One of the many factors that affect the property price is change in land use or its status.
Types of conversions
Typically, there are two types of land use conversions. With cities expanding their limits, agricultural land in peripheral areas often get converted into a residential property. Also, a leasehold property is converted to a freehold property. Typically, properties are sold and purchased on freehold basis.
Why do prices go up?
The first and foremost reason for the hike is the mandatory conversion fee that is levied by the city authority at the time of conversion. The amount of fee depends on the size and value of the property. The fee is added to the property’s final market price.
Since residential land is more in demand and developers bring up apartment complexes on such plots, the rates notch up. From leasehold to freehold means the title becomes clearer and has a permanency, which pushes up prices.
What you should check?
If you are getting a property in the suburbs at lower rates, check it’s status. Always check with your broker why the property is available at a low rate. Ensure that the documents are genuine and the title is clear.
If you are getting a leasehold property, make sure you get it converted into freehold. If it is an apartment complex, you will require permission from the residents’ welfare association (RWA) for the same. But before you go for it, make sure that the association has the completion certificate from the authority.