Purchasing a plot in any part of India can be a challenging task and requires a sound financial backing for the initial investment. Banks today offer loans for buying a plot as well as for construction. It should, however, be noted that the associated tax benefits are subjective to completion of construction of the home on the plot and even it is done the benefits are offered only for the first year.
In case of flats, on the other hand, loans are more accessible to avail, albeit, at similar rates. Flat purchase attracts a lot of tax benefits, especially for the first time home buyers.
Building one’s own home is a cumbersome process and requires constant monitoring of construction activities, from meeting the architects to ensuring the correct usage of raw materials. The most common problem faced by first time home builders is the tendency to stretch the budget. On the other hand, with apartments/flats, a fixed rate has to be paid to the builder in addition to the house and registration costs and the cost of interiors. Constructing one’s own home will amount to be more expensive at any given price as compared to buying an apartment/flat of a similar size and dimensions. However, it does give the owner the freedom to choose the layout and design.
When considering the resale value of a house, most people prefer buying a plot and constructing their own home as opposed to buying an already built house. However, with the increasing cost of construction and escalating land value, there are buyers for making independent houses as well. In case of a home, the amount will have a direct correlation with the amenities within the house and accessibility around it. In case of flats, the value of the property rises as the demand for apartments within the colony rises. It is however noted that houses have a higher resale value than flats primarily because the buyer acquires the plot of land as well on which the house has been constructed.
Rate of Return
In case of an independent house on a plot, the value of the land appreciates however there usually is a depreciation in the value of the asset due to wear and tear. Particular attention must be paid towards space planning, construction quality and quality of amenities as they act as decisive factors for valuation. Another reason for higher value in comparison to flats/apartments is the demand-supply differences. The supply of independent houses, in general, is lower than that of flats. Also, the owner of the house has the option to get permission for adding floors to the home and renting or reselling these.
Checklist before buying land
Buying land has become a risky business in major cities due to the number of instances of fake registration papers. Hence, it is essential to check the following documents.
|Title Deeds||1. If it is in the seller’s name alone and no other person is involved
2. If the seller has permitted access to others through this land
|Tax Receipt and Bills||1. Property taxes paid to the government is up-to-date with latest receipts
2. If there are any notices of requisition relating to the property which are outstanding.
3. Water and electricity bills have been paid up-to-date.
|Encumbrances Certificate||1. Ensure that the land does not have any legal issues
2. It is issued by sub-registrar office where the deed has been registered.
|Pledged Land||1. All loans for which the land has been given as pledge have been paid.
2. Release Certificate issued by the bank.
|Land Measurement||1. Land measure before registering the property by a recognised surveyor|
It is advisable to get all the documents to be checked by a lawyer to ensure they are original and other requisite authorities too.
Apart from the paperwork, it is also essential to check for the connectivity of the house, its proximity to key places such as market, hospitals, schools, transportation etc. Also, one must ensure that the property is not isolated as many instances of robbery are being reported.
Building a home is a more significant challenge than buying a flat. However, it is much more gratifying since the owner of the house is involved in every step of the build process, and everything is done as per their likes.