Must Knows

Everything you need to know before buying non-agricultural land in India

[] We list the important documents and the processes that you will need to follow, to buy a non-agricultural plot in India

Most buyers and investors prefer plots as an investment option, as it gives prospective end-users the flexibility to construct a house of their choice. Moreover, for those looking to invest for gains, the capital appreciation on land investment can be sizable, in the mid-to-long run. However, there are a lot of things you need to know, before investing in land and about the process of buying it too.

You are reading: Everything you need to know before buying non-agricultural land in India

Types of land

  • Agricultural land
  • Non-agricultural (Change in land use must be done, if you are looking to use it for residential, commercial, industrial or institutional purposes.)

Benefits of investing in plots

Scope for higher returns of up to 15% to 30% in the long-run.
Property tax is lower, because there is no built-up space.
No requirement of maintenance if there is no built-space.
No problems concerning tenants.

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Demerits of investing in land

Problems related to ownership and encumbrances – i.e., title risk.
Risk related to change in land use.
Physical dimensions of the land where the exact dimensions are not known.
Zoning risk, if the land is forest land or under the Coastal Regulation Act.
Capital appreciation may be compromised, if the location does not fare well.
Physical encroachment of your land.
No rental income.
Liquidity issues in the short-term.

Types of sellers of land

There are three types of sellers:

  • Government or development authority: The land is acquired from farmers or other owners and the government takes the onus of land conversion, etc. Such properties involve minimum purchasing risk.
  • Private developer: There is moderate to high purchasing risk.
  • Private individual: He or she may sell a converted or unconverted land. There is moderate to high purchasing risk.

Process for buying a non-agricultural plot in India

Buying non agricultural land

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Do the due diligence

Once you are clear about your budget, decide whether you wish to invest in residential or commercial plots. Also decide the time horizon till which you want to stay invested. While you may be able to make profits from a short term investment, a long-term investment is suitable if you are looking for sizable returns.

At this stage, do not forget to read up research reports. Compare rates of land in the locality you have chosen, connectivity in the area, upcoming growth corridors in the next few years, the Vastu of the property, distance from the main road, etc.

Background checks

Do not fail to do a physical survey of the plot and assess the area of the plot and encroachments. Tally it with the information that the seller has provided. Check for a clear title, especially if you are planning to buy the plot from a private developer or individual. Check the online land records, for example, the Patta chitta for land in Tamil Nadu.

Check the land-use conversion status. You can exercise your Right to Information (RTI) to find out information about the status, if the developer has not shared the details with you. Check for zoning and land-use restrictions, as well as the sale/transfer/relinquishment deed. Collect the chain of titles.

Negotiation and agreement for sale

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Compare the rate of land adjacent to the plot you are interested in to arrive at the right price. You can also do so by visiting sites like and checking property values in the area you are invested in.

You will be required to pay an advance which is generally 10% of the agreed value.

The next step is to sign the agreement. The agreement for sale has detailed information on the plot, name of the buyer and seller, agreed value of sale, terms of payment and its schedule, penalty on defaults, etc. Usually, when the buyer defaults, the advance payment is forfeited and in case the seller defaults, he or she will have to pay 20% of the agreed value to the buyer – all these clauses should be mentioned in the sale agreement.

Once you complete the payment for the plot within two to three months, you will need to register the sale deed. To register the sale deed, you will need to go to the sub-registrar’s office and pay the stamp duty and registration charges. This varies between 4% and 10% of the property value.

In some cases, you may also have to pay mutation charges. If the property is outside the city limits, get the name changed in the land records. In case the land is within municipal limits, that is, urban land, get the name changed in the municipal corporation’s records.

Documents to check for purchase of non-agricultural plot

  • Title deed.
  • Non-agricultural (NA) order.
  • Encumbrance certificate.
  • Release certificate.
  • Property tax receipts.
  • FSI available on the plot.
  • Conversion and land-use approvals.
  • Construction approvals.


What to do if the plot seller is a company?

You must verify the company’s right to sell the plot.

What is 7/12 deed?

It is the title deed used to establish the undisputed transfer and legal ownership of the land by the seller.

Where can I get the previous property tax receipts of the plot?

You can get it from the seller directly.

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Category: Must Knows

Debora Berti

Università degli Studi di Firenze, IT

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