6 Property Prerequisites Every New Home Buyer Should Know

Dec 24 2018

Ready to buy a new home?

After securing the amount and finalizing the apartment, there are a number of steps that are still left to be followed.

Usually, we don’t talk about the aspects of buying real estate, that isn’t directly in our sight. Most real estate buyers, when they step out to buy an apartment, are unaware of things like Occupancy Certificate or Property Transfer Forms, because these are the builder’s responsibility.

But as a smart buyer, you must know about the legalities associated with buying a house to protect your interest as the house owner in the best way possible. We hear about real estate scams and developer-resident disputes every day, and by all means, you would want to avoid such a case.

Therefore, we have laid down some of the basic things that every new or first-time house owner must know before-hand. These are not ground rules but checking these things in advance would help you make the best property decision, and enjoy your stay for a long time.

  • Verify the Authenticity of the Real Estate Project

It’s hard to forget the huge property scam of Bangalore where 1500 crore rupees were falsely solicited with the help of a fake real estate project.

Buyers were shown a lucrative residential location where construction had begun and the price on offer was too cheap to miss out on. This resulted in 5000 sign ups from various parts of Bangalore, and people ended up losing lakhs of rupees because of this treachery.

In order to avoid such a thing, following are a few legal documents you can verify before handing over the booking amount to any real estate developer.  

  • Title of the Property

The property title is a legal document that lays down the ownership of the land on which the project resides and the name of the property owner. It is one single important document that you must check before initiating any conversation regarding the property.

The title comes with a few clauses that must also be checked, such as marketability, any encumbrance (if applicable) and the tenure of over 12 years.

Keeping these things in check will allow you to make a safe deal. The marketer, broker, and the builder are obliged to present these documents at any time you ask.   

Title Documents consist of;

  • Succession Certificate
  • Partition Deed
  • Sale Deed
  • Government Grant Order  

Other aspects related to the title

  • Nature of Title – Nature of title describes the type of ownership that the builder has over the land and the property. Not all ownerships are of the same type. There are three main recognizable title types – On Lease, Freehold Property, On Development Rights.

In case the builder is entitled to development rights, the power of attorney and property agreement, are to be rested with the seller of the property.  

  • Registration – The title documents entailed in the set of official documents must contain stamp and registration insignia from the jurisdictional registrar of the locality. If you’re unable to verify this, beware of the property type.
  • Litigations – There should be a well-maintained account of litigations, active or pending, against the developer, that is verifiable from the local court. In case litigations are related to the property in some way, you must watch your step before advancing forward.
  • Original Copy – Original Copy of the title must also be present with the builder at the time of booking the apartment so that you can be sure that the developer is genuine enough to be trusted.    

In case of resale flat in India

If you’re buying a resale flat in India, there is a separate set of documents that you need to take care of. We have briefly mentioned those as well.  

  • Set of Deeds of Sale

The document connects the owner of the property to the seller of the property and tracks the true ownership of the property before it is handed over to you.

  • Share Certificate  

If the flat resides in a cooperative society, the share certificate proves the share of property in the society and acts as the title of ownership in this case.

  • Title Report

The Title report is a report that signifies the authenticity of the title against any defaults in the sales deeds and bank loans, that may affect the transaction.

  1. Verify the Developer/Seller’s Identity

When you search for properties on sale, there is always one person of contact that gets you through to the property. Then there is a person who gives you brokerage advice and then there is the seller of the property himself.

All of these people may not be significant except the seller. It is as important to check the identity of the seller as it is to verify the ownership. In the Bangalore scam we mentioned earlier, the owner of the property was living with a fake identity and didn’t originally belong to the city either.

Here are some measures that can be taken in this regard.

  • Residential Status – It is important to verify the residential status of the person as there is a high degree of NRI property scam in Indiia. People claim to own several properties in India and solicit booking amount with a fake identity.

Later on, it becomes very difficult to press charges against the person and the person faces a deep setback due to the scam.

  • Identification of Partners in Property – The biggest cause of property disputes is the non-cooperation between partners and untimely back-out of one of the partners, which affects everyone including the buyer. Therefore, it is mandatory to check that the owners of the property, in case the property is jointly owned, are identifiable and no court cases are running against them.
  • Authorization – You must also check if the person selling you the property has legal rights to do with verification from a local court. Many a time, the authorization to sell the property is with someone else for arbitrary reasons and the owner scams the sellers without proper authorisation.  
  1. Government Permissions Given to the Property

There are several government checks performed on the property before it is given approval for construction or even sale of apartments. These permissions come in the form of certificates issued by the government as the development of the project advances.

There are umpteen real estate projects that have been constructed without prior permission from government authorities and have been sold to the residents without a worry.

Before RERA came into existence, these laws that overlooked the sale of such properties were not strongly implemented, but now there is a clear process of passing properties. Heavy penalties are imposed on projects who fail to produce such certificates. 

Here are a few you should always take care of;

  • Intimation of Disapproval (IOD)

Wondering what is IODIt is called the intimation of disapproval but here disapproval refers to an authorization or permit. Matter of fact, it is also called a building permit or IOD in construction.

The IOD provides a clearance to the builder to start the construction process after several checks from local authorities are done.  These checks are carried out during the site inspection process, where it is determined if the land parcel is fit for construction or not. Engineers at the Building Proposal Office determines the eligibility of the project before issuing the IOD.

The IOD certificate usually takes about a month to month and a half to complete as there are 40 different checks made before issuing. Several local authorities sanction permissions such as Fire Clearance, Permission from Traffic and Coordination Department, Environmental Department, Sewerage Department etc.

An IOD is an initial permission given to the builder for the developer and the actual architectural plan is separately checked.

  • Commencement Certificate (CC)

CC full form in construction is Commencement Certificate, which is given by the local authorities to a real estate builder as a sign of commencement of the construction.

In comparison to IOD CC is an official permission for the commencement of construction. The IOD is an approval for the buildable land, where CC is recognized as the letter of approval for the building.

It is handed out after the builder has submitted the architectural plan for the building and various checks have been made for the same.

From the perspective of the buyer, it’s important that you check the commencement certificate before investing in a building project. If the builder doesn’t have this certificate, chances are that the project is being developed illegally.

  • Building Layout Approval  

Building layout approval is used to determine the layout plan of the construction project which is checked for compliances to the existing layout laws. The terms that we used earlier such as FSI and FAR values are checked for the project, in order to approve it.

Usually, the Municipal Corporation is responsible for providing approval to the building layout of the project. The layout approval is the part of building approval procedure where the building plan is checked for compliances.

The building layout approval is mandatory before building anything on the given land. Even if you have IOD, you can’t start construction until you have building layout approval first with you as these both look at different aspects of the same thing.

Building layout approval affects the projects in the later stages as well. For instance, at the time of redevelopment, the Mumbai authorities have certain rules that work in this sector.

Recently, re-development in some parts of Mumbai has taken off as a business and the factors that control the redevelopment directly affect how this is compensated to the owner of the property.

  1. Stamp Duty on Property Documents

Stamp duty is a sum of money deposited with the government for registering your real estate transaction. Once your document is stamped by government officials and local registrar, only then you become the lawful owner of the apartment.

It is often said that even after possession of the property, it is crucial that you obtain the ownership documents by paying the stamp duty.

Stamp duty is one of the most important aspects of the whole real estate transaction that will take place between you and the seller. Each state imposes its own stamp duty and it is considered as a tax for registration of the property.

You can check the same on the various documents presented before you by the selling party. There should be proper mention of the stamp duty and the amount paid to obtain it.

Stamp duty varies from state to state but the general percentage that is followed in most states in about 5% of the total value of the property.

  1. Tax Appropriation

The completion of property tax and timely settlement is another point of concern that often misses the eye of the buyer.

Most real estate developers hide their property tax status from the buyers because the development costs often bootstrap them from paying taxes on time. This leads to penalties later on that are bore by everyone involved in the transaction.

Hence it is very important to check the tax status of the real estate developer and make sure that it is being paid on time. Even if it’s not paid, you should have enough confidence in the real estate developer that they will pay the taxes without further ado.

This can be verified from the office of municipal authorities of the locality and the developer will be highlighted as a defaulter in case taxes aren’t paid before you make the purchase.

In Case of Redevelopment

A lot of properties in Mumbai are being redeveloped in order to make them functional again and make heavy gains on properties that are considered dead.

Over the years, redeveloping properties in suburbs of Mumbai has taken off as a major real estate trend and the implementable laws have seen the light of the day very recently.

For these properties, similar tax laws exist. If you’re buying an apartment or an office flour that has been reconstructed, the tax has to be paid for the new construction.

In many cases, the builder is obliged to pay rent to the original property owner till the reconstruction completes. Therefore, these clauses can also be checked in case you’re interested in investing or buying a reconstructed property in Mumbai.

  1. RERA Compliance

Real Estate Regulatory Authority of India that came into existence in 2016 is an important step forward in clamping down project delays and unfair project deliverability.

Before RERA came into existence, these laws that overlooked the sale of such properties were not strongly implemented, but now there is a clear process of passing properties. Heavy penalties are imposed on projects who fail to produce such certificates. 

In addition to strengthening the developer-buyer relationship, RERA has done a lot of work in making sure that the buyers don’t have to face consequences due to delays in projects.

A number of recent reforms have been made to the marketing of the project and how the possession of an apartment takes place.

Therefore, after the inception of RERA, each project is expected to carry a RERA registration number, which can only be obtained once the project complies to various RERA prerequisites before starting off with sales.

You can check the project’s registration status at official RERA portals of various states. A few of them are given below.

RERA Punjab

RERA Goa

RERA HP

RERA Maharashtra

Conclusion

In conclusion, there is a lot of things that home buyers usually ignore before making the purchase. We have listed a number of such things in this article which will help you make a safe real estate transaction in the future.

Usually, we don’t talk about the aspects of buying real estate, that aren’t directly in our sight. Most real estate buyers, when they step out to buy an apartment, are unaware of things like Occupancy Certificate or Property Transfer Forms, because these are the builder’s responsibility.

If you’re buying a flat or an apartment in a new building project, you’ll need more than a just good reputation for the project. Doing a background check on various things like government permission, identities of the builders and the tax status of the project will help you avoid unnecessary consequences later on. 


Ambitious solar power initiatives in Real Estate India!

Dec 24 2018

Solar Power is rising at a breakneck pace in India with ambitious projects coming to light each day.

India fulfills most of its energy requirements from coal but solar power is slowly making the move in the subcontinent. Only last year, India attracted 30% corporate funding in this segment.

Japanese investors and other FDIs are planning to invest a whopping sum of $100 billion in India’s solar real estate to make it prosper even more. These are clear signals of the market becoming self reliant and ready to take off.

World’s Largest Solar Power Plant

India will also house the Bhadla Industrial Solar Park, which is set to become the world’s largest solar plant when it starts operating at its full capacity.

In addition, other solar power plants that are planned in India will join the list of world top ten rankings. This way India will takeover USA in solar power generation rankings, staying behind China, which is the world’s number one right now.

Diu’s Accomplishment

Diu is a part of an island union territory in west India that earlier had to import electricity from the neighbouring state of Gujarat. But now, with ambitious developments in Solar electric plants, Diu is meeting most of its electricity requirements with Solar power and has achieved electriciy independence from Gujarat.

This has been possible due to government subsidies in solar rooftop equipment and installations at most of governmental buildings.

Power Purchase Agreements

Fortune 500 companies such as Adobe and Accenture are now coming up with Power purchase agreements in Bengaluru region. The agreements are a vital step in allowing these companies purchase power from solar power generators at fixed rates whenever it is available. Such measures encourage the take up of solar energy in other institutions as well.   

International Solar Alliance

International Solar Alliance is a world-level community of 122 countries that receive ample solar power across the year, which was initiated by Prime Minister of India in 2015.

The steps have prompted the World Bank to offer $1 billion in funds for development of the alliance. This is a major step forward to draw in investments for solar energy from all parts of the world.

Smart Grids in India

In order to solve the growing solar power demand and integration of the same with india’s not so robust power grid system, new smart grids are currently being tested in several parts of the country.

These grids are aimed to optimize the flow of power in the grid where the grid can automatically switch between solar power and main power by detecting changes.

An estimated investment of 44.9 billion USD is expected to be made in the decade of 2017 to 2027, to integrate smart grids in several parts of the country.

Conclusion

India is ready to embrace alternative sources of energy that could help meet power requirements and open up the current situation to a more manageable pricing. There have been proactive efforts by the government and foreign companies.

These efforts will have direct impacts on the growing solar real estate market in India, which is now open for investment.



Why Home Buyers and Agents Need to Have Each Other’s Backs

Dec 21 2018

The home buying process has changed significantly over time with the intervention of digital media between the buyer and the agent. Earlier it was limited to a newspaper advertisement or a yellow page corner from where interested buyers contacted agents to start with, following a long process of trips around the city to find a suitable home.

These days, it has been highly automated. There are more agents that want to contact buyers than there are buyers who want to contact an agent. This is mainly due to the monumental reach of digital media.

In such a situation, it is important for buyers to express genuine interest towards a home buying interaction and it is important for the agents to know when a buyer would actually not buy.

Let’s talk about the situation in detail :

The Buyer’s Dilemma

As a home buyer, you would be taking one of the most financially important decisions in life because a home amasses a large sum of money as well as your time.

Such a decision could not be taken in haste, without proper investigation and considering a handful of options. It is natural to spend some time before actually making the cut, and often back out on great looking houses just because things didn’t seem all right.

People these days have a large number of options in the form of flats, houses, villas and bungalows that are managed by responsible agents. Buyers clearly don’t spend as much time with an agent before finalizing on a home as they used to spend earlier, and might consider moving on to a new agent if things don’t go well for a month or so.

The Agent’s Dilemma

For agents, it has been even more difficult. They have to be resourceful, energetic and go beyond limits to show around the best properties in the town to seemingly interested buyers.

Many a time these buyers won’t really convert into customers but the effort cannot be reduced for each one of them that contacts these agents. This often wastes a lot of precious time for the agent, where he/she could probably talk to another party for a better deal.

The bigger issue at hand is that many customers are never going to buy anything from the agent but they act as interested until the very end, consuming both patience and time of the agent. This leaves the agent vulnerable to unrequited labour.

The Middle Ground

Thankfully, there is a middle ground on which, both the buyers and sellers can take a stand upon.

Buyers need to understand that the agent’s time is precious and so they must express their interest as honestly as possible. Buying a home is not similar to buying most things in general and hence if the agent isn’t rising up to the need, they must be informed about it as soon as possible.

Agents need to know that not every buyer would turn into a customer, for which they need to ask appropriate and a lot of questions from the interested parties. These questions will allow them to assess who to give more time and when.

These things will help agents bring out their best in themselves and buyers would find true advice for their money.

Being long established real estate agents, we have gone through the agent’s dilemma a number of times and we quite nicely understand what buyers want. Hence, if you are looking to buy, rent or sell a property, we will help you make the cut as profitably as possible.



Why are apartments better than homes?

Dec 18 2018

Let’s face facts.

We all have had a dream of buying our own bungalow, may be a mansion with an ocean view, a huge place where the children could play, or you could barbecue, or cherish the morning bliss.

I am sure everyone does, and so do you.

But, if not all what you want, life offers something better for you.

For more reasons, then you can count living in an apartment is way better than having your own home.

And, in this blog, we will share a few of the many there are.

Let’s begin.

Yes, I forgot to mention, you can prioritize your requirements in accordance with the pointers we will be giving.

Now, read on.

Here are the promised major reasons of why you should be investing in apartments than a house; or, you can say, reasons why apartments are better than houses:

1. Safety:

I am sure you don’t want hooligans to loot your place when you are not around.

In most apartments, there is a provision of a security guard and even the apartments are having reliable security systems.

If you get the same amenities for a personal house, they will cost you a fortune, plus it isn’t easy even then.

2. Spacious:

A two BHK apartment is more spacious than a home in the same space.

Think for yourself, amongst the same sized apartment and home, which one is more comfortable to carve a living?

3. Lesser responsibility:

For someone like me, someone, who loves to have a vacation twice a year leaving the house empty. It is the best option to rather own an apartment.

You can leave off for days, and it will await your presence just as you left it.

Even in terms of taking care of the space provided outside, you don’t have to worry about the cleanliness.

4. Easy redesigning:

For the matter of fact, apartments are way easier to design and customize in accordance with your requirements.

Plus, economical, as well! Ask an interior designer if you doubt our words.

It is so much easier to update the place and give it a brand new look.

5. Cheaper:

If you look for a home anywhere in India, it is always a cheaper option to rather opt for an apartment.

Moreover, most apartments are in places which have great accessibility for everything you need.

Houses are normally lacking this factor these days!

In almost every great place, your office, your child’s school, or your favorite market is present, there is an apartment which can be yours at a much lesser price than a house would be.

6. Space is best used:

With no staircase leading to an even smaller room upstairs, and a well-designed infrastructure, you have the option to have all the space to your use.

Trust me, with every update you make, you will have a better arrangement, and it will feel bigger.

7. Less maintenance:

Love repairing the roof for leakage?

Or, wondering about the damping wall?

Are you in love with the idea of mowing the grass of your garden?

I guess, no!

With an apartment, you wouldn’t even have to worry about these.

Set yourself free of these issues, with the pace of life cities have, you really should.


Should Millennials Rent or Buy Property?

Dec 17 2018

The housing market has really seen a revolution in the past decade or so. It’s quite surprising how the average rentals have remained the same (depending upon external forces) compared to the price of ownership, which has skyrocketed. We call this situation a market gap, and it’s this gap that raises one of the most important questions in any millennial’s head. That question is “Should I buy or should I rent?”

Consider the following example: For a residential apartment worth 2 crore, the EMI to buy this property would roughly be close to 24 lacs per annum. Now the same property is available on rent for Rs. 5 lacs per annum.


Rent vs. Buy Home

Which is the better option for millennials?


The answer to this question isn’t as easy as we think. For some owning a property is more important than renting it but in any case it’s very important to take an informed decision.As they say that each coin has two sides, let’s see how both the scenes are good and bad.

Buying a Property:

Pros:

  1. Capital appreciation of property is possible
  2. Forced Saving
  3. High social esteem 
  4. Tax incentives for owning a property
  5. Old age security

Cons:

  1. High property price
  2. High interest rates

Renting a Property:

Pros:

  1. Low rentals vis-à-vis capital value of the property
  2. Affordability according to choice
  3. Flexibility to move
  4. Low or NIL maintenance

Cons:

  1. No forced savings
  2. Low social esteem
  3. No tax incentives
  4. No stability

Quick Analysis:

  1. Financial – Yield on property is very low especially as compared to equity / debt investments. In fact, any other asset class can give better yield in the coming few years. Also, the opportunities that existed earlier which could offer 200-300% return have largely been availed by prior generations.
  2. Sentimental – The youth today is extremely “on the go”, and unlike earlier generations does not want to get stuck in low yielding long term investments. Also, the sentimental value attached to a house does no longer exist – people look at it purely as investment, and feel comfortable in staying in a rented house throughout their lives.

Conclusion:

While the urban youth may rent an apartment of his/her choice according to their affordability, it’s advisable that in long term, they keep the good aim of buying a property according to their budget and finances. They should attempt to invest their money into an under construction project of a reputed builder in an upcoming area in any city of their choice. With property market in the slumps, one can look for an attractive term and payment options.


Can you buy property from your father?

Dec 17 2018

Thinking of buying property from your father or someone in blood relation?

Wondering if Indian property law allows that?


Legally, yes you can buy property from your close relative. But it doesn’t make any sense to buy property from father as its better to take GIFT from him.

In India, the Gift Tax Act has been abolished . Any  gift from close relatives which includes father is exempt from tax. ( Read proviso to section 56 (2)(vii)).

Further , in Maharashtra, there in no stamp duty on transfer of immovable property to close blood relations which includes Father-Son.

Related ArticleWhat is stamp duty?

Have more doubts or questions related to property laws and tax? At Spacio Realtors, we’ll be happy to consult you. Our real estate advisory services are ISO 9001 certified and our office is headquartered in Mumbai, India.

Spacio also has a dedicated NRI Desk to assist Non-resident Indians and PIOs with all aspects of real estate including broker services, advisory services and property management services in Mumbai.

We look forward to helping you with your real estate needs. 


What is built up area and carpet area? Real Estate Terminology Part 1 [Area]

Dec 17 2018

Yes, we understand that real estate terminology can be confusing, especially for first time home buyers. This article, the first in a six part series by Spacio Realtors explains the terms related to area of a property like built-up area, carpet area, etc.

Yes, we understand that real estate terminology can be confusing, especially for first time home buyers. This article, the first in a six part series by Spacio Realtors explains the terms related to area of a property like built-up area, carpet area, etc.


What is Carpet Area?

This is the net usable floor area within the flat/apartment i.e. the area within the walls of the flat, actual area to lay the carpet. This does not include the thickness of the inner walls, but includes the door jams.

What is Built-up Area?

This is the area which includes the carpet area plus the thickness of the walls and balcony including cantilevered portion.

What is Super Built-up Area?

Super built-up area includes carpet area, the area occupied by the walls and your apartment, proportionate share of the common spaces of the building such as the lobby, lift, staircase and corridors. Some builders even include the terrace, pump house, security room, swimming pool, garden, club house, the area occupied by the compound wall of the building. The total area of these is divided by the number of flats in proportion to their size and the result is the super built-up area.

Under the new Real Estate Regulatory Bill, the sale can be done only on the basis of Carpet area.

Other real estate terms related to area of property


FSI (floor space index) / FAR (floor area ratio):

FSI or FAR indicates the maximum amount of construction allowed on a given plot of land. This is purely dependent on the plot area. It’s the ratio of the total area of all the floors in a building to the total plot area. So if the FSI is 2, the total floor area of a multi storied building cannot exceed twice the size of the plot.

In Mumbai, Rule 2(3L)(42) of the Development Control Regulation for Greater Mumbai 1991 (DCR) defines FSI as the quotient of the ratio of the combined gross floor area of all floors, excepting areas specifically exempted under these regulations, to the total area of plot.

TDR (Transferable Development Rights):

In certain circumstances, the development potential of a plot of land may be separated from the land itself and may be made available to the owner of the land in the form of Transferable Development Rights (TDR). TDR is granted in lieu of relinquishment or surrender by the owner of the land / property for public utilities like road widening, playgrounds, civil amenities etc. The TDR is generally transferable and tradable in the market.

TDR enables the holder to construct the permissible construction area elsewhere in the same city at the same market value.

This is the first post of our real estate terminology series. Subscribe to our blog via email so you never miss a post from this series and other interesting property tips.

Next How to find the official value of a property in India?


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