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11 things you should know about before investing in agricultural property

11 things you should know about before investing in agricultural property

With the improved purchase power and increase in the lookout for alternative sources of income, a large majority of Indians from the entrepreneurial and working classes are looking to make a shift towards agriculture. But, before you make the leap, here are a few essential tips to get you started.

Measuring the land:
A few realtors and brokers tend to cut corners sometimes while dealing with property sales. A best practice by the industry experts is to measure the property by your own agents or to outsource it to a trusted 3rd party agency. This way, you’ll be informed of the dimensions of the real estate property you’re about to invest on and if it matches with its official documents.

Purchase or inherit:
India is an agricultural country, that said, not everyone has the right to purchase agricultural land in India. Land and its resources are under the jurisdiction of the state government, hence, the rules of purchasing agricultural property vary from state to state. It’s always advisable to consult a trusted real estate agency or set an appointment with your local Tahsildar’s office to know more about it before making a hasty investment.

Annual Income:
The government of Karnataka in its last amendments on agricultural lands/wetlands has increased the bar. Previously, anyone with an annual income of more than INR 2 Lakh was eligible to purchase an agricultural property. Now, the eligibility criteria have been pushed significantly to INR 25 Lakh.

Land type:
To be successful in an agricultural venture, you should be well aware of the types of crops, the inflow of water, the type of soil, and market conditions among others. In this context, however, knowing the type of crop that can grow in the land you’re about to invest in plays a significant role. To know more about the soil and its physical attributes, getting a sample of soil from the property tested is the best bet.

Purchase limit:
The government of India has set regulations in place that allows any interested parties to only buy a particular set of land, regardless of the wealth they possess. In a few states, this limit is set to 17 acres while for some, it’s as high as 52 acres.

Depending on the state you’re looking to purchase it, the rules will vary.

Free advice:
Contact a trusted realtor

NRI’s cannot invest:
Yes, you’ve heard that right. If you are a Non-resident Indian, you are not allowed to invest in agricultural properties in India. That said, there is no limitation on letting you purchase residential properties.

On the flip side, an NRI is allowed to inherit agricultural property. Isn’t that a catch, for according to the Indian constitution, only someone with a farmer’s lineage is allowed to purchase agricultural property in most cases.

Construction on agricultural land:
Agricultural property can only be used for irrigation, animal husbandry, and poultry farming. Construction of any properties on an agricultural property will be considered illegal unless it is imperative for its functioning. A 1200 sqft house, a barn, a shelter for animals in the farm fall in the permissible category.

Get the paperwork right:
Ensure that all the pre-purchase research doesn’t go to waste. While purchasing that next agricultural property, ensure that you’ve checked all the things that need to be done legally and scientifically. Hiring a trusted real estate agency with great reviews will help you get the job right, for, they with their reach and resources will be able to gather deeper and farther insights on that piece of real estate.

Encumbrance certificate:
Don’ forget the encumbrance certificate, it can be dated back to 30 years and is an official statement declaring the property free of any previous or ongoing legal disputes. You can always get this at the local sub-registrars office.

Annual income from centre and state:
The central and the state government, individually have come up with accords to promote more agriculture in the nation. Apart from a variety of grants, people investing in agriculture are embossed with a plethora of subsidies, buyback programs, and discounts among others.

This is the icing on the cake.

The market cap:
Agricultural lands too witness exponential growth in its value like commercial and residential properties. Over the last decade, the scenario of a huge was never predicted by economists and there were no unpredicted occurrences either. This stands as a testament to the fact that investing in agricultural lands can also be to make good investments for the future if not for immediate farming.

There are a lot of pros and cons of investing in agricultural lands and consulting an expert like Pahani before making an informed buying decision is advisable, for, their expertise and on-field experience has never failed to amaze. That said if there are any other points that you can think of, feel free to mention them in the comments section below. We’d be happy to engage you.

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