Coastal paradise: get onto the property ladder one step at a time

Picture this: Buying land now may be a good investment and when the time is right you can build a home to your budget.

So you can't afford to buy a bach? But you want to get a foothold in the coastal property market? The answer may be to buy a section now and build later. 

Section prices start at around $100,000, within easy driving distance of Auckland and range up into to the millions, according to Gary Caldwell, manager of Bayleys Mangawhai. 

Coastal land is in demand. But the large number of new subdivisions mean there are 5,500 coastal sections and nearby lifestyle/rural land for sale or in the pipeline between Mangawhai Heads and Oakura north of Whangarei, according to ASB bank research.

Despite the supply and the eager salespeople keen to sign you up, buying a coastal section isn't always simple. Willie Vermeulen from Harcourts Tauranga owned a bulldozing contracting firm before switching to real estate 19 years ago and he knows his dirt.

He warns that the unwary can buy badly, especially where coastal land is for sale.  "You really need to go to the local council and get a plan of the coastal hazard lines," Vermeulen says. The lines indicate flooding or high tide risk and often restrict where on a section a house can be built.

Easements, such as right-of-ways or right to pipe water across a section also may prevent you from building on certain parts of the section.

"Even with a subdivided section, fly-by-night agents or someone who has not been in the business very long will sell a section (without mentioning hazard lines) and the next thing you know is that you can only build on 10 square metres of the site," says Vermeulen.

Councils also hold details of mean high tide lines, which are vital to know and other information, which may be useful such as whether resource consent is required to build and if there are wahi tapu sites (sacred areas) on the land. 

You'll also need to make sure that any land you're buying – especially from a farmer has been through the Resource Consent process says Gary Caldwell, manager of Bayleys Mangawhai. Depending on what you plan to build on your section, you might need resource consent.

It's definitely worth getting lawyers', architects' and engineers' opinions before signing on the bottom line. Excess wind in a location can mean a building needs extra bracing. The Building Act 2004, allows councils to refuse to grant building consent if a building is at risk of erosion, flooding, subsidence or slippage.

The Department of Building and Housing recommends taking special care to check titles for 'section 72 endorsements', which will alert you to such risks.

If that's not enough, you need to take into consideration plenty of other factors such as the proximity to schools, shops, hospitals and public transport; sun and wind both winter and summer; access for builders; space for garaging or off-road parking/ whether services such as water, sewerage, power, phone, gas; are connected to the site and will the mobile phone and television reception be good; whether the neighbours are acceptable and what the council's plans are for any vacant land nearby. 

Bachcare general manager Leslie Preston adds that many of the subdivisions on sale in coastal areas are "B and C grade" and as a result buyers should beware. 

The best land/sections to buy are absolute beachfront as they hold their value, says Vermeulen. Second tier properties are those with a view of the sea. Finally flat subdivisions with no views are the least desirable and least likely to appreciate in value. 

Thanks to the bull run on property in New Zealand many people believe that property will simply continue to appreciate.

Over the past two years, says Vermeulen, buyers have seen healthy gains in their sections' values. However like all investment markets, property has its ups and downs. It's therefore important to make sure you buy wisely, not just fall for a salesman's patter.

Unless you plan to watch the land appreciate and then flick it on, you'll probably want to build a house . Prices for these start at $149,000 from companies such as Bettaway Homes – for something really designed to be a minor dwelling/sleepout on the back of a section. Standard homes  can run  to more than $750,000 from companies such as Energy Efficient Homes. Or the world's your oyster for a top-of-the-range architect-designed home.

The downside of buying land, rather than land and a house is that it's difficult to get a rental yield from bare grass. You  will need to fund the mortgage from your own pocket and can't look to tenants to subsidise your expenses.

It is possible to simply put a caravan and utility shed on your land [providing it has basic services attached] and rent it out. Such rentals are few and far between – rental websites Holidayhouses.co.nz and Rentabach.co.nz have just one stand-alone caravan offering each.

Land owner Sarah Hart rents a caravan and attached utility shed (including flush toilet, shower and washing machine) for between $25 and $100 a night – making enough money to more than cover the rates.

ON THE WEB
www. ConsumerBuild.org.nz
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