Media Room
Industry News
National Realty e-Magazine


Select a year 

JanuaryFebruaryMarchAprilMayJuneJulyAugustSeptemberOctoberNovemberDecember                Back

Don't lose the plot while buying land written by Priya Nair, published in DNA. February 2, 2019

Many of us who live in flats in cities often dream of owning an independent house and may consider buying a plot of land to construct that dream house. Then there are stories of how someone purchased a plot of land and made huge gains from it. But buying a plot of land, comes with its set of problems.


While it may be cheaper than a ready property and may offer higher gains, there are several conditions that one has to keep in mind. DNA Money spoke with experts to understand what one must watch out for.


Reasons for buying plot of land


Being a valuable resource, land can fetch better returns over the long term, provided it is bought at the right location and has all documents in place with no legal hassles, says Anuj Puri, chairman &ndash Anarock Property Consultants. "The area must have or at least proposed to have proper social and physical infrastructure facilities in the future coupled with civic amenities like water, sewage, and electricity. Ideally, one must buy in areas where basic infrastructure facilities are already present. The major fallout of buying in developing areas is that even while infra facilities may be proposed, they could either get delayed or scrapped altogether later on. So it's better to buy what one sees,'' he says.


Land can be bought for self-use as well as for investment. It could be for a retirement home, weekend home or small vacation rentals. In some cases it is could also be for self-consumption if it is close enough to the workplace and has good access and connectivity to the city.


"The primary reason of plot development largely takes place in rural areas is the availability of spacious plots in comparison to those available in the urban areas,'' says Girish Shah, executive director, marketing and corporate communications, Knight Frank, India.


However, the price appreciation happens over a longer period of time, says E Jayashree Kurup, head editorial, Magicbricks. While disadvantages are that plots are difficult to protect from encroachment and maintain and also they don't give you regular rental returns.


Factors to keep in mind while buying land plot


Land record: Title deed is one of the most important documents to consider while buying a plot. It provides details about land ownership, obligations, rights, and mortgages, if any, on the property. It, thus, validates the authenticity of the land in concern and whether the project is registered and its development rights transferred. The deed can be verified at the land record office.


Land-use certificate: Proper land-use of the property in concern needs to be verified. "It is illegal to construct residential over a commercial or industrial plot and vice versa. One can verify this with the respective urban development authority and see the certificate," says Puri.


Some plots can also be located in the 'converted zone'. Since cities are expanding, agricultural land may be converted for residential or commercial purpose by paying a fee to the government. In such cases, one can check the endorsement order given by the tehsildar or deputy commissioner of the zone who provides licenses for residential construction on land.


Master plan of the area: Often, properties are sold by builders on the pretext of future infrastructural developments in the area such as metro, highways, etc. This can be easily verified by the area's master plan which is available with the town planning department.


Verify encumbrance certificate: Before purchasing a plot, it is important to check that the land is free from legal dues. For this, Encumbrance Certificate for at least 30 years can be verified. Available with the sub-registrar's office, this document states that the said land does not have any legal dues and complaints.


You could check out state government websites for information about the available in a certain area. But be aware that the information may not be regularly updated, says Puri.


Stand-alone or developed plots


One can choose to buy a standalone plot and develop it fully or one can also choose to buy plotted developments from reputed developers, says Ashish Mahajan, co-founder, PropStory.


"These come with the advantage of being semi-developed in terms of electricity, water and sewage connections as well. One of the benefits of purchasing a plotted development is quicker delivery. Also, many of them come with attractive and suitable financial schemes,'' he says.


These could work better as an investment for the appreciating value of land or as a weekend or vacation home. "These developments usually happen in areas away from the city. Improving connectivity and infrastructure have, however, reduced distances,'' Mahajan adds.


Shah agrees that plots for sale offered by a developer are good options because they are under RERA, if there are more than 16 units. Besides, all the legal due diligence is completed before it is put to sale and the process of acquiring such property is the same as buying a built property.


Advantages of purchasing plots from developers include better infrastructure such as inner roads, water supply connection, underground sewage connection, RCC storm water drainage, provision for electric connection and communication cables. Additionally, many plotted developments come with amenities such as jogging track, swimming pool, clubhouse, etc.


Most retail buyers prefer or can afford standalone plots in rural areas. But there is a risk. "The land usage can be changed by the authorities. Hence, it is advisable to see the master-plan before buying the land. Since cities are always expanding, another risk is that the status of such land could be changed from residential to infrastructure usage and you would end up getting just a compensation," says Kurup.


Hence, it is advisable to buy a plot from developers in gated communities. It is crucial to check that land title deeds are clear, and also that the project has been cleared by the local authority. It is important to buy from developers who have authentic and proven credentials. A background check of the developer's past project will give an idea about the execution capabilities of the developers, she adds.


Financing and tax


A number of banks provide 'plot loans' to purchase plots as well as to subsequently construct a home. If one simply buys a plot no deduction can be availed. However, after construction of the house is complete, one can seek deduction only for the specific amount spent for constructing the home. Tax exemption is applicable only for loan amount taken for construction of a house, and the deduction must be claimed in the same year when construction was completed.




  • Title deed is most important and provides details about ownership, obligations, rights, mortgages 
  • Verify land-use because it is illegal to construct residential over commerical plot and vice versa 
  • Verify the future infrastructure development with the master plan available with the town planning department