Selwyn Times: April 24, 2019

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Buying a lifestyle block
City life getting you down? Dreaming of
living in the country, where you ‘commute’
from the breakfast table to a barn or your
home office? It might look like an easy life but
buying a lifestyle property can be a complex
business.
While living in the country has much
to recommend it, 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.
“We recommend comprehensive due
diligence when buying any kind of property,
but rural ones come with a whole extra set of
things to think about compared to buying a
straightforward stand-alone home in town,”
says Kevin Lampen-Smith, chief executive of
the Real Estate Authority (REA).
Lampen-Smith says that while it’s tempting
to focus on the dream wish list for your
bucolic bolt-hole, but you should also
compile a list of issues to be aware of (and
people who can help you learn about them).
“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,” he
says.
“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 onboard early to
check titles, consents and other information
that you gather in the process.”
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. Lampen-Smith
recommends getting 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. Similarly, it would be tough to
discover that your subdivision plans are not
permitted by council rules.
Be aware that there may be tax implications
if you’re planning to use the property as a
business, Lampen-Smith says.
“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.”
A good place to start when trying to figure
out what tax obligations might attach to your
purchase of the property is Inland Revenue’s
property tax decision tree (available at
http://www.ird.govt.nz/property/propertyterms-and-tools/property-decision-tree/),
but keep in mind that it is always best to
seek professional advice before you make a
decision.
Rural properties (like all properties) can
also have easements on the title that relate to
access, water or power. Lampen-Smith says
you should 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 incumbent owners
may have an informal arrangement with their
neighbours, but this may not remain when
the property passes into new ownership.
Things that we take for granted when living
in urban environments, like water, sewage
and access, can require more involvement in
rural areas. 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?
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 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.
“Like all property purchases, buying a place
in the country requires careful, objective
consideration,” Lampen-Smith says.
“There are lots of great things about living
on the land, but it’s best to be realistic about
it. You don’t want to be like the former townie
I met a few weeks ago, who mournfully told
me that their lifestyle block had become “a
life sentence”. Do your homework and you’re
far more likely to live happily ever after in
rural bliss.”
For independent advice on buying or
selling property, check out settled.govt.nz.