Buying a plot could seem like a simple transaction involving the transfer of funds and property between a buyer and a seller. But the actual picture is a little murky. Before making a choice, one should take into account several aspects such as corruption, multiple buyers, and those selling the incorrect land using falsified paperwork. In order to assure a secure investment, buying a block of land in India can be a difficult process that demands careful diligence.
Where Should You Buy a Plot: The Outskirts or The City Center?
You have a better chance of making a healthy return on your investment over time when the base price is low. For investments in land, the same holds true. An investor’s chances of success are extremely small when making investments in a crowded real estate market when land prices are already soaring. If the prices are excessively high, it could be challenging to find customers.
On the other hand, land costs in the city’s periphery are competitive and, in some circumstances, 30–40% less expensive than in the center. As social, civic, and physical infrastructure in these places develops, so do land prices. Such infrastructure pushes increase property and plot prices in addition to contributing to an increase in the livability index for the belt.
Considerations For Investing in Plots
Before making an investment in a proposed development, consider the following points.
Determine The Seller’s Identity
- A buyer must investigate and confirm the seller’s identification before buying a plot.
- The seller’s citizenship and proof of residency, as well as whether permission from the relevant authorities is needed in order to sell the property.
- The names of all sellers must be made known if the property is held jointly.
- Verify the seller’s eligibility to own and sell real estate if they are a corporation.
Documentation
Whether purchasing a plot of land or an apartment, property documentation is a crucial part of any real estate purchase. By getting the right legal counsel, looking over documents, and checking out pertinent property information, the buyer can make sure that their investment is safe and secure. The key building paperwork needed to purchase a plot is listed below.
Title Deed
This contract guarantees that the seller is legally distinct from the property. Examine the original title deed rather than making a copy of it. The seller’s name must appear on the property’s registration. Next, make sure the seller is the single owner and has all the necessary permissions to sell. By checking the title on the state government’s registration website, you can keep track of this. A lawyer should be consulted at all times.
Encumbrance certificate
The encumbrance certificate is a necessary record to show free title or ownership when transferring property and while applying for a mortgage. It is crucial to recognize that this certificate is issued by the sub-registrar’s office for a set amount of time. Additionally, the registered property records serve as the foundation for the sub-registrar’s record. This means that a document won’t be included in the certification if it hasn’t been registered at the sub- recorder’s office. The encumbrance certificate is only applicable to periods that have been reported or that have passed after the certificate’s expiration date.
NA Order
Unless the government specifies differently, all land in India is referred to as “AGRICULTURE Property.” Agri land is suitable for farming, but if you want to do something else, you must first turn it into non-agricultural (NA) land. Not all NA-status land, meanwhile, is suitable for residential construction. NAs come in a variety of forms, including:
NA – Warehouses
NA – IT
NA – Residential
NA – Commercial
NA – Resort
You must therefore search for “NA – Residential.”
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Original land deed
The 7/12 document is another name for the document. It is necessary to request copies of all former and present owners’ original land deeds.
Power of Attorney
The seller ought to get a Power of Attorney if the proprietor is an NRI. (POA). A power of attorney (POA) or letter of attorney is a legal instrument that designates a certain person or organization as the person in charge of managing your funds, property, and health care in your absence. The primary, donor, or grantor is the individual who gives another person permission to act on his or her behalf. The individual with the authority to act is the agent. Depending on the terms and conditions of the POA, the authorized agent may have limited or broad authority to make legal decisions regarding the property, medical concerns, and finances.
Property Tax Bills and Local Authority Approval Document
Last but not least, make sure the plot has all the local authority approvals. Additionally, look up all prior tax bills that the property owner has paid.
Know more about land acquisition acts, rules, and policies.
Different Plot Types
Depending on the demands and objectives of the investment, a buyer of plots may search for different kinds of plots. The most typical sorts of plots are residential, commercial, agricultural, institutional, and industrial ones.
Agriculture Land
As the name suggests, agricultural land is set aside for farming and other associated activities. Each state has its own requirements for buying agricultural land. Some states continue to impose agricultural restrictions because a significant section of our workforce is employed in agriculture. A few Indian governments also forbid residents of other states from buying agricultural land there. These plots are also substantially bigger than other kinds of properties. State standards and the amount of land a single person can purchase also affect land ceilings.
Residential Plots
Residential plots are lands used for constructing homes. The purchaser must get the required licenses from the relevant authorities in order to convert agricultural land to residential use. Residential land can be bought by an investor as well. The procedure for submitting an application to modify a land use differs by state. Residential plots can be used as collateral for loans that qualify for Section 80C tax reduction.
Learn More: Advantages of Working with Real Estate Agents When Buying a Home
Commercial Plots
A city’s master plan will allocate commercial districts for the construction of businesses like stores, offices, and other trades. These parcels typically incur greater taxes and levies from the government. Many of these properties are constructed via shared ownership arrangements, where investors combine their funds to construct a property. Make sure the land has been zoned as commercial before buying any business property. Otherwise, it would be challenging to develop the site. When buying commercial land, the available Floor Space Index is a crucial factor to take into account. (FSI). The amount of development on the property is normally determined by FSI.
Institutional Plots
These are plots designated for certain uses, such as building a college, a school, or the headquarters of an institution. Such plots are authorized by a local government body, which also permits any necessary sales or transfers.
Industrial Plots
Government agencies frequently create industrial plots to support industrial corridors in a region. These plots will be used, among other things, for cold storage facilities, manufacturing, and warehousing and logistics.
Special approvals could be needed in order to purchase a plot for an industry. This is particularly true in light of the potential environmental effects an industrial unit may have on the neighborhood. Licenses to establish an industrial unit also need approval from a body that focuses on that industry. The owner should look into these aspects and any other potential permissions before making a decision on industrial property. When zoning land as industrial, approach roads are also considered due to the anticipated traffic of heavy vehicles.
Useful Article: The Latest Real Estate Trends in India You Should Know
Wrapping Up
Before spending your hard-earned money, real estate developers’ guidance could be helpful in addition to due diligence and several verifications.
In short, it’s not a good idea to speed through plot hunting. Before selecting a plot to invest in, take your time and conduct some research. After all, making a long-term investment calls for diligence and perseverance.
