Whether looking to buy plots for your dream house in popular cities such as Hyderabad, Mumbai, Delhi and Chennai or simply making an investment in one, it is important to consider the following factors before making any rushed purchase:
- Checking, verifying licenses and certificates
Tiresome as it may sound, getting some specific licenses checked and verified by a consultant is of prime importance before buying a plot. These include:
- Title deed: This is a legal document that shows you have the right to the ownership of the plot. Before buying, confirm that the deed from the seller (or reseller) has full right to the ownership of the property, and that it meets all necessary approvals from the authority.
- Encumbrance certificate: It is a proof that the property is free from all/any monetary and legal liabilities. It also shows that the property can be sold as free title and that there isn’t any problem associated with the ownership. Ensure that this certificate says the land is free from the earlier-mentioned dues or liabilities.
- Release certificate: This is important especially when dealing with resale lands. The certificate, which you get from the bank you have pledged a loan from, shows that the land you are about to buy is clear from all impending loans. It shows that any loans on the land in question has been repaid.
- Property tax receipts: Any bills from the owner that haven’t been paid for, for a land on resale are shown on these receipts. Ask for tax receipts from the owner to ensure there isn’t payment pending from the original owner.
- Approvals: Make sure that the land-use is permitted as per the city plan. You can get this from the local pubic-body office in your city. Additionally, ensure that the plot layout has been approved by the local body and the development corporation.
2. The wrong impression of renting the property
You may buy a particular land thinking you will cover the EMIs through renting the land. It may be a miscalculated or erroneous approach, as experts say rental benefit on residential properties is a meager 2-3%. Secondly, it may require a much longer duration than expected to rent out your property.
3. The right buying cost
When asking a broker about the plot, ensure that he or she tells you the final cost of the plot and not just the basic one, as such is the case many a time. They may keep you in the dark with respect to extra costs such as, but not limited to: Service tax, preferential location fees, development fees, etc.
4. Look out for available plans
You may be eligible for a guaranteed rental scheme that lets the developer pay you rent during construction of the plot, for a fixed period. Then there is another scheme that lets the developer pay you after the possession. In such cases (and schemes), the properties are generally located outside the city limits.
The fact of the matter is that you need to be aware of all the available schemes or plans before making the payment for your plot. While some may benefit you, some may also result in loss such as subvention schemes where the price is generally 10% higher of normal.
5. Constructing costs
When choosing to make your house, consider these for the construction costs:
- Home designing plan of the architect
- Contractor’s fee
- Labor cost
- Interior fittings such as tiles, bathroom fittings, etc.
- Building material costs
It’s wise to pay more as initial cost for building your house than to spare more at the time of reparation or maintenance.
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