The Real Estate industry is a popular choice for Indians to invest their money in for decades now. Amongst a variety of types of lands, agricultural land is one of the most sought after. Low maintenance and a guaranteed increased rate of investment (ROI) make buying agricultural land an ideal choice for many.
It is mostly the urban investors who are showing a keen interest in buying agricultural land. A drastic change in consumer preferences and a shift to organic farming are two factors that contribute to this interest. Did you know that agricultural lands do not depreciate? Naturally, this is another reason for its popularity these days. Unlike homes and residencies, there are no extra maintenance costs incurred in taking care of the agricultural land either.
Buying agricultural land is neither as easy nor as quick as compared to other types of land. Now that you have decided to take the leap, we want to make sure you only reap benefits and no losses. Before making any decision, most of us make a mental note of the pros and cons that our decision may imply. Similar is the case with buying agricultural land. It is on you to make an informed decision, and it is on us to educate you for the same!
What are the pros of buying Agricultural Land?
Once you acquire the land, you have no restrictions on how you want to utilize it to earn profits. The land is your property and it is entirely your decision whether you want to use it for farming or construction. In fact, now that the new land norms are in place you can also get into a joint venture with an individual and double your profits for the future.
2. Resale Value is High
Since there is a limited supply of land now, the competition has drastically increased. This results in buyers willing to pay more for your land. Moreover, when you compare agricultural land with constructed land, the former has a higher rate of appreciation. This is because agricultural land does not go through any changes and tends to remain in its original state.
3. Low Maintenance
When you think of it - mowing, fencing, and hiring a guard to ensure safety are the only extra maintenance factors that come with buying agricultural land. Revamping or repairing is out of the picture and hence it saves a lot of money, time, and effort.
4. Less Cost of Investment
It is a fact that vacant patches of land are more affordable as compared to constructed sites. This advantage is the most beneficial for people who want to enter the real estate investment sector for the very first time. While you might struggle to buy a constructed property in metro cities, buying an agriculture plot is much easier and more affordable.
Digitization of land records and maps has made the sector more transparent and simple to navigate. Did you know that most of the land records are dated back to ancient times and have been documented in vernacular and archaic languages? While this was a concern till recently, it is not anymore. Digitization means easily translating all these land records into different languages. This will not only lead to more clarity in the sector but will also make investing in agricultural land a much attractive option.
What are the Cons of buying Agricultural Land?
1. Tax Invasion and Difficulties
When it comes to tax, you may face a lot of challenges. The tax rates of cities in India are almost always increasing, ultimately creating problems for you as an owner of the land. Now that RERA regulations are in place, your responsibility is not just limited to investing in the land. You will constantly be up to date and knowledgeable enough to read and comprehend all responsibilities that come with real estate buying and investing.
2. Illiquid Asset
This becomes a problem when you are planning to resell the land. No one today or in the future would want to buy the land by paying hiked prices. It can take you years and years to find an interested buyer now. On top of that, agricultural land is not an asset that can just be disposed of with no liability.
3. Lack of Land
According to statistics, there is an increase in demand for agricultural land but a significant decrease in supply. The availability of land is becoming increasingly less due to the increase in the population, and hence more housing projects in India. Especially in metro cities, you do not have much to choose from anymore and the only location where only limited land is available is in the outskirts.
4. Risk of Encroachment
There has been an increase in cases of illegal pieces of land being confiscated across the country. You can indeed file a report and hire a lawyer in case you are not in the wrong. However, the whole process of getting your land back and being in the clear will require you to spend plenty of time in courts, and the money needed to hire a lawyer is not ideal either.
5. Land Ceiling Act
The Land Ceiling Act came into force in 1976 and implies that agricultural landholders can only hold the land until a certain amount. The amount of land you can hold varies from state to state and so there is a high possibility that the state where you are planning to buy the land may allow less than what is suitable for your needs. In case you ever decide to buy more land than stated, it is immediately taken away by the Government of India.
Now that you know all the advantages and disadvantages of buying agricultural land in India, you are ready to start the process. However, the land buying process is not just tedious but also requires a lot of effort. To say the least, it takes days and months to get background checks done and all your legalities figured out. If you dive into the scene without having much knowledge of how you should approach the buying process, you are bound to commit mistakes. Since there is one standard process in India for buying agricultural land, we have come up with some common mistakes that you can learn about and surely avoid when it is your time!
What are the Common Mistakes Committed when Buying Agricultural Land?
1. Not knowing the Seller
Very often we tend to base our final decision on the history of the land. Did you know that the history of the land user will tell you more about the land than the land history ever will? It is your right and duty to know about the previous land user and you can demand the same.
2. Incomplete Documents
There is always confusion about documents that are needed to qualify for the purchase of this kind of land. While they may vary from state to state, here is a list of basic documents that will come in handy for sure -
- Family Tree History
- Title Documents
- Encumbrance Certificate
- Patta Book
- RTC (Records of Rights/Pahani)
- Survey Documents
- Mutation Extract
- Khata Certificate
- Conveyance Deeds
- Grant Certificate
3. Failure in Goal Setting due to a Short Term Outlook
Do not take goal-setting lightly in this scenario. You want to earn profits and make sure your investment was worth it for not just a few but a lot of coming years. If you do not have clear goals in mind, you are setting yourself up for disappointment and havoc. Agricultural land cannot be maintained well with uncertainty.
4. Not Conducting Physical Land Survey
Most people make the mistake of thinking that knowing the history of the land is enough. However, till the time you do not physically assess the land, you will not know if it is suitable for your needs and requirements.
5. Ignoring the Value of Undisputed Land Titles
Check the title of the land before the final purchase agreement is signed. If there are any disputes over the titles, it will create legal problems for you in the future. The title verification should be dated back to at least 40 years. These 40 years need to be counted from the date of purchase of land.
While there is a lot of information readily available related to this topic on the internet, we believe that
this is sufficient for you to make all the right decisions and be satisfied with them. It is indeed important to stay informed and aware, but sometimes too much information can create confusion.
Is it worth buying agricultural land in India? Yes, it is completely worth it. However, make sure you do not enter this new phase with unrealistic expectations. Buying agricultural land is indeed the most suitable and ideal investment for people with a surplus and high income. When it comes to individuals who work on a salary or are self-employed, the benefits are the same but it requires them to put in more effort, time, and at times the money.
Also Read: Property Registration Process in India
Do not rush into the decision. All that you need to know is already in this guide. In the end, you have to choose the one option that will satisfy you and reap long-term benefits for you. There is no such thing as taking too much time to decide. Understand the pros and cons, weigh them with a clear mind, and then make your final decision.