Salient features to be aware of while purchasing a property

1. What is the area of a villa or flat?

Remember that the concept of ‘area’ is used in real estate differently. This ambiguity is often taken advantage of by sellers and builders. As the buyer, you should be clear about what they expect from a deal.

Following are some important pointers to bear in mind:

*The Super-built-up area includes all areas under common spaces. This is the apartment’s share of the lobby and staircase, elevator, and corridor outside the apartment. Also included are areas under common facilities such as a basement, substations, security rooms, garbage chutes and the security room. In some cases, even window projections or the area under stilt are part of the super built-up area calculations.

*The built-up area includes not only the carpet area but also the wall area of your house.

*The carpet area refers to the exact area inside your walls. The carpet area would cover the entire wall of your home if you were to lay a wall-to-wall carpet. It is easy to see how every square foot (sq. ft.) in a deal can directly translate into large amounts of money required to purchase the property. The RERA builder will only deal with carpet areas.

2. Are You able to get the same flat as what you have seen?

When you visit the construction site, a sample flat will be shown to you by the company’s sales representative. A sample flat is a marketing tool that companies use to increase their sales. The sample flats were created by interior designers who are skilled in creating optical illusions. They are skilled at using lighting effects to make the house appear larger. So that customers feel there is enough space after placing the double bed and other furniture, they use smaller furniture than what is available on the market. After the flats have been sold or the building is in possession, the sample flats will be demolished.

The location of the flat is another issue. Sample flats can be used as standalone units and offer great views from every balcony or window. If it is part of a group of flats, it may not be true. Builders often include a clause that allows them to alter the layout plan of an apartment or flat shown to you. The final layout of your flat may look very different to the one you saw when you booked. Sometimes the sample flat may appear larger than the actual one.

A buyer should have a copy of the apartment’s architectural drawing and the layout map. 

These documents must be approved by the Municipal Corporation or the local development authority. The drawings will show you the exact area of the flat’s carpet. If there is a clause in the agreement that allows the Builder to change the specifications, you will not be able to drag the Builder before a consumer court.

Building layout plan -When you book an apartment, some builders will show you the layout plan for a building with a swimming pool/clubhouse close by. Later on, you will discover that the block where you booked your flat does not have a garden. It is located on another foundation in another township block. This means that the Builder changed the construction plan halfway through.

 The ideal situation is for the Builder to construct the building according to the approved map. The Builder cannot change the approved plan. The sales representatives will usually show you a brochure with a different layout plan than the one approved by the development authorities. This is to lure you into purchasing the flat. This is to let you know that the flat’s area cannot be increased.

3. Is an early exit permitted?

You may be buying buy flats as investments. As an investor, you might prefer to sell your flat if you’re getting a good return on investment before completing the project. Sometimes you might not wish to keep the flat due to personal reasons and want to sell it. It is best to ask the Builder before you sign an agreement to sell. If a builder has the inventory, they will not be interested in cancelling the flat. The Builder might have a transfer clause that charges a fee based on the size of the flat. They usually impose restrictions so that buyers cannot buy on the secondary market. It would help if you investigated whether the developer has previously blocked sales of this nature and the transfer fee for an early exit.

4. Is it possible to get a refund if you cancel the flat? It isn’t easy to get a refund from a cash-strapped contractor. Prevention is always better than cure and treatments. Before you make a booking for a flat, do your research. The cancellation fee charged by different developers can vary greatly. Reputable builders, such as Ashiana, will refund the full amount of the buyer cancels within one month. Some builders do not deduct money for cancellations within a month. Others deduct 10% from the booking amount.  Builders quote the same amount on the flat’s purchase price.  Smaller developers could forfeit all of the booking amounts.

There are no set rules that builders must follow when cancelling bookings. Before you hand over the cash or the cheque, think twice. Avoid paying the deposit in cash even after you have chosen a project. When you are closing a flat, make sure to have your chequebook handy. Then, give the cheque to the developer. Always get a receipt for any cheque that you give to the Builder.

5. What are the Extra Charges?

Parking (open or covered) is an additional charge. Open parking is more expensive than covered parking.

You may be interested in a house with a corner view overlooking hills and a centrally located garden. Both of these options will have a price. Prices will vary between properties in the same building or complex depending on their floor, view and other factors.

Properties that face south or east are more valuable than those facing north and west, especially in northern India, where the winters can be very cold and the summers extremely hot. You will get more sunlight during winter if your house faces south or east. Similar to South India, units that comply with Vastu laws are valued highly in South India.

Higher price for higher floors

Views in metropolitan areas are more expensive. For example, in Mumbai, the cost per unit increases as you move up to higher floors. This holds for any city with river/sea views. Many builders now have a highrise charge. The buyer will have to pay a substantial additional sum if the property faces the sea. The price of units facing the central courtyard is higher than those facing other apartments in high-rise buildings. Also, properties with a park or pool view have a higher price. Road-facing properties may be subject to a premium.

The premium for ground-floor to sixth floors is higher in cities like Jaipur, which aren’t used to high rises. The consumer wants to retain the old-city values of living low-rise while enjoying the safety, security, and convenience of high-rises. They look for lower floors in high rise buildings. In such cases, higher floors are not more expensive than lower floors.

Additional charges may apply if your new apartment faces a pool or garden. 

These extra charges are typically calculated per square foot and are called preferential location fees (PLCs). These principles are the basis of Preferred Location Fees (PLC) applicable to new properties. The most in-demand property has a premium charge. PLC is currently arbitrary and has no set norms.

External and internal development fees will be a requirement to be which the developer has to pay. You should verify the amounts and find out if they can be changed. Ask the Builder about any additional charges. You should fully understand and consider all costs before you decide to book an apartment. If you can afford the entire amount after negotiations, then you should buy a flat.

6. What if you don’t pay on time?

Builders usually offer a grace period to pay any late instalments. It would help if you asked about the grace period the Builder allows to pay the instalments in the event of unanticipated delays. Ask about your interest liability. Builders typically charge 18% per year for interest. If you are late paying, ask if your allotment will get cancelled. Ask about the forfeiture clause. What is the amount of the refund in the event of forfeiture? You will be responsible for specific penalties if you make late payments or miss instalments.

7. Is the property under a mortgage?

Ask the Builder whether he has a loan for the project. A no-objection certificate from the bank where the Builder took the loan is mandatory. A demand draft is also issued by banks indicating the number of the escrow account (bank account in which the sale proceeds of a specific project are to be deposited). You must also obtain permission from the Builder to a mortgage. You will not be allowed to register the property in your name unless you do so.

8. These rates will soon be revised!

Builders use this trick to attract buyers in this age of fierce competition. A builder may tell you that the prices will soon rise as the project is nearly sold out.

Today’s real estate market is a buyers market. Developers are desperate to sell. Markets volatility and falling stock prices play an influential role. Builders are not able to get the money they need because banks have strict standards for building finance. Developers receive flats from buyers as the cheapest source of money. Builders will negotiate if you’re a serious buyer and offer you a discount if you do. It is better not to give in to temptation.

You can start saving money for better options and easier repayments of the loan before taking the plunge.

9 Do not be lured by freebies. Builders offer a variety of price discounts and other special offers to help you sell your property faster. Different developers offer different kinds of offers. Some offer trips to foreign countries free of charge, while others provide a luxurious car. Some provide a modular kitchen with AC in bedrooms and free parking, while others waive the preferential location fee.

There are no free lunches !!

Keep in mind that no one can give you everything from his pockets. Keep your eyes on the flat you are purchasing. What is the size of the flat? What is the price per square foot at which the developer offers the apartment? Is it comparable to the current market rates? It is possible to calculate the exact value of the freebies by subtracting it from the base price and then comparing it with other offers. Before you decide to go with these schemes, it is important to consider the financial history of the Builder.