Buying a piece of land and building their first home is the biggest dream harboured by many Indians. So, when Prabhat told his mother that he was buying a plot of land, she was proud of him, something she did not feel when he had invested in a flat.

But buying a plot of land is a tricky affair, what with all the blatant corruption surrounding such deals including creating fake documents, demand for payment in cash and also issues of disputed land sales. If you are ready to buy land to build your first home, it is advisable to be very cautious and thorough.

Also, the steps and procedures are quite different from purchasing a flat and hence require a careful analysis before setting out on the path.

Plots are scarce in big cities, but you can still get a good piece of land in smaller towns or even the peripheries of the cities. If you are planning a loan, then a land loan offered by banks is an option. Some bank loans entail a clause that requires the buyer to start construction within six months of land purchase. So, it would be advisable to plan your course beforehand. You may procure a personal loan, but that might be a little more expensive.

Watch Out

It is advisable for land buyers to check for the following factors thoroughly and get them examined by a legal expert before making the purchase:

The Deed Title: Check if the deed title is in the name of the seller and he has the full right to sell it. Insist upon seeing the original and not just a photocopy.

Encumbrance Certificate: This document can be procured from the sub-registrar’s office where the deed is registered. It declares that the land is free of legal hassles and unpaid dues.

Property Tax Receipts and Bills: Ask for the originals again and ensure all the payments have been made; non-payment could lead to legal complications and more expenditure in the future.

Apart from these, you must also make sure loans on the land have been repaid, and a release certificate has been issued by the bank. Get the property valued for the exact land measure.

Documentation

To purchase land, the following documents are required from the seller’s end: Original Land Deed of the current owner, known as the 7/12 document and also the previous owners with the proper names on the title. Secondly, an Encumbrance Certificate from the Sub-registrar’s office for the at least the last 30 years. Thirdly, Release Certificate from the bank, stating that the loan on the land has been completely repaid. And finally, the original property tax receipt and other bills relating to the plot.

For the buyer, the requisite documents include the title deed after it has been transferred to the buyer’s name, written by a Government licensed Document writer, the receipt from payment of stamp duty charges.

Now, you can get your land registered in the sub-registrar’s office or have your name added in the village office records.

The State Municipality Act requires that a prior sanction be obtained by a person who wants to undertake construction activity for building a new house or modifying an existing one. The process has been made automated in most States and is not time consuming. Your contractor, engineer or architect needs to take care of this. The architect needs to submit the Building Plan along with a prescribed fee for getting the building plan approval done.

The construction costs involved in the project includes the fee to the architect/contractor, building material costs, and labour costs. Interior fittings such as light fixtures, bathroom fittings and tiles will add to the expenditure list.

Smart Ideas For Saving

The cost escalators will be the choices you make such as the construction plan itself, the material be required for building your house will vary according to your plan, the material quality and so on. Sometimes, it is better to pay extra at the time of building and save maintenance and repair expenses later.

Outstripping your budget plan is inevitable while constructing your own home. But you can cut corners though:

Keep your construction plan simple and don’t make too many changes once the construction work commences. Get materials and fittings with long-term savings in sight. Pick the materials when prices are low even if you require them at a later stage. Finally, get what you need and not what you want. Cost cutting is very important from your end as there will be many unforeseeable expenses that will crop up.

Sticking to the original construction plan as much as possible is the best way to finish the project early or on time.

(The author is CEO, BankBazaar.com)

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