How to Buy a Section in New Zealand - Complete Guide
Buying a section in New Zealand is an exciting step toward building your dream home, but the process differs from purchasing an existing property. This comprehensive guide covers everything you need to know about buying bare land in NZ, from finding the right section to settlement day and beyond. Whether you're a first-home buyer or experienced property investor, understanding the section buying process will help you make informed decisions.
Step 1: Define Your Requirements
Before searching for sections, clarify what you need:
- Location: Proximity to work, schools, family, amenities
- Section Size: Enough for your planned home, outdoor living, garage
- Budget: Include section price, legal fees, and holding costs
- Timeline: When do you want to build? Some sections have build deadlines
- Orientation: North-facing for sun, views, privacy from neighbours
Step 2: Research Areas and Subdivisions
Investigate potential locations thoroughly:
- Visit at different times of day and week
- Check council district plans for future development
- Research school zones if relevant
- Assess traffic, noise and neighbour proximity
- Investigate flood zones, land stability and geotechnical factors
Step 3: Understand Covenants
Most new subdivisions have covenants - legal requirements attached to the title:
- Minimum Floor Area: Often 150-200m² for the main dwelling
- Building Materials: May specify brick, weatherboard, roofing types
- Colours: Some subdivisions restrict external colour palettes
- Fencing: Requirements for front, side and rear fencing
- Landscaping: Timeframes and standards for gardens
- Build Timeframe: Typically 2-3 years to commence building
Review covenants carefully before purchasing - they can significantly impact your building plans and budget.
Step 4: Get Finance Pre-Approval
Land loans differ from standard mortgages:
- Higher deposit typically required (30-50%)
- Some lenders offer construction loans combining land and building costs
- Interest rates may differ from home loans
- First Home Grants may apply if building new
Speak with banks or a mortgage broker before making offers to understand your borrowing capacity.
Step 5: Make an Offer
When you find the right section:
- Use a Sale and Purchase Agreement specific to land
- Include appropriate conditions (finance, due diligence, LIM report)
- Set realistic timeframes for conditions
- Consider using a buyer's agent if unfamiliar with the process
Step 6: Complete Due Diligence
During the conditional period, investigate thoroughly:
- LIM Report: Land Information Memorandum from council showing consents, notices, hazards
- Title Search: Verify ownership, easements, covenants, encumbrances
- Geotechnical Report: Essential in Canterbury - confirms ground conditions and foundation requirements
- Services: Confirm water, sewer, power, internet availability and connection costs
- Survey: Verify boundaries match plans
Step 7: Engage Professionals
You'll need:
- Property Lawyer: Reviews contract, conducts searches, manages settlement ($1,000-$2,000)
- Building Designer/Architect: Design your home (engage early to check feasibility)
- Surveyor: If boundaries need verification
- Builder: Get quotes during due diligence to confirm total project costs
Step 8: Settlement and Handover
On settlement day:
- Final inspection to confirm section condition
- Lawyer handles fund transfer
- Title transfers to your name
- You receive keys/access codes if applicable
After Settlement
Once you own the section:
- Arrange insurance (yes, you can insure bare land)
- Maintain the section (mowing, security) until building
- Begin building consent process
- Arrange utility connections
- Monitor covenant compliance deadlines
Frequently Asked Questions About Buying Sections
How much deposit do I need to buy a section?
Most lenders require 30-50% deposit for bare land, higher than the 10-20% typical for homes. Some construction loans allow lower deposits if you're building immediately. First Home Grants may assist if you meet criteria.
Do I need a lawyer to buy a section?
While not legally required, a lawyer is highly recommended. They review contracts, conduct title searches, check covenants and easements, and manage settlement. Conveyancing typically costs $1,000-$2,000 for straightforward purchases.
What is a LIM report and do I need one?
A Land Information Memorandum (LIM) from the local council shows building consents, resource consents, rates, notices, natural hazard zones and other information. It costs $200-$400 and is recommended for any land purchase to identify potential issues.
What are building covenants?
Covenants are legal conditions registered on the title that control what you can build. They may specify minimum house size, materials, colours, fencing and timeframes to build. Covenants protect neighbourhood character but may limit your options - review carefully before buying.
How long do I have to build after buying a section?
Most subdivisions require building to commence within 2-3 years. Some allow extensions while others are strict. Failure to build may result in penalties or forced sale. Always check the specific covenant requirements before purchasing.
What is a geotechnical report?
A geotechnical report assesses soil and ground conditions to determine foundation requirements. In Canterbury, sections are classified TC1, TC2 or TC3 based on earthquake-related ground conditions. New subdivisions typically include geotechnical assessment in the development.
Can I get the First Home Grant for a section?
Yes, the First Home Grant provides up to $10,000 for individuals ($20,000 for couples) buying land to build a new home. You must have contributed to KiwiSaver for 3+ years, meet income caps, and the land plus build must be under regional price caps.
What ongoing costs are there before building?
While holding a section before building, you'll pay rates (typically $1,500-$3,000/year depending on value and council), potentially interest on your land loan, maintenance costs (mowing, security) and insurance if applicable.
What is a titled vs off-the-plan section?
A titled section has completed all subdivision requirements and is ready to transfer. Off-the-plan sections are sold before titles issue, with settlement when development is complete. Off-the-plan may offer lower prices but involves waiting and development risk.
What if I can't build within the covenant timeframe?
Contact the covenant administrator (usually the developer or body corporate) early to discuss extensions. Some are flexible while others enforce strictly. Consequences may include fines or requirement to sell. Understanding these rules before buying is essential.