How to increase the value of your property by 30%?

The Indian real estate sector has witnessed exponential growth over the past few years. The market is characterized by massive surge in property prices, rentals, and quick absorption of projects. The return-to-office mandate has prompted a significant migration of people back to their work cities, consequently driving up the demand for residential properties. The demand-supply mismatch, as a result of the pandemic, coupled with the need to buy a house, has increased demand for residential houses.

The demand for RTMI (ready to move in properties) has increased from 78% in 2022 to 85% in 2023. However, the shortage of available RTMI properties has failed to keep up with the heightened demand, thereby pushing up the prices of resale properties. It is intriguing to witness sellers getting the actual asking price for their properties, after a decade. Each state operates under distinct property norms undergoing frequent changes—ranging from security deposits to rent collection—often shifting every 200-300 kms. The real estate rules and regulations vary across cities. There are also several nuances associated with resale properties and those vary across cities in India. For instance, the concept of Khata emerges as a pivotal factor for sellers in Bangalore in securing favourable returns from property transactions. A Khata is a document maintained by the BBMP (Bruhat Bengaluru Mahanagara Palike) that contains specific details about a plot of land, such as, the owner’s name, size, area, type, location of property and tax details. It plays an important role while trying to obtain a loan from a bank. There are two types of Khata- A Khata and B Khata.

A Khata is exclusively granted to properties within the (BBMP) limits with no tax dues, ensuring they possess all necessary legal clearances and have been constructed in adherence to government and local body guidelines. On the other hand, the B Khata designation is assigned to properties that either lack legality or violate established guidelines set forth by governmental or local bodies. Unlike A Khata properties, B Khata properties lack legal standing, posing significant limitations for property owners. One of the crucial downfalls of B Khata properties is that these cannot be legally sold or have ownership transferred. Financial challenges also arise, as banks and authorized financial institutions are hesitant to provide loans for B Khata certified properties due to their uncertain legal status. This restriction can significantly impact property transactions and potential buyers seeking financial assistance. Furthermore, B Khata properties face restrictions on any form of renovation or extension. The absence of legal validation hinders property owners from making structural modifications or improvements to their B Khata properties. This limitation can affect the property's overall value and restrict the owner's ability to enhance or customize their living space. Not only that, it is extremely challenging to sell a B Khata property and it won’t fetch the right price despite the boom that the resale residential market is currently experiencing.

To boost revenue from property tax, BBMP had announced a provision under which they are looking to convert B-Khata to A-Khata properties, provided they are eligible and fulfil all the requirements. A-Khata properties have always been easier to sell & get a loan against. A Khata property is likely to sell much faster and home buyers prefer to purchase properties with khata A certificates in Bangalore. As per a recent survey by NoBroker of 1,150 property buyers, 75% of them would prefer an A-Khata property. Such properties attract a premium in major locations in Bangalore, such as Jayanagar, Malleshwaram, Electronic City and Whitefield. Hence, conversion of a B-Khata property to A-Khata would enhance the appeal of the property and increase its value. The value of your property can increase by as much as 30% post conversion to A Khata.

The conversion of B Khata to A Khata properties involves a series of essential steps and adherence to specific criteria.

• One crucial requirement is the clearing of all tax payments by the property owner, ensuring that all property taxes, including any outstanding amounts, are fully settled with the local authorities.

• Additionally, the property should have undergone a process known as DC conversion, signifying a change in the land's usage from agricultural to non-agricultural or residential purposes. This conversion is a fundamental prerequisite for upgrading the property's status to A Khata.

• Another key criterion is the payment of applicable betterment charges. Property owners are obligated to pay the prescribed betterment charges, which are fees imposed by local authorities for upgrading the property's classification. These charges contribute to the overall development and improvement of the surrounding infrastructure. Fulfilling these criteria not only facilitates the conversion process but also ensures that the property attains legal standing, making it eligible for various benefits associated with A Khata properties.

Indeed, property buyers these days are increasingly well-informed, possessing a nuanced understanding of the complexities associated with the purchase and sale of resale properties. This awareness can be attributed to a variety of factors, including easy access to information through digital real estate platforms and educational resources. Today's buyers are more likely to conduct thorough research on property values, legal requirements, and market trends before making informed decisions. New age proptech platforms have streamlined the process of conversion of B Khata to A Khata properties, raising the market value of the same.

Buying and selling properties involves a lifetime of savings. Any decision pertaining to that must be thought through and adhere to all legal procedures. Real estate in India is the most bankable investment option and just a minor discrepancy can drop the value of your property significantly. Therefore, one must carefully consider all these legal parameters and ensure that the property has all the necessary Khata formalities in place.

Views are personal. The author is CEO & Co-founder, NoBroker.com