While plotted homes have the advantage of getting delivered faster, buyers need to do their due diligence with regard to the land title. They also need to be wary of issues relating to basic amenities.
With work-from-home widely accepted, homebuyers are faced with the dilemma of whether or not to invest in plotted homes or apartments. (Representative image)
Plotted developments or independent homes have not only grabbed the attention of buyers, but also of developers who find it the easiest way to capitalise on their idle assets. Investing in low-rise flats or independent homes solves two problems at one go – buyers stand a chance to get early delivery and developers need less money and time to complete these projects when compared to high-rise apartments. Also, the work-from-home culture has pushed buyers to look for houses that can cater to their requirements.
“We have seen a 30 per cent increase in queries for homes with infrastructure that caters to the need for work-from-home. Pre-COVID, very few were asking us about web connectivity, power back-up, etc. The demand for such infra has only grown, with many firms permanently moving to a work-from-home style of working,” said Santosh Agarwal, CFO and Executive Director, Alpha Corp.
Rakesh Reddy, Director, Aparna Constructions & Estates, said that homebuyers are buying plots to build independent homes or retain them as a long-term investment since it requires minimal maintenance.
“Working from home has led to the increase in demand for plotted developments in suburban areas where premium spacious projects are even more affordable. The increasing opportunities for remote work have led more people to consider purchasing homes beyond the metros, focusing on suburbs and smaller towns. This trend of reverse migration and decentralisation will improve economic activity in Tier 2 and 3 cities, which will lead to increased growth,” said Reddy.
A report by Housing.com earlier this year said that key localities in Gurugram, Hyderabad, Bengaluru and Chennai had recorded double-digit growth in prices of residential plots, especially post 2018. Where prices for land in these cities grew in the range of 13-21 per cent in the last three years, apartment prices have remained range-bound (2-6 per cent).
“Staying at home during the lockdown made our family realise the importance of an independent house. However, we also did not want to lose out on various amenities like the dedicated play area for kids that we would not have if we had bought an independent house in an open locality. Therefore, we went looking for a gated, plotted development with facilities for children,” said Manoj Kumar, who booked his affordable home in one of the projects in Gurugram’s Sohna Road last year.
Those buying a house in Haryana have the option of availing the state government’s Deen Dayal Jan Aawas Yojana scheme, and developers have been coming up with new projects under this category. While the affordable category deals in the high-rise (maximum size 650 square feet) segment, Deen Dayal Awas Yojana deals in low-rise or plotted category (maximum size 180 sq yards).
Plotted homes vs apartments: Pros and cons
Heena Sehrawat, a real-estate consultant and founder of Geetanjali Miracle Makers, said that consumers are prioritising safety and wellness, which are catalysing the gated communities and plotted development segments.
“COVID-19 has greatly altered the preferences of home buyers due to concerns of safety and security. Plotted development has gained prominence not just because of higher return on land appreciation but also due to the flexibility of vertical expansion. A plotted home can be expanded vertically by up to three-four floors, and thus, can provide for the needs of family members, including those working from home,” said Sehrawat
Also Read: Why the demand for residential plots is rising amidst the pandemic
Vicky Arora, who moved into his 2BHK home in Karnal last year shared that while he is contented with the decision, one major challenge he has faced is pest infestation. “The disadvantage of the ground floor is that you get ants and cockroaches in the kitchen or rooms quite often and need to get pest control done once or twice a year,” said Arora.
With work-from-home widely accepted, homebuyers are faced with the dilemma of whether or not to invest in plotted homes or apartments. Shrey Aeren, Managing Director & Country Head of Berkshire Hathaway Home Services Orenda, India, says that while both asset classes are highly lucrative, one must weigh the pros and cons before investing.
“Plotted homes offer greater flexibility as they can be designed and constructed the way you want, based on your needs and preferences. A high-rise apartment, on the other hand, is a predesigned structure with limited scope for modification. Plotted developments appeal to most people because they require minimal maintenance, offer privacy and better security. A plot of land cannot be rented out unless you build a house on it, but you can rent out an apartment right away. Interestingly, land is believed to result in higher capital gains over time than built structures when demand is high and supply is limited. As the apartment ages, its value depreciates. Moreover, buyers looking to buy plots receive possession much faster than those seeking to own an apartment which usually takes months or years, along with compromise on quality,” said Aeren.
While plotted homes may have their advantages, they come with a certain rider – dealing in land could sometimes turn out to be dubious, and those looking for their dream homes could fall victim to fraud or misrepresentation. There are often issues related to basic amenities as well.
Dhirendra Kumar (name changed), who bought a 1BHK home with land rights in Ghaziabad is unable to move to his new address despite getting possession, as there is no electricity connection. He said that the builder is yet to deposit the required power infrastructure development fee with the UP electricity department. The department is not issuing fresh power connections to newly-built houses.
Advocate Jaspreet Singh Rai cautions buyers against taking a final decision of buying a plotted house. “Buyers need to do their due diligence. Under this, all the records of the property over the last 70 years should be looked into. If you are buying it from a builder, then one should check that the project should not have a loan against it. Also, the land should not be mortgaged anywhere. One should also keep an eye out for the availability of necessary basic amenities and infrastructure, including roads, sewerages, electricity connections, schools, hospitals and transport mediums before deciding on buying such a property,” said Rai.
Rai said that one should also be careful while buying a land parcel in remote areas. “In the recent past, there were cases where people were sold farmlands, but disputes were later raised claiming that the lands were part of a river belt. Sometimes, the land may be part of a forest reserve. So, one has to be very cautious, and thus, doing due diligence becomes necessary,” said Rai.
Also Read: Ready-to-move home or under-construction housing project: Which is better?
One can get the due diligence of the concerned property done, including the title search and cross-verification of the property chain, with the help of a lawyer, who could get it done from the Tehsildar / Patwari of the concerned area.
Five key things to check before investing in plotted homes
* Get the chain of the property papers checked<br/
* Ensure there is no legal case/bank dues pending against the land<br/
* Check for electricity/water connections, sewerage, and other basic amenities
* Check for availability of schools/hospitals nearby
* Check for loans from banks/NBFCs against the property
Home loan: Do banks finance such homes?
As far as financing for these houses is concerned, if the concerned property comes with an approved map, then nationalised banks like HDFC, ICICI Bank, PNB or SBI do grant loans to such units. However, if the properties are without maps, then non-banking finance companies (NBFCs) including GIC, ICICI Home Finance, IndiaBulls, Fullerton India and Hero Housing Finance provide loans against these properties, but at a slightly higher rate of interest. Many Direct Service Agencies working as intermediaries between the banks and the borrowers told Moneycontrol that interest rates on loans range between 7.5 per cent and 11 per cent, and sometimes even higher, depending on the credit score of the borrower and property location.
Developers upbeat about the sector
In April this year, Haryana government increased the ground coverage for plots of sizes up to 250 sq m to 75 per cent from 66 per cent. It has also permitted maximum floor area ratio (FAR) of 165 per cent for plots up to 100 sq m and 145 per cent for plots between 100-250 sq m, as per the amended Haryana Building Code, 2017. This has made owning a plot more lucrative compared to an apartment.
While Gurugram-based MRG World is planning to come out with seven-eight projects under the affordable and Deen Dayal category along New Gurugram and Dwarka Expressway, JMS Group is planning to launch new plotted communities in Sohna in the Gurugram district.
Manik Malik, Chief Financial Officer of the BPTP Group, shared that the company is looking to invest Rs 350-500 crore in the affordable plotted segment over the next two-three years.
“We have observed a steady incline in demand for plotted development, especially over the last few years. In FY22-23, we will be launching five new projects spread across about four million square feet in Bangalore, Chennai and Coimbatore,” said Abhishek Kapoor, Executive Director & Chief Executive Officer, Puravankara Limited.
Hyderabad-based Aparna Constructions is also planning to come out with its next plotted development project in the city this year and plans to launch 200 acres every year.
