Buying a second home in Uttarakhand: Pros and cons
In the wake of the COVID-19 outbreak, there has been an uptick in the purchase of second homes in the real estate sector. While Goa has always been a highly sought-after destination for this purpose, Uttarakhand is also emerging as a preferred choice for those seeking a second home. The picturesque locations, thriving hospitality industry, and the concept of home stays and wellness have fueled the interest of aspirational buyers in hill stations and vacation home destinations. Uttarakhand, including areas in Dehradun, Haridwar, Rishikesh, and Mussoorie, has become a favorite investment destination among buyers and investors from all over the country. Additionally, cities like Nainital, Rudrapur, and Chamoli are also attracting the attention of many home buyers in search of a second home.
The Uttarakhand government has recently implemented a 15% increase in the circle rates of land across the state. This change affects the circle rates of agricultural, non-agricultural, and commercial land.
When it comes to purchasing a property in Uttarakhand, it is crucial to have a comprehensive understanding of the market. Here, we take a closer look at some of the factors that one should consider before making a purchase decision.
Table Of Contents
Advantages of buying a second home
1. Favorable State Regulations for Property Buying:
Uttarakhand welcomes investments from individuals residing outside the state. The government has clearly defined purchasing restrictions for non-residents. Within the municipal limits of cities, there are no size restrictions for property or plots. However, for agricultural land located outside city areas, the rule allows the purchase of only 250 sq meters. This means that members of the same family can buy separate 250 sq meter land parcels, either adjacent or distant. If the agricultural land is within city limits, compliance with the state’s Land Ceiling Act is necessary.
2. Diverse Options for Prospective Buyers:
Uttarakhand offers a wide range of property options, including apartments, villas, plots, and agricultural land. In high-priced locations such as Dehradun, the state capital, and Mussoorie, a popular tourist destination, two-bedroom apartments can be found in the range of Rs 6,000-6,500 per sq ft. Plots are available in the range of Rs 30,000-35,000 per sq yard. Villas or plotted developments are priced from Rs 50 lakhs to as high as Rs 10-12 crores.
“The region has developed as a residential-cum-vacation destination, catering to various types of buyers. The availability of disposable income has attracted new-age buyers who are willing to invest in second homes,” says a real estate broker based in Mussoorie.
3. Steady Appreciation in Property Rates:
Developing and established areas in Uttarakhand have witnessed steady appreciation in property prices across various categories, except for land. Investors have experienced significant appreciation in their investments, particularly in locations like Mussoorie, where the hospitality and tourism industries have flourished.
3.Freehold Properties
All plotted developments in Uttarakhand are sold as freehold properties, making the process of mutation and property transfer easier with the required paperwork. This facilitates smooth property registrations for new buyers.
4.Growing Popularity of Leasehold Model
With the entry of several hospitality chains, rental incomes from second homes have increased. Many second home buyers and investors now view their properties as a source of rental income.
“Our investment in a second home in Rishikesh three years ago has provided us with a new revenue stream, especially during the COVID-19 pandemic and job uncertainties. We have been leasing it to individuals seeking temporary stays in the city for a month or two. The demand has risen due to the safety protocols associated with COVID-19,” says a buyer, who invested in a second property in Rishikesh.
“The concept of Airbnb-like home stays has gained popularity in Rishikesh and other cities according to a lot of local brokers.
Disdvantages of buying a second home
1. Higher Property Prices in Key Regions
Properties located strategically in the hills of Uttarakhand come with a premium price tag. Additionally, there is a noticeable difference in prices between ready-to-move-in apartments and those under construction. Prices also vary significantly across different regions. While a typical homestay in Mussoorie may cost around Rs 3,000 per night, similar accommodations in more remote locations can be found for as low as Rs 1,000 per night.
2. Limited Availability of New Properties
Uttarakhand is becoming increasingly popular among investors and vacation home buyers from nearby cities such as Chandigarh, Delhi, Jaipur, and Lucknow, who are eager to invest in this region for personal use or rental purposes. As a result, the real estate market in Uttarakhand has become highly competitive. However, there is a shortage of new properties, especially in key regions. The limited supply of new properties has driven up prices, making it common for second home buyers to invest in older properties that require renovation, thus requiring additional funds.
3. High Maintenance and Upkeep Requirements
If you plan to use your second home for personal use, it’s likely that you will only occupy it for around 45 days per year. In this case, you can expect to spend at least Rs 3 lakhs annually on caretaker staff and property maintenance. If you decide to rent out your property to short-term vacation rental companies, your guests’ ratings will significantly impact your property’s success. Therefore, you will heavily rely on the services provided by your caretaker. Considering all these expenses, you may end up spending more on the property than you earn, unless you plan to permanently relocate to your second home.
4. Uttarakhand Land Buying Rules for Non-Residents
Uttarakhand has regulations that are favorable to property buyers. The state imposes no restrictions on property ownership, allowing individuals from different states to buy properties in Uttarakhand. There are also no limitations on the size of the property. However, there are certain restrictions on purchasing agricultural land beyond the city limits, with a maximum limit of 2,690 sq ft
What Buyers Should Do When Buying Land in Uttarakhand
Before investing in a second home in Uttarakhand, buyers should conduct extensive research on the property, including the reputation of the developer, construction quality, location, promised amenities, and prevailing property prices in the area. It is advisable to seek assistance from reputable property consultants who can conduct a thorough investigation on your behalf. Buyers should prioritize investing in RERA-registered projects to ensure the security of their investments. It is important to be cautious, as there have been instances of fraud where unsuspecting buyers have been deceived by fraudulent projects. Several companies in the region have also faced legal action from the Enforcement Directorate for fraudulent practices. Therefore, buyers need to exercise caution, especially when considering under-construction properties.
Investing in completed projects or resale properties is generally safer. Additionally, buyers should only invest if they plan to visit the property regularly or have business interests in the region. Properties in Uttarakhand with the potential for healthy rental income can be a good investment option at the prevailing property rates
Stamp duty in Uttarakhand
When registering a property in Uttarakhand, certain essential documents need to be provided, including the original property documents with appropriate signatures. Additionally, an encumbrance certificate, identity proof, address proof, power of attorney, and property valuation certificate are required.
To register the property, it is necessary to first register it on the online portal: https://registration.uk.gov.in/. The portal also provides the option to calculate stamp duty and registration fees through the e-valuation tab on the homepage. By providing the necessary details online, you can determine the applicable stamp duty and registration fees.
Stamp duty and registration charges in Uttarakhand | ||
Gender | Stamp duty rates | Registration charges |
Male | 5% | 2% |
Female | 3.75% | 2% |
Joint (Male +Female) | 4.37% | 2% |
Joint (Male +Male) | 5% | 2% |
Joint (Female+ Female) | 3.75% | 2% |
How to Make Your Second Home in Uttarakhand a Profitable Investment?
If you’re considering buying a second home property in Uttarakhand for vacation purposes, there’s a great opportunity to generate a regular income by offering it for short-term rentals. Various platforms like Airbnb, Vista Room, and other similar services can help you list your property and connect with people searching for accommodations on a short-term basis. However, it’s important to be cautious when renting out your property through these platforms. As the owner, you’ll need to take care of the property’s security and upkeep and be available virtually to address any guest queries.
Moreover, with the increasing trend of remote work due to the COVID-19 pandemic, owning a property in a remote location has become lucrative for investors seeking rental income. Many professionals now look forward to spending at least 15 days in a hill station where they can access high-speed internet and basic amenities like food, cleaning, and other facilities. The starting price for such accommodations ranges around Rs 40,000 per month, depending on the location and amenities provided.
Frequently Asked Questions
Q1. What should I consider before investing in a second home in the hills?
Ans: It’s crucial to thoroughly understand state regulations and property prices in the region. Deal only with reputable developers who have a solid track record.
Q2. Are there RERA registered projects in Uttarakhand?
Ans: Yes, there are RERA-approved projects in Uttarakhand. Ensure that you check project, developer, and agent details on the portal before making an investment.
Q3. Where is the office of RERA Uttarakhand located?
Ans: The office is located at Rajeev Gandhi Complex, Near Tehsil, Dispensary Road, Dehradun – Uttarakhand, 248001. You can reach them at 0135 – 2719500 or through email at uhudauk@gmail.com and info@uhuda.org.in.
Q4. What is the stamp duty on properties in Uttarakhand?
Ans: In Uttarakhand, the stamp duty is 5% for males and 3.7% for females.
Q5. What is the property registry rate in Uttarakhand?
A.The property registry rate in Uttarakhand is twice that of most other states. It is 2% of the property price, while in other states, it is typically 1%.
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