Among plethora of investment avenues, land is the most sought after investment in India because it has the potential to multiply capital at a far greater speed than anything else. Unlike flats that are governed by set residential rates, land has a broader scope to fetch higher returns, which is relative to the development of area around.
However, investing into land is not as simple as it sounds. There are several legal and other factors involved that need to be considered before taking any decision. Here is a brief summary of important points that should help you filter most appropriate land for investment.
- Clearance from local authority - While many buyers are aware of the difference between agricultural land and non-agricultural land, most of them fail to validate the availability of clearance from local authorities. It is prudent to stay away from land deals, which lack transparency in terms of clearances.
- Not within scope of government plan - Before taking negotiations any further, it is imperative to verify that the land in question does not interfere with any development plan by the government. Land under Eminent Domain can leave an investor’s money stuck in the project, forfeiting his/her right to even sell it again. Investors should be extra cautious about cheap lands being offered in interior or rural areas that are meant for public use.
- Clear title and demarcation - One needs to ensure that a land has clear title and its demarcation is in accordance with map. Moreover, knowing the history of land in question is also advisable. One can either hire a firm specialised in such verification or accomplish it at an individual level. Record of past transactions and title can be retrieved from Sub-registrar while stamped and signed copy of demarcation map should be requested from the government office.
- Basic utilities - Just because you are buying land for investment purpose does not mean that basic utilities can be overlooked. One has to evaluate a property based on the amenities, both present and in future. Land sans septic tank or drainage system will be unappealing and will find hard to get buyers. Besides this, availability of ground water is nowadays key for potential buyers and is important even from an investor’s perspective.
- Free from encumbrance - Before closing the deal, check for records to ensure that the land is free from encumbrance by any person or authority. When in doubt, it is advisable to publish a public notice in a newspaper or reach to a lawyer.
While entering into a land deal for investment purpose is a lengthy process, investors can look forward to launch of Real Estate Investment Trusts (REITs), which has finally received nod from the Securities and Exchange Board of India (SEBI). Although there are no listed REITs at the moment, but few of them are already in the offing. These REITs are structured similar to mutual funds and will enable even small investors to participate in India’s booming real estate.
About The Author: Reenika Avasthi is associated with Inverika Investment Solutions LLP as a Content Writer and Financial Planner. Reenika Avasthi is a Certified Financial Planner and a freelance content writer in the field of personal finance. Her interest in writing and spreading investor awareness motivated her to start blogging.
Like us at https://www.facebook.com/Inverika/
No comments:
Post a Comment