Roadblocks on the way to a successful land transaction | Land Dealing related issues commonly faced by landowners and buyers in India
Land can be unanimously agreed upon as the foundation of any real estate structure. However, the nature of this asset is characterized by an inherent dichotomy; It is the most important but least organized of them all. Land deals form a crucial part of any real estate venture and hence are of utmost importance to real estate developers, land agents, and landowners.
Stakeholders agree upon many shared problems faced during different phases of land transactions. These issues mainly revolve around four common themes:
- Technical issues
- Regulatory issues
- Legal issues
- Determining the fair market price
Table of Contents
Technical Issues
1. Land boundary demarcation
Paper-based land maps clearly miss out on the accuracy of defining proper land boundaries as demonstrated by digitized land maps. Most municipalities of India are struggling with this issue, but BBMP has carved out a niche in this matter. GIS Enabled Property Tax Information System (GEPTIS) by BBMP is an excellent example of using GIS to clearly demarcate the land boundary within BBMP jurisdiction. Nevertheless, areas that fall outside of BBMP do not have the same privileges. Further, even within the BBMP GIS Database System absence of Survey Number of the land sets out the new search for land revenue map to fetch the further details of the property
2. Land location in the development plan
Development plans play an extremely important role to understand the development potential of any land. The lack of superimposition of the development plan on the already existing land map makes it difficult for the stakeholders to get a holistic overview of the land.
3. Insights about land topography
In the case of a large real estate project understanding of land contours give a clear picture to the developer to determine the initial infrastructure cost for the land parcel. However, this knowledge is mostly absent during the land transaction procedure unless and until an engineering survey or valuation exercise is done for the land parcel.
4. Availability of quality pictures of land before the physical visit
Site visits to understand the nature of the land is considered mandatory for any land transaction. Yet multiple physical visits during the initial browsing of lands can be proven extremely tiresome and a waste of time for many land buyers. Further, the Covid-19 pandemic has shown travel restrictions can hamper real estate business proceedings as deals take more time to materialize than the normal time.
The mission of Earthfields is to simplify the land subject and its nitty-gritty to a layman as most of the time problems happen due to unawareness and lack of networking. Currently, we have developed the features where landowners and agents can tag location (which can also be viewed in the satellite layer), upload images, and refer to resources (master plans and FAR charts across city/rural). In our future developments, we would be adding more advanced features like marking land boundaries, social infra, technical and market intelligence data, etc. which would be beneficial for all types of our users.
Regulatory Issues
5. Land zoning regulation
Land zoning regulations are crucial to understanding the nature of development possible on a piece of land. The information about the same is not readily available and requires careful searching of the development plan after procuring the survey number of the land
6. Development Potential
Building by-laws dictate the development potential of the land. Though straightforward for multiple real estate professionals like architects, civil engineers, feasibility consultants, etc., these laws are not easy to be understood for a land buyer. Regulations regarding basic development parameters like F.S.I, building height, ground coverage, premium charges, etc. need careful consideration on the part of a buyer.
7. Land title & property detail
Land title records and property detail are one of the most complex issues faced during a land transaction across the country. The procedure involves multiple agencies and hence is an extremely time-consuming process. Bhoomi website of Karnataka govt. has been proved extremely helpful and efficient in this matter; however, the same requires the survey number of the land parcel which needs to be obtained from the land revenue map.
Under our resources, all our customers can refer to the zoning regulations of different zones of city/rural to be better equipped with information related to development bylaws, potential permissions, etc. In the future, Landowners and agents would be able to upload the docs related to land title to an extent that to be accessed by premium real estate developers at the preliminary stage.
Legal Issues
8. Claim on land or disputed land
Many times, a land deal falls apart at the final stage when the buyer goes to the registry office to finalize the deal. At that point in time, the person gets informed about any claim or dispute on the land which earlier he was not aware of. Hence a central database that connects the land survey number with the impending court cases on the piece of land is needed of the hour.
9. Land conversion (A to NA or Class II to Class I)
Land conversion depends on the type of land. If a Land is of agricultural (A) nature it needs to be converted to NA (Non-Agricultural) land before any development. Similarly, Class II lands (Lands that are given by govt. to landowners for a particular usage) need to be converted to Class I land (free for usage as per zoning regulation). This conversion information is often incomprehensible to the general buyer and needs a whole set of legal due diligence processes just to understand the same.
Our legal health index is the feature that aims to match the risk appetite at the start level between demand and supply customers. Where our landowners and agents can give perspective % to three windows of legal docs and cumulative % is accessed by real estate developers (it is at the test mode). We have plans to develop a comprehensive marketplace for land liaison and legal in line to standardize their services and prices.
Fair Market Price Issue
10. Unavailability of area wise land transaction data
In the majority of Indian states land transaction data is not readily available for an average buyer. It requires a basic understanding of using the website of the land revenue department along with several property details such as plot number, village name, etc. Further, area-wise land transaction data which can give a fair perspective to the buyer about the actual market price of lands in an area is glaringly absent in the land market across India.
11. Locally controlled land market
The land market is highly localized in India and local players have absolute control of the same which results in both misinformation and the absence of information about the fair market price of land. This scenario hugely affects the convenience and transparency of land deals in this country.
To start with we are providing an ideal land market price range (ILMPR) to our landowners and agents only to have a basic understanding of market price and deal fairly with their land supply. Furthermore, with the help of technology and government support, we target to make it faster, more accurate, and easily accessible.