Managed Farmland vs Plot vs Villa Near Bangalore

Managed Farmland vs Plot vs Villa Near Bangalore

Drive out of Bengaluru on any highway and you will see three kinds of hoardings: managed farmland, residential plots and gated villas. They can look similar in the brochure: greenery, a clubhouse, "an hour from the city". Legally and practically, they are very different things. Here is farmland vs plot vs villa: what you are actually buying with each.

Key Takeaways

• Managed farmland is agricultural land. A residential plot is land approved for building homes. A villa is a house you can live in.

• You can generally build a home on an approved residential plot. Building on agricultural land depends on state rules and approvals.

• Home and plot loans are common for villas and approved plots. Agricultural land loans are mostly meant for farmers.

• NRIs and OCIs can buy plots and villas, but not agricultural land.

• Choose by what you want to do with it: live, build, or keep open land.

What is each one?

Managed farmland is agricultural land, usually sold in plots of a quarter acre to one acre, which a company farms and maintains for a yearly fee. It stays agricultural land in the revenue records. Our guide on what managed farmland is explains how it works.

A residential plot is land that has been approved for housing as part of a layout, with roads and services planned. You buy the plot and build your own house later, following local building rules.

A villa is a ready-built (or under-construction) house, usually in a gated community, with the land under it.

Farmland vs plot vs villa at a glance

Can you build a house on each?

On an approved residential plot, you can generally build a house once your building plan is approved by the local authority.

On agricultural land, building rules depend on the state and the local authority. In many cases, building a home requires the land to be converted to non-agricultural use or specific approvals, which take time and are not guaranteed. Never assume you can build a farmhouse because a brochure shows one. Ask for the rules in writing and check them with a lawyer.

In Tamil Nadu, the Combined Development and Building Rules, 2019 say no one may construct a building without written permission from the competent authority, and the building permit is issued by the local body, which includes a village panchayat (Rules 4 and 5). The same rules define a farm house as a building for incidental use on an agricultural or horticultural farm (Rule 2(40)) (Tamil Nadu Combined Development and Building Rules, 2019).

At Tamara Valley: you can build a farmhouse on your plot, subject to the applicable approvals, and our team can guide you through them.

What about approvals and RERA?

Residential plotted and villa projects above certain sizes generally have to be registered with the state's Real Estate Regulatory Authority (RERA), and layouts need approval from the local planning authority. Exactly which projects must register can be interpreted differently from state to state.

Managed farmland projects sell agricultural land, and whether RERA applies to them is a legal question. Ask the developer what registrations and approvals the project has, and ask your lawyer what they mean.

In Tamil Nadu, the Directorate of Town and Country Planning (DTCP) publishes the rules that apply here, including separate rules for changing land use from agriculture to non-agriculture in non-planned areas (2017), for regularising unapproved plots and layouts (2017), and the RERA rules (2017) (DTCP Tamil Nadu, Rules). Which of these apply depends on how the land is sold and used. Ask any project, including us, which approvals it holds, and have your lawyer check the documents.

Can you get a loan?

Villas are usually bought with home loans, and many lenders offer loans for approved residential plots.

Loans to buy agricultural land are different. Bank of Baroda's scheme for purchase of agriculture land, for example, lists small and marginal farmers, share croppers and tenant farmers, and women with ownership rights of land as eligible (Bank of Baroda, Scheme for Purchase of Agriculture Land). Most city buyers of farmland pay from savings or other finance. Check with your bank before you plan.

Who can buy?

Resident Indians can generally buy all three, subject to state rules on agricultural land. For NRIs and OCIs, the Reserve Bank of India allows the purchase of "any immovable property (other than agricultural land/ plantation property/ farm house)" (RBI Master Direction). So NRIs can buy plots and villas, but not farmland.

How is the profit taxed?

Profit on selling a residential plot or villa is taxed as a capital gain. For farmland, profit is not taxed as a capital gain if the land counts as rural, meaning beyond 2, 6 or 8 km (aerial distance) of the nearest municipality, depending on its population (Income Tax Department, Benefits available to Farmers). Our farmland investment guide explains this in detail.

Which fits you?

If you are mainly thinking about money, compare the options with safer choices too. See managed farmland vs fixed deposit and farmland vs real estate.

The short version

A villa is for living, a plot is for building later, and managed farmland is for keeping open land that someone else looks after. Decide what you want to do with it first, then check the approvals and documents.

Want to see managed farmland in person? Book a free site visit to Tamara Valley.

This article is general information, not legal, tax or investment advice.