Land Holding Cost Calculator NZ

This calculator works out what it costs to hold a piece of bare land in New Zealand before you build on it, a cost that catches out many people who buy a section early and plan to build later. Land is unusual among investments because while you hold it, it earns nothing yet still costs money every year. The biggest piece is interest on the money tied up in the land, whether that is a loan you are servicing or your own capital that could be earning elsewhere. On top of that sit council rates, which you pay even on an empty section, plus smaller ongoing costs like insurance, mowing and keeping weeds down. You enter the amount borrowed or invested in the land, the interest rate, the annual council rates, any other yearly costs, and how many years you expect to hold the land before building, and the calculator returns the total holding cost over that period and the cost per year. Use it to decide whether buying now and building later really stacks up, by comparing the holding cost against how much you expect the land to rise in value and how fast build costs might climb while you wait. Figures are estimates only and not financial advice.

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$94,500
total cost of holding the land
Cost per year$31,500
Interest portion$84,000

Interest is on the money tied up in the land; rates and other costs apply each year. Compare against any rise in land value. Estimate only.

How it works

The annual interest is the amount borrowed or invested times the interest rate, treated as interest-only while you hold the land. The annual holding cost adds council rates and other yearly costs to that interest. The total is the annual cost multiplied by the years you hold the land.

Worked example

On 400,000 dollars at 7 percent, interest is 28,000 dollars a year. Adding 2,500 dollars of rates and 1,000 dollars of other costs gives 31,500 dollars a year, so over 3 years the holding cost is about 94,500 dollars, of which 84,000 dollars is interest.

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Frequently asked questions

What does it cost to hold bare land?

The main cost is interest on the money tied up in the land, plus council rates, and smaller costs like insurance, mowing and weed control. These run every year you hold the section before building, and add up quickly.

Why does holding land cost so much?

Bare land earns no rent while you pay interest and rates on it, so it is a pure cost until you build or sell. The longer you hold it, the more it costs, which is why long delays before building hurt.

Should I buy land early and build later?

Sometimes the land gains value faster than the holding cost, sometimes not. Compare the holding cost here against any expected rise in the land's value, and remember build costs may also rise while you wait.