What is a Land Development Loan?

The land development loan is a specialized funding solution for real estate developers for developing a housing plotting project that requires funds for the creation of amenities like electricity, water, sewer, roads, and other utilities.

This loan can be utilized for the following purposes:

• Land acquisition
• Developing amenities like roads, sewer, water & electricity
• Project management cost
• Contractors & staff salaries
• Project marketing cost

Some features of Land Development Loan 

• Loan for land acquisition along with the development of amenities & necessary utilities
• Available in PAN India
• Loan starts from Rs.1 Crore to any higher amount
• Repayment can be done through the sale of plot units
• A moratorium period is provided

Eligibility for the Loan 

1. NA Land: An agricultural land that is converted to non-agriculture land/residential by the concerned authority with a conversion certificate or an existing residential plot/land is eligible.
2. Borrower Investment: As per the policy, the borrower needs to invest 20 to 30% of the total project cost and the balance amount can be financed.
3. Credit Score: A rating of SMA 1 or 2, or any issue in the past which was closed are eligible for this loan except NPA profiles.
4. Approvals: All necessary approvals like the NA certificate in the case of agricultural lands are required before the loan application.
5. Property Title: Property title must be as a registered sale deed from the concerned authority. It could be registered on the company or personal name of the company director/borrower.
6. GPA & other land registrations are not eligible.
7. Builders & developers who are running companies with proper GST registration are only eligible for this loan.

Documents Required

• Company Profile
• Last three years audited balance sheet
• GST registration
• Partners/directors KYC
• Project report
• Land conversion certificate
• Land property documents

What is the land development?

Any kind of development of a piece of land for a specific purpose like agriculture or converting into a residential or commercial layout is called land development.

Agriculture Development

Farmers or agro companies prepare the land for the raising of useful crops like cereal to feed or may raise crops for medicinal & other commercial uses.

Residential Plot Development Project

Real estate developers convert vacant land into a housing society that provides homes for people.

This kind of project requires the development of amenities that are necessary for modern living like, electricity, internal roads, sewer facilities, and water. The builder may keep an option of land parcels for the schools, colleges, hospitals, and recreational/entertainment zones according to the size of the land.

After developing a big land full of utilities and other amenities, developers sell this land into smaller fractions in the form of residential plots where electricity & water facilities are already provided and ready for further construction of houses.

Commercial Plot Development Project

These kinds of lands are developed in the same way as residential projects. The only difference is the usage of land is for commercial purposes. In this case, also, the land is provided with amenities like water, electricity, and sewer.