Why you shouldn’t fall in love with… a Rural Resources Block

So many people these days come to Tasmania because as a state – we’re bloomin’ spectacular. Trees, greenery, awesome people, fabulous beaches, mountains… and did I mention trees?

And Tassie has some awe-inspiring bush blocks. Many of them that seem to be at very very reasonable prices.

And there’s a reason for that.  They’re very (very very) difficult to finance.

My strong recommendation when you find a block of land for sale in Tassie that looks anything dissimilar to a standard rectangular small house sized block is to call the local council and find out the zoning.  (Note – I said call the council not ask the real estate agent – I used to be an agent for many years and I love them dearly, but call the council to be triply sure).

If it has the word Residential in it – excellent.

If the zoning of your block is “Rural Resources” – put a little wall up around your heart – as this block is going to try and break it.

Why? Because the reason it likely seems to be very well priced compared to other boring blocks is that the zoning of Rural Resources makes it very very hard to fund.

But why – you can build on Rural Resources blocks can’t you? Absolutely you can and there are many homes built on rural resources blocks in Tasmania (side note: many banks will treat this zoning harshly later on when you go to sell offering the new purchasers a maximum of 70% borrowings against a rural resources house).

So if you can build on them why do banks not typically want to finance vacant rural resources blocks?

Because banks like to avoid risk. And the risk with a rural resources block is that permission to build a house on it is completely discretionary. Discretionary approval to build a house means risk to the bank.

Most banks will not fund rural resources zoned blocks. This bares repeating.  Most banks will not fund rural resources zoned blocks.

Of those that will (and they’re very few and far between), you need a very sizeable deposit – the minimum we’ve been able to fund one with has been 20% + costs and typically you will need written confirmation from the local council that you will be allowed to build a residential dwelling on the property.  This can be really tricky to get and oftentimes may mean you need to go through a significant portion of paperwork and potentially builder’s costs to get to that stage.

If you are a purchaser with a smaller deposit or equity to tap into than 25% of the purchase price, please do not fall in love with a rural resources block. Please note that this may not be enough but should be considered a bare minimum.

If you are a purchaser who is not prepared to do significant ground work with the local council then please do not fall in love with a rural resources block.


Want to read more on what a rural resources zoning means (not for financing it, just for the block) click on either of these links: