Buying bare land — a section or rural block — is treated very differently to buying a house by NZ banks. Land has no income-producing potential, no habitable structure, and is considered a higher-risk asset. Most lenders will lend on land, but at lower LVRs and with stricter conditions than residential property.
Banks typically lend up to 65–70% LVR on urban sections and 50–65% on rural land — meaning you need a 30–50% deposit for bare land. Interest rates are usually slightly higher than residential rates. If you plan to build on the section, many lenders prefer to combine the land loan and construction loan into a single facility. Some banks won't lend on land-only purchases at all — non-bank lenders and specialist rural lenders fill the gap.
Why Land Lending Is Different
Banks treat bare land as higher risk because:
- No habitable structure — the land alone can’t be easily sold to recover the loan if the borrower defaults
- No rental income — unlike a house, land doesn’t generate cashflow to service debt
- Limited resale market — sections often take longer to sell than houses
- Development risk — the bank has no certainty you’ll build, or when
- Zoning changes — land value is tied to its permitted use, which can change
As a result, most banks impose:
- Lower LVRs (50–70% depending on location and type)
- Higher interest rates than standard residential mortgages
- Shorter loan terms in some cases
- Conditions around intent to build
LVR by Land Type
| Land type | Typical maximum LVR | Notes |
|---|---|---|
| Urban residential section (serviced) | 65–70% | Established subdivision, town services connected |
| Urban section (unserviced) | 60–65% | No council water/sewage — higher risk |
| Lifestyle block (up to 10 ha) | 50–65% | Depends on location and lender |
| Rural / farming land | 40–60% | Specialist rural lenders preferred |
| Bare land (no consents, no services) | 50–60% | Often non-bank territory |
Lenders for Land Purchases
Main banks (ANZ, ASB, BNZ, Westpac, Kiwibank): Will lend on urban sections and some lifestyle blocks, typically at 65–70% LVR. Most prefer to know you intend to build within a defined timeframe.
Non-bank lenders: More flexible on rural and unusual land. Rabobank, ANZ Rural, BNZ Partners, and specialist rural lenders serve farming land. Non-bank residential lenders (Liberty, Basecorp, Resimac) handle sections the main banks decline.
Overseas buyers: Foreign buyers face additional restrictions. The Overseas Investment Act limits who can buy NZ residential land — consult a lawyer before purchasing if you’re not a NZ citizen or resident.
Land + Construction Combined Facility
The most common structure for buying land to build on is a combined land and construction loan:
- Buy the section — bank settles the land purchase at the agreed LVR
- Builder engaged — fixed-price contract signed with a licensed builder
- Construction facility activated — bank advances construction funds in drawdown stages
- On completion — the facility converts to a standard residential mortgage at standard residential LVR
This approach works because the “as-if-complete” valuation of land + finished house typically justifies a much higher LVR than the land alone — effectively solving the bare land LVR problem.
Important: The bank will want to see a credible build plan (and ideally a building contract) before approving the land loan, even if the construction loan comes later.
Rural Land Considerations
For land over 4 hectares or in rural zones:
- Zoning: Rural zoning restricts permitted uses. Check the district plan — what can legally be built and what activities are permitted?
- Consent to build: Some rural zones require resource consent before you can build a dwelling. This adds time and cost
- Services: Bore water, septic tanks, and off-grid power add $30,000–$80,000+ to your build cost
- Specialist lenders: ANZ Rural, BNZ Partners, and Rabobank are the main rural finance providers. They have different assessment criteria and relationship-based lending
Lifestyle Block Mortgages
A lifestyle block (typically 1–10 ha with a dwelling or buildable section) sits between residential and rural lending:
- Most main banks will lend on serviced lifestyle blocks with an existing dwelling
- Bare lifestyle blocks without a dwelling are harder — use a broker to find the right lender
- The block’s location, access, services, and intended use all affect lender appetite
- See Lifestyle Block Mortgage NZ for full detail
Frequently Asked Questions
Can I use KiwiSaver to buy bare land?
No — KiwiSaver first home withdrawals cannot be used for bare land. The land must have a home already built on it (or you must be purchasing and building as a combined transaction that results in you living there). Consult your KiwiSaver provider for specific rules.
Do LVR restrictions apply to land?
The RBNZ’s LVR restrictions technically apply to residential mortgage lending. Bare land is sometimes treated outside these rules by individual banks — but most still apply conservative LVR limits of their own. The new build LVR exemption (10% deposit) does NOT apply to bare land alone; it applies once a new build is completed or near completion.
How long can I hold land before building?
Banks typically want to know your build intention, but there’s usually no hard deadline specified in the loan documents. However, some lenders review land-only loans periodically and may pressure you to build or sell if you’re not progressing. Discuss the timeline with your lender upfront.
Are interest rates higher for land loans?
Usually slightly — banks price land loans at a small premium to standard residential rates to reflect higher risk. Non-bank lenders charge more again. Using a mortgage broker helps you find the most competitive rate.
What checks should I do before buying land?
Before committing: get a LIM report, check the district plan for permitted activities, confirm services availability (water, power, sewage), check for covenants and easements in the title, get a geotech or soil assessment if you’re building on sloped or unknown ground, and confirm access rights.