covenants on the property that might have an impact on a future business you may run there 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 to 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. Ask your lawyer to check the title and work out what the easements are, and how they will have an impact on your rights and responsibilities as an owner. For example, if the title allows a neighbour access to a piece of their land through your property, do you have any right to limit the type and frequency of that access if you buy it? Be aware too that there may be ‘unofficial’ easements operating; the current owners may have an informal arrangement with their neighbours, but this may not remain when the property passes into new ownership.
Be aware that there may be tax implications if you’re planning to use the property as a business. In general, if it is currently being used for a business that is tax-registered – whether that’s selling organic eggs, grazing stock or running a B&B – then the seller will probably add GST to the price. This means you’ll pay an extra 15 per cent unless you are also registered for GST.
Ask your lawyer or accountant to check if the house or any other buildings on the property are GST-exempt. They will also be able to advise you on whether you need to be GST-registered. Inland Revenue’s property tax decision tree is a good place to start when trying to figure out your tax obligations.
Things that we take for granted when living in urban environments, like water, sewage and access, can require more involvement in rural areas. Many rural lifestyle blocks are not connected to sewage schemes and instead rely on septic tanks or other sewage disposal systems. 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? What is the process for ensuring it is safe to drink? What happens to wastewater and sewage? Are you prepared for life with a septic tank? Will the current owner ensure the tank is empty as a condition of sale?
If you’re buying a block with an existing dwelling, you’ll need to understand what type of system has been installed and whether it has the appropriate permits or consents and if there are any ongoing maintenance obligations. 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.
When it comes to access, will you share a private road or right of way with other properties? What will be your responsibilities and potential costs for maintaining it? Don’t forget that your neighbours may be involved in unglamorous activities at ungodly hours – check the zoning rules for nearby properties if you’re worried about noise, smells or traffic. You might think it’s lovely to have stock grazing out the window, but are you ready for a milk tanker driving past every morning? Be aware that the LIM will not always alert you to any pending or current New Zealand Transport Agency (NZTA) decisions regarding local highway linkages that often divert traffic away from urban centres in favour of immediate rural areas on the town boundary. Check with NZTA if you think your property could be affected by road changes.
You may want to ask the real estate agent these questions to help you decide if the property is right for you and your family:
Originally posted 15 October 2018