Many of those who are just starting their journey of buying property as an investment, think about buying rural property. But, unlike buying a house in the suburbs, the important role here is not the location of the property, but its purpose. Not every piece of land can be used to build a house and not every rural property can be bought as an investment and then forgotten about for 5-10 years. 

Rural property has its own rules. In this article will tell you about the general principles of these rules in Australia. 

Can I buy a rural property but not grow anything on it? 

Yes, but it depends on the zoning and land use regulations. Some rural properties, particularly those zoned Rural Residential or Lifestyle, do not require agricultural use. However, land classified for Primary Production may require minimal farming activity or land management to maintain tax benefits and council compliance. 

Investing near growing regional centers, with access to transport and utilities, increases long-term profitability. 

So, you don’t have to grow anything on a rural property, unless the land is zoned for Primary Production, in which case the council may require minimal agricultural activity. This can include keeping livestock, growing crops, or leasing the land for farming. Properties zoned Rural Residential generally have no such requirements.

How to finance a rural property investment 

Financing a rural property differs from urban home loans due to higher risks for lenders. Options include: 

• Rural Home Loans: Offered by major banks but may require a higher deposit (20-30%). 

• Agricultural Loans: Designed for farming businesses, including government-backed options. 

• Self-Managed Super Funds (SMSFs): Some investors use their retirement funds to buy rural property. 

• Private Lenders: Alternative financing for those unable to secure a bank loan. 

Rural financing requires thorough financial planning and consultation with lenders.

What type of rural property cannot be resold? 

In Australia, some rural properties have resale restrictions depending on the purpose of the land, meaning they may be difficult or even impossible to sell without approval. Below are key land types with resale limitations: 

1) Agricultural Land with Primary Production Requirements 

Some rural properties are zoned for Primary Production (Farming, Grazing, or Horticulture) and must be used for agricultural purposes. If a landowner fails to maintain agricultural activity, they may lose tax benefits or subsidies, making resale challenging. Some states impose restrictions on converting farmland into residential or commercial use, limiting buyer interest. 

2) Conservation Land or Environmental Protection Zones 

Properties designated for conservation purposes, such as Nature Reserves or Wildlife Corridors, often have strict regulations preventing development or farming. These restrictions reduce the pool of potential buyers, as the land may only be resold to conservation organizations or the government. 

3) Forestry Land 

Some land is designated for sustainable forestry under government programs, meaning it cannot be cleared for housing or other agricultural uses. Buyers must comply with forestry management regulations, making resale limited to investors in timber production. 

4) Mining or Resource Extraction Leases 

Rural land with mining or resource extraction permits may have conditions restricting resale to approved mining companies. Some land may be subject to rehabilitation obligations, requiring costly land restoration before it can be resold. 

5) Indigenous Land or Native Title Land 

Some rural properties are subject to Native Title Rights, meaning the land is managed by Indigenous communities and cannot be sold to private buyers. Lease arrangements may allow limited use but do not grant full ownership, restricting resale options. 

6) Land Purchased Under Government Grants or Subsidized Programs 

Some rural properties acquired under government-funded farming schemes or land development programs come with restrictions. These properties may require a minimum period of land use before resale is allowed, or they may need government approval before being sold. 

7) Rural Properties with Heritage Protection 

Land containing heritage-listed buildings, historical sites, or culturally significant landmarks may have strict limitations on resale and redevelopment. Buyers must agree to maintain the heritage value, limiting the number of interested buyers.

What is the difference between rural lands approved for housing and those on which housing is prohibited? 

The key difference lies in zoning and land use restrictions. 

• Rural Land Approved for Housing: These properties are typically zoned as Rural Residential, Rural Living, or Primary Production, allowing permanent dwellings. Owners must comply with council building codes, environmental considerations, and infrastructure requirements (e.g., water, power, and road access). 

• Rural Land with Housing Restrictions: Land zoned as Agricultural, Conservation, or Special Purpose may prohibit residential construction. Such land is reserved for farming, environmental conservation, or resource extraction, and housing might only be permitted under specific conditions (e.g., for farm workers or temporary accommodation). 

Local councils enforce these rules, and exemptions might require extensive approvals or rezoning applications. 

What types of buildings can be built on rural property in Australia? 

On rural property in Australia, the types of buildings allowed depend on zoning laws, council regulations, and state policies. Generally, permissible buildings include: 

• Residential Dwellings: Farmhouses, homesteads, and rural cottages are allowed in most rural zones, provided they meet planning requirements. 

• Agricultural Structures: Barns, sheds, silos, stables, and greenhouses can be built for farming and livestock purposes. 

• Tourism and Commercial Buildings: Eco-lodges, farm stays, wineries, and bed-and-breakfast accommodations may be allowed in tourism-friendly rural zones. 

• Industrial and Storage Facilities: Some rural properties may permit storage units, machinery sheds, and small processing plants for agricultural goods. 

• Community and Utility Structures: Rural areas may allow community halls, water tanks, solar farms, and emergency service buildings. 

Zoning laws and local council regulations dictate what can be built, so consulting with the local planning authority is crucial before purchasing land.

What is The Inland Code and how does it affect building permits? 

The Inland Code is a set of planning and zoning regulations applied to rural and inland areas of Australia. It outlines land use policies, environmental protection measures, and development guidelines. 

• Impact on Building Permits: The code influences factors such as lot sizes, building materials, fire safety regulations, and environmental conservation requirements. 

• Restrictions on Development: Some areas may have limits on land clearing, restrictions on water usage, or fireproofing requirements for structures. 

• Streamlined Approvals: In some cases, the code simplifies permit approvals for pre-approved designs that meet rural infrastructure and sustainability standards. 

The Inland Code varies by state, so checking local government planning guidelines is essential before construction. 

What incentives does the Australian government provide for rural property owners? 

The government offers various grants, tax benefits, and support programs for rural property owners. Incentives vary by state: 

So, is rural property a good Investment? 

Investing in rural property offers lower purchase prices, allowing buyers to acquire larger parcels of land at a fraction of the cost of city real estate, making it ideal for long-term capital appreciation. Unlike urban properties, rural land often has fewer zoning restrictions, enabling diverse uses such as farming, eco-tourism, or development, which can generate multiple income streams. Additionally, rural investments can benefit from government grants and tax incentives for agricultural or conservation purposes, reducing holding costs and increasing profitability over time. 

However, if you are looking for where to buy investment property in Australia and are considering rural property as an easy way to make a profit, it is important to understand that in most cases, rural property becomes a profitable investment if you consistently put in the effort into this purchase. This option is not suitable for everyone.