Moving to the Country

This isn’t a common brief, but it happens for us more regularly than people would imagine.

Every now and then, a client contacts us and shares that they’ve been contemplating a move out of the city, and for some it may be rural living, acreage or farming.

This is indeed a considerable change.

Not only are they facing a change of scenery, but a change of lifestyle too. With that, comes a lot of planning and provisioning.

We start with an online consultation, mapping out where the ideal locations are for them. We scan planning maps, searching for zoning controls, overlays and local council regulations. From bushfire management overlays to farming zones (and a multitude of other considerations), we aim to familiarise them with their planning requirements and everything that could adversely impact their plans.

They are often set a task that involves recently sold properties. We align their desired budget with the dwelling and land allotments on their wish list. We delve into their plans for the property, and we’ve worked with clients who have embarked on food production and packaging, farming, viticulture, tree farms, market gardens, land banking for subdivision, hobby farming and eco-lodge development, to name a few.

Once this feasibility exercise is conducted and viable townships are revealed, we recommend our clients spend some time in these regions to familiarise themselves with the locals and the amenity. Part of that familiarisation involves both staying for a short break and navigating the commute. Their commute might be to the nearest large regional centre, or it could be to visit family. For some, it’s a frequent trip into the capital city or the office.

Only once our clients have considered the amenity they require (schools, medical centres, hospitals, train transport, produce and shopping needs), we will then embark on the criterion for the brief.

All have had their own sets of unique criteria, and all have had some challenging planning requirements.

For example, an eco-lodge build in a BMO, (bushfire management overlay) will attract strong planning scrutiny when applying for consent to construct. Depending on the BAL level deemed for the site by the local council, some projects will require bushfire resistant materials and window shutters to sustain a fire blaze for 60 minutes. Tackling BAL FZ is no mean feat and will add considerably to the build cost.

Obtaining permits for separate dwellings is essential. There would be nothing worse than embarking on a build and finding that local government rules out short-stays or dual tenancy.

For farming, market gardens and other parcels of land requiring irrigation, the considerations go beyond water, tanks and pumps. Water treatment for dwellings is something that many country-folk must provision for.

Any land banking and future-subdivision buyers need to be completely aware of zoning restrictions. Many large parcels cannot be subdivided, and plenty can’t have multiple dwellings on site.

Food, wine and beverage producers need to consider accreditation and permits, from packing and quarantine to their ability to trade.

But beyond these practical, land-related considerations, they also must think about how they fund the purchase. Buying in the country is often far more of a challenge than purchasing a residential dwelling in a city.

Do they sell first, buy second? Or should they aim to secure their country property and then tackle a sale? This depends on five things.

• Their risk appetite,
• The market conditions in their current city,
• The scarcity and/or peculiarity of each dwelling, and
• The bank’s appetite for the country property,
• Their cash reserves and ability to get bridging finance.

The first is obvious. If the idea of buying first and subsequently navigating a sale leaves a buyer feeling sick at the thought, there is little point facing sleepless nights and stress. For them, selling first makes sense, even if it means renting or coordinating temporary accommodation and storage for a while.

If the market conditions are unfavourable for vendors, they may choose to wait it out or sell first so that they have an accurate idea of their funds on hand for the country purchase. However, if seller’s market conditions present, they could muster the confidence to buy first, knowing that an imminent sale is likely. For those who decide on the latter, we encourage them to discuss their sale with reputable local agents. We ask them to devise a sale-plan that works off conservative sale figures, and to have realistic expectations of sale and settlement timelines.

The third point; scarcity and/or peculiarity of the dwelling relates to both dwellings. If their current city home is scarce-good, they may be in for a positive surprise with their sale result. Pending the order of purchase and sale, a higher-than-expected sale price could translate to a superior country purchase. But if their property is scarce-weird, they may need to prepare for a limited buyer pool and hence a lower sale price. On the other side, if the country property is scarce-weird also, they need to carefully their resale opportunity if they one day decide to sell and move on. Ensuring the price they offer is justified and sensible is important. Appraising country property is quite different to appraising city blocks. Zoning, overlays, land use and comparable townships are important to note for every sale, and the catchment of recent sales will no doubt be further afield than the subject property.

This fourth point is the critical one that many discover unexpectedly; the banks’ appetite for the country property.

Depending on the zoning, the services to the block, the overlays and any recent natural disasters, some properties won’t be eligible for bank finance at all. Others could finance the property on a 60% LVR, (which would require a 40% deposit), while some may have other LVR caps. It’s integral that the bank and/or broker are advised of the proposed purchase before contracts are signed.

Like all lending scenarios, different lenders have different appetites.

So, when a bank says no, we ask about other banks. Sometimes purchase options require third-tier lenders.

The last point relates to cash reserves and their ability to get bridging finance. A big move from the city to the country will have any number of additional costs, and if the sales don’t synchronise and settle on the same day, bridging finance may be required. This should never be a last-minute scramble, and buyers should be acutely aware of the costs of the bridging finance eligible to them.

If their cashflows are tight, or if bridging finance is not a certainty, they should very carefully consider their sale/purchase order.

The most important two aspects to get right when transitioning to the county are being certain about it, and financing it. Without both, stress and losses are potentially at play.