Buying a section or land to build a house in NZ

Are you considering a land purchase to build on straight away or to hold for future plans? Or maybe you want to build an investment property from the ground up? This guide will help you get started on the road to your ideal section, lifestyle block, or land and house package.

Where is the best place to buy a section or land?

Finding the right section for your needs is much the same as finding a home that suits, except you don’t have to worry about the house itself just yet. If you’re planning to build and live on the land, it’s about you and your goals. If you’re investing to rent or on-sell, it will include what your ideal tenants or purchasers would value most. Either way, here are some things to consider when you’re looking at land.

Choosing a location:

  • Based on work and lifestyle opportunities, what regions, towns and suburbs would suit?
  • How far do you want the property to be from the nearest hospital, medical centre, gym, school, supermarket, bus or train service…and so on?
  • What lifestyle options are important? Think about hiking or cycle trails, beaches, golf courses, sports clubs, galleries, live music venues, kids’ playgrounds, and growers or makers markets.
  • Are there suitable sections available in the area within your approximate budget?
  • Is the area expected to grow in popularity or perceived value?

A checklist for sections or land within the right areas could include:

  • Size, contour (flat or sloping), views, and aspect for sun and prevailing winds
  • Existing homes next door or any risk of losing outlook, sun, privacy, peace and quiet
  • Distance from current or planned main roads and their traffic noise
  • Suitable access for construction and daily life

Borrowing money for a section or land

Getting a mortgage to buy a section or land can be more difficult than borrowing for a finished home. For starters, a lender may want a higher deposit or initial interest rate. That’s because bare land can be harder for the lender to sell if you can’t meet your mortgage payments and they need to recover their money. This is particularly true during an economic downturn. If you plan to build straight away, it can help to have some evidence of your plans, such as the involvement of a builder or architect.
Create a budget

The first step to getting a section or bare-land mortgage is to create a budget, so you can check where your income is going and show a lender how well you manage money. We’ve made this easy with our online budget planner calculator.

If you’re planning to build a house on the land, you’ll need to budget for a construction mortgage as well. To learn more, see our helpful guides on new-build construction loans and what it costs to build a house in NZ.

Check your credit score

It’s also a good idea to check your credit score online. This might make it necessary to reduce or consolidate any existing debts before approaching a lender. For more about this, see our article on credit scores and mortgages.

Check your first-home buyer KiwiSaver entitlements

If you’ve been a member of KiwiSaver for at least three years, you may qualify for a KiwiSaver first home withdrawal and a Kāinga Ora First Home Grant. Money from these sources can be used to buy bare land if you intend to build a home on the land or are buying a land and home package. It’s important to check this out and apply before you buy, as you can’t use a KiwiSaver first-home withdrawal to build on land you already own. To learn more, visit the Kāinga Ora website.

Get an initial idea of what you can afford

To get a rough idea of how much you might be able to borrow for your land mortgage and a potential home construction loan, see our handy borrowing power calculator.

Once you know how much you’d like to borrow, it pays to check what your regular mortgage repayments would be. If you’re planning to live in the house you build, you could also start setting aside the equivalent of these repayments (less your current rent or mortgage repayments) as further evidence of your ability to manage money. To quickly calculate mortgage repayments and explore different scenarios, see our mortgage repayments calculator.

Talk to a lender or mortgage broker

Once you have a detailed budget in place and have done some preliminary financial planning, it’s time to talk to a mortgage lender or broker as a first step to getting pre-approval. That way you’ll be able to look for the sections or land with confidence.

How to inspect a section or land before you buy

When you’ve found a suitable section or parcel of land, it’s important to do some initial checks yourself, and then get it inspected by your builder or architect before you make an offer. If you haven’t started working with one yet, ask an experienced local builder with a good reputation to carry out an on-site inspection with you. You’ll probably need to pay for their time, but it can be a good chance to get to know a potential builder for your future home.

Initial checks you can make
  • Different times and weather. Visit at different times both day and night to get a feel for variables like sun angles, peak traffic noise, street lights and late-night neighbours. Look for wet or soggy areas after a spell of rainy weather and stand on the land during strong winds if you get the chance.
  • Neighbourhood. Check distances to amenities that are important to you, such as shops, schools, gym and parks. While Google Maps directions can give you the actual distances and driving or walking times, it’s a good idea to physically travel the routes to check out things like busy intersections or hilly terrain.
  • Utility connections. Find out how easy/expensive it would be to connect things like power, gas, water, sewerage, storm water, phone, internet and fibre to a future home on the property.
  • Council plans. Visit the local council website or offices to check their official plans for the immediate and surrounding areas, including the current and future zones. You could find your rural view is zoned for residential housing or your section is close to a future industrial area.
Things to discuss during the onsite inspection
  • Local knowledge. Ask the builder about the area’s pros and cons, as well as how desirable the location is considered to be.
  • Environmental factors. Is it within a high wind or coastal erosion zone that could add to building costs?
  • Terrain. Would the land’s steepness (elevation), access or soil types increase or decrease building costs?
  • Your assumptions. Test your understanding from the checks you’ve made yourself with what the builder thinks.

Do you need a lawyer to buy a section or lifestyle block?

Buying land is very similar to buying a house, so yes to the lawyer. It’s smart to consult your legal specialist before signing anything. In fact, the sooner you include your lawyer in your plans the better. They can often act as a coach by pointing out the things you need to look into or helping you with mortgage strategies. It’s particularly useful to have a lawyer with plenty of experience in bare land purchases and new-build contracts. Here are two of the things you could ask your lawyer to check closely:

  • Land information memorandum (LIM). Issued by the local council, this details their records related to the property, such as consents, utility company notices, and flooding or erosion risks.
  • Title (certificate of title). This shows who owns the land and any registered restrictions or rights, such as existing mortgages, easements, covenants or other legal interests that may exist.

How to make an offer on a section or land

If you’ve understood and carefully considered all your lawyer’s advice, sorted your mortgage pre-approval and made sure your finances are sound, then it’s time to make an offer. That will begin a written negotiation process to determine selling price, and sometimes other conditions, with the owner.

The deal is usually done using a sale and purchase agreement provided by the real estate agent or seller. It will include when you must pay the deposit and a settlement date (the date when you would like to pay the remainder and take ownership).

Add conditions to avoid risk

During negotiations, you can ask for certain conditions to be included, such as the offer being subject to you getting mortgage approval, or the LIM and title passing legal checks. There is usually a time limit on the conditions, after which the agreement becomes binding (unconditional) unless you have cancelled the agreement in writing. The uncertainty of a conditional offer can be less attractive to the seller, but it could be wiser to avoid the risk of making an unconditional offer before you’re ready to do so.

Involve your lawyer

The sale and purchase agreement will also contain quite a number of other clauses covering things like what happens if you don’t pay on time; what happens if the land is damaged before the sale goes through; and anything the seller has agreed to get done before settlement. As it’s a binding legal document, you could also make your offer subject to your lawyer approving the sale and purchase agreement, if they haven’t already done so.

Buying land at an auction
If the section or land is being sold at auction, which is much less common, the sale is usually unconditional with the deposit due as soon as the auction ends. This means you have to do all your checking and have finance approved before the auction date.

Getting ready to build on a section or lifestyle block

There’s a lot of planning, paperwork, costing, co-ordination and skilled work involved in building a new home. How much of the world you can do yourself will depend on your experience and available time. Most lenders provide construction mortgages that can be drawn down in stages if necessary, as work is completed and payments are due.

To learn more:

See our helpful guides on

IMPORTANT: 29/09/2023 – Due to recent unprecedented demand, the Kāinga Ora First Home Partner scheme is now fully subscribed and therefore they will not be accepting any new applications while they work through their commitments to those already in the scheme. Find out more here.

DISCLAIMER: The information contained in this article is general in nature. While facts have been checked, the article does not constitute a financial advice service. The article is only intended to provide education about the New Zealand mortgages and home loans sector. Nothing in this article constitutes a recommendation that any strategy, loan type or mortgage-related service is suitable for any specific person. We cannot assess anything about your personal circumstances, your finances, or your goals and objectives, all of which are unique to you. Before making financial decisions, we highly recommend you seek professional advice from someone who is authorised to provide financial advice.

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