There is no doubt that a drive around the outer city limits reveals some idyllic scenes. Quiet country living with a few sheep or cattle grazing or pretty olive trees is a life long dream for many people keen to escape the hustle and bustle of city life.
However, trying to get your head around all of the many issues that go with buying and owning a rural lifestyle block can be very daunting.
Unlike a simple residential purchase, there are a whole raft of issues that you will need to get your head around. Deciding whether or not to register for GST, knowing what types of resource consent are required for land use, water and sewage disposal, understanding RMA planning requirements to ensure you can undertake the activities that you intend, and knowing what the neighbours can (or cannot) do are all complicated issues which you will need to carefully consider before committing to a rural lifestyle block purchase.
Here are some of the important issues that you will need to consider:
- GST: You will need to check whether the vendor is registered for GST and whether the purchase price is “plus GST if any” or “inclusive of GST if any”. The last thing you will want is an unexpected GST bill. You will also need to consider whether you should be registered for GST or not on the purchase. This will usually depend on the size and scale of the lifestyle block being purchased. Most agree that unless it is going to be a reasonably large rural lifestyle block that will be run as a commercial enterprise, it is best not to register for GST. This will keep your life simple (eg no regular GST returns) and you will not need to account for any GST on resale.
- Sewage: Many rural lifestyle blocks are not connected to reticulated sewage schemes and instead rely on septic tanks or other sewage disposal systems. If you are buying a block with an existing dwelling, it will be important to understand what type of system has been installed, whether it has the appropriate permits or consents and whether there are any ongoing maintenance obligations. If you are looking at a bare land block, you should make sure you know what the current requirements are under the local council and regional council plans, and whether resource consent will be required for sewage disposal. It may also be necessary to ensure that any current resource consents are transferred to you on settlement.
- Water supply: Many rural lifestyle blocks are not connected to Council water schemes and water is supplied by private schemes or bores/wells located on the property. Generally speaking, taking water for domestic and stock watering purposes is a permitted activity but use of water for irrigation or commercial purposes will most likely require a consent. If you are buying a rural lifestyle property, make sure you know where the water comes from, whether all the necessary consents have been obtained and whether the water quality is potable. Ensure that your agreement for sale and purchase provides for the transfer of any water consents required for the property, especially if irrigation is involved and be aware that the availability of water in many parts of Canterbury is becoming limited.
- Land covenants: If you are buying a rural lifestyle block that has been subdivided from a larger block of land, the developer (or the Council) may have created a range of land covenants over the subdivided blocks to manage the way that they can be used. These covenants may restrict the way the land is used (e.g., prohibiting certain types of farming or types of domestic pets) or they may impose positive obligations that require you to maintain or develop the land in a particular way. If you are looking at buying a lifestyle block that is subject to land covenants, make sure you carefully read the fine print in the covenant documents to ensure that you can use the property in the way that you intend.
- RMA planning issues: While living in the country has lots of advantages, many “townies” forget that the rural landscape is also a working environment. There are many aspects of rural life that are noisy and smelly – for example effluent spreading on dairy farms, harvesting, frost protection on orchards and vineyards and fertiliser and spray applications. Councils try to minimise these conflicts by imposing setbacks around rural activities with potential noxious effects – for example building setbacks from boundaries with properties where effluent disposal takes place. Make sure you check out zoning rules and activities on adjoining properties so that you understand what kind of activities can take place on the properties around you to avoid any unwelcome surprises.
The key to a successful rural lifestyle block purchase is a careful and thorough due diligence process to identify and understand all of these issues. It is important to get good legal advice regarding these matters and if you have any questions or would like some expert advice, please contact our rural lifestyle block specialists Richard Parkes and Caroline Mason.