The Indian real estate scenario is experiencing an abrupt surge in the overall demand for high-end homes. Amid the exclusive aspects following this surge in demand is the increasing number of NRIs returning, first generation industrialists who are booming in their new set-ups, startup organizations and multinational companies employing emigrants for their growth in the country. Contrasting the previous scenarios, it is the buyers who are controlling the real estate sector now.
The demand mainly is around parts of the country where vast piece of land area is available thus making it promising for builders to provide an all-inclusive array of amenities that have not been heard about in any such housing project.
The demand from corporates for accommodation for emigrant employees has also called for the requirement for high-end homes constructed with international standards which these expatriate are used to. Apart from this, the corporates are also eager to pay lofty rentals for such properties to offer the precise ambience for such employees during their tenure in the country.
The boost in demand for such homes is majorly coming from the IT sector because of the improved connectivity levels and the accessibility of high-end homes in parts nearer to MNCs. In Bangalore, quite lot of villa projects are speeding up the construction process which are estimated to be around the price range of Rs 1.5 crores and a few more are coming up in proximity to Whitefield and Old Madras Road which is another indicator to the spurt in demand for high-end projects.
One of the biggest reasons behind this spurge is the keen interest of the investors who are keeping a tab on the rise in demand for high-end homes and the resulting rentals. Wherever enhanced connectivity options are visible and the vicinity is good enough, the demand keeps on increasing for such homes in the country.
Developers who are developing high-end homes state that most of the queries they get are from businessmen, senior corporate executives and high net worth individuals. Some of them are even keen to invest in a second home. Expatriates are also interested in buying such homes but due strict documentation laws, they normally choose to go for a lease rather than out-and-out buy.
As per the ruling of the Foreign Exchange Management Act (FEMA), nationals of foreign origin who are residing in India can invest in only one residential property once they get sanctions agreed upon by the concern authorities like the State government.
Foreign diplomats can buy and sell any property other than agricultural land, plantation property and farmhouse in the country with aforementioned approval from the Government of India. The payment should be made only through foreign inward remittances by the means of normal banking channels.
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Posts Tagged agricultural land
Home Loan Pre-conditions for purchasing a land to build for residential purpose
Majority of financial institutions lend home loan to borrowers who are planning to buy a patch of land to build their dream home. Banks grant land loans to salaried and self-employed people and even to NRIs. These loans empower you to buy a residential piece of land.
WHAT KIND OF LAND CAN BE BOUGHT?
Banks do not offer land loans on an agricultural land. As per the guidelines laid down by the Reserve Bank of India, a land loan is specifically given for buying lands for residential means only. Few lenders have fixed set of norms under which the land should be located within certain municipal limits. Apart from this some financial institutions add on a number of restrictive clauses that demand the purchaser to start the construction process on the purchased land within a duration of six months to a year.
IS IT FITTING FOR YOU?
There are a lot of factors that affect a person’s choice of building his dream home on his own. One such factor is the price. Buying a piece of land and then constructing the house on it can some time turn out to be a less costly affair. Also, one can set the pace of construction as per wish to suit his financial conditions. Constructing the home oneself facilitates the owner to put into action his all creative ideas in design and color schemes. Apart from this one also has a liberty to put off main operating cost, enhancements and addition to a future date.
HOW DIFFERENT IS A LAND LOAN FROM A HOME LOAN?
The interest rate for a land loan is on a par as compared with the interest rate of a home loan. One cannot ask for income tax deductions on the interest rate paid for a land loan. But if a borrower converts the land loan into a home loan to get financial support for the construction purpose of the residential property, then surely he can get all the tax benefits available under the Income Tax Act. Apart from this, once a completion certificate is obtained from the appropriate authority, the interest rate paid on the loan is entitled for IT benefits.
DOWN PAYMENT
Borrowers who are looking forward to get a land loan have to pay a higher down payment amount. The loan-to-value ratio for land loan in the case of down payment often goes as high as 70%. Normally, an individual who opts to take a home loan has to pay for only 20% of the cost of property.
DOCUMENTS REQUIRED
It is always advisable to appoint a legal expert to check and verify all the legal documents of the plot in concern. Apart from this, one should also verify the layout drawing of the site as approved by the town planning authority, and no encumbrance certificate of the land. Other property documents that need to be validated comprise of original documents pertaining to ownership of land, revenue receipts, land records and tax receipts.
DOCUMENTS REQUIRED WHILE APPLYING FOR A LAND LOAN
Before the borrower applies for the land loan, he should have some documents in place which include original site ownership documents, tax receipts for taxes paid by the owner, layout drawing, revenue receipts , no objection certificate from society for sale and transfer of land, and no encumbrance certificate for the land.
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Are your Property Documents in Place?
Having all property documents in place is really essential. Maintaining the documents is important for the reason that if in case you decide to sell off your property, then you will have to present all property papers to the potential buyer. Apart from this, you might need them while paying property taxes, calculation of income tax, computation of capital gains, estimation of wealth tax and other such things. The property documents are also required in case if you intend to file a legal claim on a property.
Documentation of property papers is one of the most crucial and essential part in the complete property acquisition process. They require cautious inspection by a buyer. You should verify the title and mortgage status of a property. Banks also sanction loans on properties that have a clear title. In case the property title is not clear, a lot of problems can crop up in future including trouble in disposing off the property.
Here is a list of a few important documents that you should make certain are in order and kept carefully:
Sale or Conveyance Deed: A seller passes on the title of the property to a buyer through sale or conveyance deed. This document helps out a buyer to make sure that whether the property he is looking forward to buy actually belongs to the seller or not.
Authorization to Use Land For Non-Agricultural Purpose: In case if you are looking forward to buy an agricultural land and you wish to develop it for residential or other use, then that piece of land should be converted to non-agricultural land. In order to do so, you can get a non-agriculture order issued from the district collector where the property is located. Apart from this, you should also have the receipt as a proof of the payment of non-agriculture tax. In case if the agricultural land is not converted to non-agricultural land within the specified duration, then you should get another order from the authority concerned to prolong the period.
Permission for Property Transfer From Society: For many properties, the seller or the buyer needs to get a no-objection certificate from the local society for transfer of land.
Search Report: A search report is a certificate issued by a lawyer who conducts a detailed check on the property title, which is intended to be bought. The certificate states whether the property exists in reality or is just imaginative, and has clean and marketable title. While making a search report, the data of the last 30 years is taken into consideration. A seller or a developer attaches a copy of this search report with the sale agreement. The report also informs whether there is an existing mortgage, litigation, condition or claim on the said property that might affect the title of the buyer negatively.
7/12 Extract: The tehsildar or the land authority concerned issues this extract and offers various details about the property including survey number, location, area, date from which current owner is registered as owner etc.
Index II: Index II is issued by the office of Sub-registrar of Assurances. This index carries names of the sellers and buyers of a said property.
Some More Documents Required Are:
- Share certificate issued by the society Allotment letter issued by the authority
- Lease deed of society
- Registration details of the society
- Bye-laws of the society
- Approved building plan
- Proper title of builder
- Permission to mortgage
- Undertaking from the society (in case the property is still under construction) Allotment letter
- Possession letter
- Receipts of payments made to authorities
- Receipts of payments made to seller
- Power of attorney
- Will Agreement to sell the property
- Khata certificate
- Receipts of payments of property tax, electricity bills and water charges
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