What do you look for when you buy plots for
investment?
Ganesh , an NRI, has decided to buy a plot in the
outskirts of Chennai; his idea is to use it for constructing a house a few
years later once he returns to India. Alternatively, he reckons, it will
appreciate well and he would use the sale proceeds to buy an apartment within
the city.
He received several offers from various developers,
who have established housing layouts in the north, south and western suburbs of
the city. Finally he shortlists a property near Sriperumbudur in the western
suburbs which seems to be an ideal fit for his needs. It is a good corner plot
and there are more than 100 plots in the layout and once people start
constructing houses, there will be a thriving neighborhood, he is told. He
invests the money and gets two adjoining plots registered in his name after the
developer sweetens the deal with nil registration charges who also agrees to
safeguard his property for three years for a nominal fee.
A few years later he is back in India for good. He
decides to construct a house in the layout and sets out on the process of
getting bank finance for the same.
When the bank inspects and scrutinizes the property,
he is told the layout remains unapproved by the Govt.; he goes through his
papers and finds that the property has indeed been approved by the panchayat
president who has signed on the layout drawings. When he presents it to the
bank, he is told the panchayat president does not have any authority to issue
such approvals.
To top it all, there is information that there is a
Govt. plan to acquire land in the neighborhood for formation of a mega
industrial estate which would cover this layout also. It is said the compensation
payable for land owners in such unapproved layouts will be negligible and it
won’t even cover the cost
of his purchase, leave alone any appreciation.
Who is at fault here ? When Ganesh approaches a
lawyer, he hears out his story and tells him that he should have been more
careful before investing. There is nothing much he can do now, he is told!!; he
cannot proceed against the seller as he has sold it only as agricultural land
and thus there are no illegalities in the sale.
He tries selling the plots but soon realizes there
are no buyers and the fate of several such investors who have purchased land in
this layout is similar to his.
Ganesh reckons, he would lose about Rs.20 lacs
ultimately should the Govt. take over the land give compensation as per the
prevailing Govt. guideline rates!!
His investment would have been safer had he carried
out a due-diligence through a competent engineer with knowledge on the
approvals and property values.
Do write to us in case you have some interesting
information or feedback!
BVe Consulting Engineers
Engineering Project Consultancy & Property
Advisory Services,
Residential-Commercial-Industrial-Infrastructure
Designs
Due-diligence studies -Asset valuation services
Chennai -600 083
bv.consultingengrs@gmail.com
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