All For A Plot: The A To Z Of Land Investments

Investing in land has always intrigued those looking to put their money into something solid, quite literally. Unlike stocks, which can be as unpredictable as the weather, or gold, which just sits in a vault, land is an asset that you can touch, see, and even develop.

Let's dig deeper into the essential aspects you need to know about such investments. From legalities to the types of land available, here are a few factors you need to remember to make an informed decision. Remember, every plot of land holds a story - make sure yours is well-plotted from the start.

There is a difference in the way flat prices appreciate versus land. The demand for flats is driven by their liveability and location in urban regions, which can make them more expensive per square foot compared to land.

When you buy land, you're essentially getting a blank slate that you can develop according to your requirements. This also means that you'll be responsible for all aspects of development, including obtaining permits, ensuring compliance with local regulations, and managing construction operations, in some scenarios. Costs of land can vary, from site preparation to the utilities that might be attached to it.

In contrast, buying a flat or apartment is simpler as it's typically ready for immediate occupancy or near completion. Flats come with pre-defined amenities and structures, managed for maintenance and compliance by builders or housing societies. This convenience reduces buyer headaches but limits customization and development potential.

Residential land is perhaps the most sought after land investment. Their location (in or near urban areas) with the necessary infrastructure, makes them a popular choice for individuals and developers looking to build homes, or wanting potentially high long-term investment returns. The demand for these has also remained steady due to the constant need for housing the increasing population.

Agricultural land is another popular category. However, only agriculturists can invest in this kind of land in most states. While generally cheaper than residential or commercial plots initially, agricultural land offers advantages like lower starting costs and potential future conversion to residential or commercial use, albeit with legal complexities.

In terms of ownership, there are freehold and leasehold lands. Freehold land basically grants the owner absolute and perpetual rights over the property. Owners have the freedom to utilize, sell, or transfer the land without substantial restrictions, subject to compliance with local regulations.

On the other hand, leasehold land involves leasing the property from a government authority or a private landowner for a specified duration, typically ranging from 30 to 99 years. After that period, there's a renewal clause that if you don't breach certain terms, the lease will be renewed.

A lot of individuals do purchase land based on anticipated value increases, due to rezoning or urbanization plans. This, however, does require a significant amount of market research and needs to be well-timed, to get the best returns.

Investing in commercial land can be lucrative, as the land can be leased or rented out to businesses, providing a steady income stream. The value of commercial plots commands higher prices due to strategic positioning. However, acquiring permits and approvals for business operations can be quite a time-consuming and costly process.

In contrast, agricultural land is generally more affordable, appealing to those interested in farming or long-term land appreciation. However, converting agricultural land to other uses, such as residential or commercial, involves significant legal hurdles and government approvals, which can be complex and vary by state. Additionally, agricultural land value is influenced by factors such as soil quality and water access, alongside operational challenges like labour-intensive farming and environmental considerations.

Buying land does involve going through a complex legal process to ensure a secure purchase. Essential documents include the title deed, verifying the seller's ownership and an absence of disputes. An encumbrance certificate then confirms no financial or legal liabilities like mortgages. It also provides a transaction history, validating the seller's claims.

A land use certificate ensures compliance with local zoning laws, confirming permissible development. Approvals from authorities like municipal corporations are vital, covering land development, construction permits, and environmental regulations. The sale deed finalises the transaction, transferring ownership from seller to buyer officially.

When land is passed down through generations, it's crucial to establish the legal heirs clearly to avoid disputes. This involves updating land records to reflect the new ownership through a process known as mutation of property. The mutation process ensures that the land records are current and that the rightful owners are recognised by law. It's also important to understand the tax implications of inherited property, including inheritance tax and potential capital gains tax if the property is sold in the future.

With multiple heirs, partitioning or equitable sale of land may be necessary, a complex process often requiring legal guidance. Additionally, the new owners should be aware of existing liabilities or obligations attached to the land, such as loans or unpaid taxes.

To understand more about the legal intricacies of land investments, tune into the upcoming episode of Big Decisions with Khaitan & Co's Harsh Parikh and Money Front's Mohit Gang on June 21.