With real estate prices hovering around
historical highs in most urban areas, traditional property investors are
looking at other viable options. One idea floating around these days is
buying agricultural land, which experts say, may not weigh too heavy on
your pocket. It could also be a source of tax-free income, they say.
However, buying agricultural land is not an easy process like finalising
an apartment. There are a host of issues, most importantly legal ones,
to tackle before owning a piece of verdant land. "Buying agricultural
land is the most sensible thing to do, though there are many issues
involved," says Anand Narayan, director -residential, Knight Frank.
Hello, Farmer
To begin with, almost all state laws allow only farmers to buy
agricultural land. "To protect agriculturists, legislations in each
state in India have set out that agricultural land can be used for such
purpose only. For acquiring such land, a common attempt is to bracket
yourself as an 'agriculturist' even if you don't fall in that category,"
says Ashish Bhakta, partner at Advaya Legal says. Now, there are two
ways to do it: one, you have to show that your father or grandfather was
a farmer. Two, you have to show that you already own some agricultural
land. It is almost impossible to change your father's and grandfather's
occupation, if they are not farmers. That is why most people try the
second route. "Many people have bought land that is totally uncultivable
to get the status of a farmer. Thereafter, they buy good agricultural
land for cultivation. This is very common," says a lawyer who doesn't
want to be named.
Another
method is to buy land in the name of an actual farmer and then share the
profits. "This procedure is usually contractual, it may not necessarily
be illegal, but it is also difficult to justify if it is legal," says
Uday Dharamdhikari, CEO, Usha Breco Realty. Bhakta suggests a clean and
legal way to do it, which may save you many headaches in future. "If you
don't declare yourself as a farmer, and you still want to acquire such
land, then you need to apply for conversion of the land. That is, change
the use of land for non-agricultural purposes," he says. Land can be
used for purposes other than cultivation only after prior permission
(usually from the collector) for such conversion is obtained, he says.
But this is an extremely tedious process and may take a few years to
complete.
Location And Area
Needless to say, agricultural land (that too, vast tracts of land) is
unlikely to be a small drive away from your home. As a rule, don't
consider the distance from your home as the primary concern while
scouting for agricultural land. "Distance from farm land is of no major
consideration. Access from the main road, visibility from various roads,
availability of or accessibility to electricity and water for the site
should be kept in mind," says Manish Aggarwal, executive director,
investment services, Cushman & Wakefield, India.
The size of the plot you buy is also
important. Experts believe you should go for a large land parcel so that
you can carry on agricultural activities in full swing. Narayan of
Knight Frank says, "You need a large parcel of land of about 50-60
acres."
Legal Issues
Once you have zeroed in on the land, you have to turn your attention to
the most important hurdle you may have to surmount: the legal issues.
Tell yourself again and again that this is the most crucial step
involved in buying a piece of agricultural land. Narayan suggests an
easy way out: "Ask a sound law firm to do due diligence. Ensure that the
title of the land is clear. If you do not have the wherewithal to check
the legal issues, then engage a proper realtor or local broker to check
them." "The most common mistake is that people don't see if the land
has been properly acquired or not, whether the farmers have been
rehabilitated or not. There can be numerous problems. You buy land and
then realise there are many issues," says Dharamdhikari. Aggarwal gives
some useful tips on how to avoid such mistakes: "Study the state bylaws
before buying agricultural land. Land should not have any encumbrance or
litigation on it. Also, have a thorough title due-diligence done on the
land with at least 30 years historical title check done. There should
be no minor, etc, as owner of the land. Make sure that there are no
village roads/lanes, well, etc, on the land and there are no LT/HT
electrical wires running thought the land." Get your land demarcated
clearly, and ensure that the seller gets the boundary wall or fencing
done before the title is transferred, he says.
Source Courtesy: The Economic Times
Source web-link: http://articles.economictimes.indiatimes.com/2011-09-30/news/30228914_1_agricultural-land-farm-land-land-for-non-agricultural-purposes
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