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How To Purchase Rural Property
If you’re itching to buy some rural property, then know that you are not alone. Since 2020, a lot of people have been bitten by the bug. With lockdowns and work-from-home orders, more and more people are getting interested in moving away from the cities.
Plus, the value of rural land is rising. Between June of 2017 and June of 2020, the value of rural land nationwide increased by 30%. With the current average variable interest rate at under 4%, you can expect even more interest in rural property.
“The drive for the industry to reach $100 billion in output by 2030 will also continue to impact property prices, and reaching that target could see an almost 30% increase in rural land by 2030.” -Mark Bennet, ANZ
For the most part, buying rural property is the same as buying any other property when you look at the big picture. However, there are certain nuances that you should keep in mind. So now let’s look at how you should go about purchasing rural property.
Think about land use
When thinking about land use, it’s not just about what you’re planning to do with the land. You also need to consider what the land was used for before.
Let’s say, for example, you’re buying rural property for farming. It’s important to know of any possible contaminants or residues from former use. Chemical residues from previous use could affect your crop and in effect the marketability.
When you think of chemical residues, you might jump straight to pesticide or fuel disposal sites. While that is one way that land can get contaminated, it’s not the only way. Even certain livestock diseases and crops can leave residue in the soil. Then when you start farming, these residues can affect your own produce.
The truth is the seller isn’t legally bound to disclose every piece of information about the property. Plus, sometimes, they might not even know themselves. So check out the vegetation. Is the land covered under the Native Vegetation Act? Also, there are biosecurity measures you should consider. Does the property fall under a protection zone in the Biosecurity Act? This means certain activities that are prohibited on that land.
If you plan to use this land for farming, you need to know if there is anything that could prevent you from moving forward.
et an accountant that knows about rural taxation and talk about land use. How you get taxed is heavily dependent on the use of the land. Your accountant will tell you about things like whether certain taxes like the Goods and Services Tax (GST) will apply to you.
According to the ATO, the decision of who pays GST and who doesn’t is done on a case-by-case basis. So let’s go back to the idea that you’re buying the property for farming, for example. Let’s say the previous owner farmed the land for 5 years up to when you buy it. If you intend to keep using it for farming, then you won’t have to pay GST.
Mining or mineral exploraiton
Anyone can get a mining or exploration licence for your property. So if you want to get ahead of the game, you can get this license yourself. If someone else goes through proper channels and mines minerals on your land, it becomes theirs.
In addition, if someone else gets a mining licence for your property, they are legally bound to ensure that they cause minimal disturbance to how you run your property. However, if there are situations where you can get overruled. One instance of this is if the minerals found on your property are worth more than the agricultural value of the land.
The layout of the land
The layout of the land directly impacts what you can do with it. So think about things like waterways and legal access. Trucks will need to easily access the land for pick-up and deliveries. So ensure that there are legal and adequate access points to the property.
For your farm, you’ll want something without frost so your crops and livestock can get the most sunshine. So try to choose land that faces the North.
“People are realising that they’ve just got to act now, because that parcel of land may not be available for a substantial period of time.” – Will Rayner, CFO, Rural Bank
It’s always best to know what you’re buying into. So don’t let the fear of missing out push you into a rushed decision. To help you with the professional help and advice MLS Finance have a group of associates we can put you in touch with. The last thing you want to do is to legally own a piece of property that bleeds your bank account or one that is even harder to resell.
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