Factors to be considered before buying an Apartment / house

Today Buying an apartment or house is well within the reach of middle class and moderate income group. There are various ways and choices around us, all we need to do is explore it.

Home loans are not as tedious as a decade back. Financial institutions have eased lending rules and rate of interest is very competitive and well regulated by RBI. Banks have a variety of home loans to be lend in various levels of property owning stage. Property developers are offering value to the customers money. Property developers give hassle free property owning experience along with host of value added services like loan processing and documentation, legal clearance, registration of property etc., Amenities are today’s modern life demands and customers look for.    

Property purchase decision has to be backed by lot of research and thorough study of few vitals factors. Especially, for a common man it is a vital decision to be taken with caution towards potential pitfalls.

The points to be considered are as follows:

1. Location  

Location factor has lot of crucial parameters which determines your property present and future value. Generally, location factor is evaluated against availability of transport, medical facility, schools and travel time to work place are some of the aspects you should consider to arrive at property purchase decision

2. Pricing

Pricing is pivotal point of whole property purchase process. The demand price of the seller and affordability price of buyer must match to close the deal. The property price must be demanded must be logical and should have correlation to other properties in the locality.  Besides the size of the property, being linked the costs, would be normally looked into, but one should understand the full implications of size in terms of costs as well as comfort.

3. Understand all hidden costs

Not many are aware that the purchase price of the property is not only cost to be borne. You also have to pay for parking , amenities, society, electrification, preferential location charges(PLC) etc., You also need to factor in other hidden costs such as brokerage, stamp duty, legal fees, registration costs and maintenance costs, inspection fees, mortgage fees and the like. Ensure that you have budgeted for these too else they spring up unpleasant surprises.

4. Promoter’s Background

 In the event of buying a property from a builder obviously, one of the most important issues will be the choice of the builder. The reputation of the builder, resources, track record, adherence to delivery schedules, capacity of the builder to handle emergent issues, financial resources of the builder and quality of the construction to be considered. The Property Builders should enhance the hassle free property purchasing experience by quality of value added services.

5. Title Documents

When buying a property, ensure that the title to the land in question is clear. The clear title to the property makes property purchase process a smooth ride, else you will be on roller caster ride!

6.Other Documents

It is advisable for you to read and understand offer letter, allotment letters and charts, source disclosure documents, documents relating to purchase and all other documents required for acquiring the property or completing the acquisition.

7.Approvals

Ensure that the building plan is duly approved by the concerned development authority. Also check whether the plan is drawn as per National Building Code(NBC).Try to verify whether the developer has obtained other permissions and no objection certificates from relative authorities like Fire Departments, BWSSB and other relevant authorities. 

All you should know about Registration of Instruments relating to flats and Apartments

All you should know about Registration of Instruments relating to flats and Apartments

1.What are the cases and instances to which the Apartment Act is applicable?

The Act is applicable in cases where owner or all owners sign the required declarations and register the same as provided in the Act. It applies to the apartments used for residential purpose.

2.What is an Apartment?

Apartment is an independent s dwelling   unit having one or more rooms and part of a building with one or more stories providing access to place of common usage and road.

3.How to acquire ownership under Apartment Act?

The deed of apartment should be signed and registered (Please see Karnataka Apartment Ownership Act 1972 and Rules 1975 for details)

4. What is a Flat?

Flat is an independent unit of building for use as residence.

5. What are the conditions to purchase a flat?

A developer of flats must register an agreement before accepting advance of deposit. Such advance, deposit shall not exceed 20% of agreed condition.

6. How ownership of flat can be acquired?

Developer of flat is required to transfer it to the registered association, co-operative society or company of buyers of flats within the period of agreement. He should also endeavor for formation of such association, co-operative society or company within prescribed period.

Formats are provided in the 'Act' for registration of flats. They may be registered after prescribed stamp duty is paid (Please see Karnataka Ownership Regulation of Promotion of Construction, Sale Management and Transfer Act 1972 and Rules 1975)

Registration is compulsory. A purchaser will not get ownership title to the flat without registration.
7.How right is transferred in case of sale of flat/apartment?

Sale of flat/apartment is as simple as any other sale transaction. A purchaser acquiring rights may register sale deed in office of the Sub Registrar.

Purchasers of flats/apartments may note following small difference in transfer of flat/apartment as compared to that of transfer of site, house. Ownership of flat/apartment comprises of the following rights namely,-

a) Undivided interest in land;

b) Carpet area of flat/apartment and

c) Proportionate share in common area.

Purchaser can become absolute owner of flat/apartment after sale of all the above three rights together describing in sale deed and registered.

8.Is it not possible to become owner of flat/apartment by purchasing undivided interest in land only,through a sale deed ?

It is not possible to become owner of flat/apartment by describing only undivided interest in land in the sale deed.

9. What are the precautions to be taken while purchasing flat/ apartment?

While purchasing flat/apartment, the following matters may be verified and ascertained that they are correct:

(i) Agreement to sell with promoter should be compulsorily registered in Sub Registry Office, there after sale deed also should be registered.

(ii) Permission for construction of flat/apartment and sanctioned plan should have been approved by City development authority/ Corporation / Municipality / Panchayat.

(iii) Whether promoter/seller has right to sell the property.

(iv) If sale transaction is by a General Power of Attorney holder whether general power of attorney is valid on the date of transaction/sale deed.

(v) Flats/apartments constructed in violation of sanction plan should not be purchased.

(vi) Verify whether occupancy certificate is obtained from the local authority.

(vii) Verify whether deed of declaration and Co-operative society or company is formed and registered.

10. Is it valid to get transfer ownership of flat/apartment through transfer of share by the co-operative society without registered deed?

It is not legally valid. Co-operative Societies who allot flat/apartment to its members should compulsorily register sale deed in Registry Office under Registration Act, 1908.

BREN PALMS – BUILDING SPECIFICATIONS

Structure

Earthquake resistance - Seismic zone II compliant RCC Framed structure

Masonry works - 200 mm / 150 mm / 100 mm thick Solid Concrete Block

Plastering

Internal walls / ceiling - Cement Mortar with Lime rendering

External walls / ceiling - Cement Mortar with Sand Face plaster

Flooring Finishes

Foyer / Living / Dining / Master Bed room / Children Bedroom / Guest Bed Room / Kitchen –

Vitrified Tiles

All Balconies / Utility - Rustic Ceramic Tiles

All Toilets - Ceramic Tiles

Entrance Lobby - For Ground Floor – Granite / For Upper floors – Rustic Vitrified Tiles

Staircase - Sadarahalli Granite ( for treads ) / Black Granite ( for risers )

Dadoing Finishes

All Toilets - Ceramic Tiles up to 7’ height

Kitchen - Ceramic Tiles – up to 2’ height from counter level leaving window opening

Counters

For Kitchen - 20 mm Granite platform with Single bowl single drain board of Futura / Nirali /

Equivalent

Doors & Windows

Main Door - Teak wood frames with Veneered Tubular Core flush door ( No Polishing required )

Internal / Toilet Doors - Hard wood Frames with Moulded skin doors, with enamel paint on both

sides

Windows - Powder coated Aluminium with Mosquito mesh in Living / Bedrooms

Utility - Powder coated Aluminium window with opaque glass

Ventilators - Powder coated Aluminium with provision for exhaust

MS Railing & Grills

All Balconies - MS Railings as per design ( only on front side )

Staircases – MS Railing as per design

Window / Balcony – Safety MS Grills for all Ground Floor Flats only

Utility – MS Grills for all the flats

Painting

Living / Dining / Foyer / Bedrooms / Toilets - Acrylic Emulsion

Staircase / Lobbies / All Ceilings including inside flats - Oil Bound Distemper

Exterior walls / Balconies - Weatherproof Cement Paint

Bedrooms / Toilet doors - Enamel paint

MS Grills - Enamel paint

Hardware’s

Premium Quality Hardware – Dorset / Godrej / Equivalent

Plumbing & Sanitary

Sanitary wares

EWC - from Parry ware / Hind ware / Kohler

Washbasin – from Parry ware / Hind ware / Imported make

CP Fittings - Premium fittings from Jaquar / EssEss or equivalent

Concealed Diverters for all Toilets

Concealed Cistern for all Toilets

Hot & cold water provision - For all washbasins in Toilets / For all Shower Mixer unit in toilets

Kitchen Sink – Only Cold water tap provision

Utility – Provision of Sink

Electrical

Power for each flat - 3 BHK – 5 KW / 2 BHK – 4 KW

DG Backup for each flat - 2 / 3 BHK – 1 AC Point / 3 or 4 light points / 1 Fridge point / 100% for

Common areas

Fire resistance Electrical wires

TV & Telephone points for Living & all Bedrooms

AC points for Living & all Bedrooms

Switch Plates / Switches - Modular Switches – Anchor / Salzer / Crabtree / Schneider

Exhaust fan provision in all toilets

Geyser provision in all toilets

Instant Geyser point in Kitchen

Aqua guard provision in Kitchen

Washing machine provision in Utility

Chimney / Hob point provision in Kitchen

One 5 A point in all Balconies

One light point in front of all Main door of the flats

Landscape

Avenue trees / flower beds / lawns / Play area / Zen garden / Trellis etc.

Elevators

One 10 Passenger lift of Kone / Schindler / Fujitech / Equivalent per block

Capital gains tax on sale of Residential Apartments

The residential flat or apartment sale has direct implication on your computation of taxable income. The property in this context is an immovable property which is exclusively used for residential purpose.

The residential property  purchased may be sold with in three years or after three years. If the sale affected within 3 years it is considered as short term capital gain and the sale proceeds are added to the income and taxed at the applicable tax rates of the assesse.  , on other hand, residential flat or an apartment sold after three years from its purchase, it is considered as Long Term Capital Gain( LTCG) and taxed at 20% with indexation benefit.

The residential property sold after three years enjoys all the benefits of Indexation. The indexation considers the inflation effects on erosion of real value of money through rise in prices. Due to this your investment has risen three to four times, the purchasing power of money will have gone down 50%, from the time you made investment. To reduce the impact of inflation on your investment, indexation benefit is provided in calculating long term capital gains. Through this benefit you can adjust your capital gains from inflation by applying an appropriate factor from cost inflation index to the original units.

Her is an example how Indexation Benefits works :

Cost of purchasing a property in 2007                                             35,00,000 = 00

Cost of selling the property in 2012                                                 50,00,000 = 00

Inflation Index  2007 -  551

                         2011 -  785    

Indexed Purchase cost  - 35,00,000 * 785 / 551                    =          49,86,388 = 00

Long Term Capital Gains  = 50,00,000  - 49,86,388              =          13,612 = 00

Tax  on LTCG  = 13,612 * 20%                                                =          2,722 = 00 

Education Cess  = 2722 *3% =82 + 2722                             =          2,804 = 00      

If inflation index had not been considered the non indexed gain would have been Rs. 15,00,000

Thus the indexation benefit substantially reduces the tax liability of an assesse, otherwise would have been a huge tax liability resulted out of above example.

 

In a nut shell

Long Term Capital Gain is computed as below:

LTCG = Full value of consideration received or accruing - (indexed cost of acquisition + indexed cost of

improvement + cost of transfer)

Where, Indexed cost of acquisition =Cost of acquisition x CII of year of transfer /CII of year of acquisition

Indexed cost of improvement =Cost of improvement x CII of year of transfer  /CII of year of improvement

CII = Cost Inflation Index (Please see chart given below)

Tax liability on LTCG to be taken at 20%.

If total income other than LTCG is less than zero slab,LTCG over the zero slab only attracts tax at 20%.

10 Things You Should Know Before Buying an Apartment

After living in rented houses for some time everybody thinks about buying an own flat or apartment. If you are the first time first time apartment buyer, here is the checklist of facts you should read.

Decide on the area you want to buy an apartment. This requires at least a considerable research in and around the area.

Before you buy, research the market to make sure you get the value for your money and expected ROI( Return On Investment) in case you want to sell after sometime. The reliable builders who have good track record of property development, workmanship and brand in the market are the best source of these information.

Pay some visits to ongoing projects and model flats that give you fair idea of building pattern. If the builder has a model flat, it clarifies our most of the buyer’s doubts.

Check that the property you are interested in is close to the facilities you require., for example shops, public transport, parks, hospitals, schools, work, gym, etc. – A valuable tip if you want to earn some time.

When you choose to live in an apartment consider whether the building is close to clubs, cafes or other live music venues. What is the amount of passing traffic – will it be noisy at peak hour ? Will the noise affect your lifestyle? It is a good idea to arrange an inspection of the building during the evening or during peak hour traffic before you agree to the purchase

If you are not buying a newly developed property, check out how old the building? You should consider the age of the building. Are any facilities likely to require repairs or replacement? It is strongly recommended that you obtain an architect or engineers report on the building before deciding to buy.

What are the security measures for example, can anyone walk into the building? Are there any security cameras?

Does it have a balcony so you can enjoy the view or afternoon sunshine? Or are you blocked by other buildings or facing the wrong way for the sun?

What are the maintenance charges? Many people don’t think at this aspect when they buy a new apartment. They will generally cover the municipal tax, property tax, assessment tax, water charges, common electricity charges, elevator charges and charges for hired help, like the garbage cleaner and security. Find out how much is the maintenance charge, what does maintenance charge include? For example, car parking charges may be separate.

  

Last and important if you own a car check out for the car parking facility, and whether is there a provision for extra car parking facility for extra charges if you could shell out.  

Home or Apartment Buyers Must check for these documents

 

Owning a house is an important thing in ones life. However, one needs to be careful while buying land/house to avoid falling into legal hassles. A lot of care is needed from the  beginning- right from site seeing till the registration of the land.  The legal status of the land is one of the first issues that you should address before confirming a property.  Don't give any advance before getting confirmation about the legal status of the property.

Before buying a land,  a number of checks needs to be done to confirm that the land has a clear and marketable title. The first thing is to find out the tenure, legal right of the holder of the land in government records. The tenure or possession right could be freehold, leasehold or may be held under a government grant or 'sanad'. Freehold land is always most preferable. The seller should provide all the necessary documents to the buyer.

Title deeds

The first step is to see the title deed of the land which you are going to buy. Confirm whether the land is in the name of the seller and that the full right to sell the land lies with only him and no other person. Don't be satisfied with the Xerox copy of the title deed. Insist on seeing the Original Deed. Sometimes the seller may have taken a loan by pledging the original deed. It also needs checking whether the seller has permitted any entry/access to others through this land and whether any other fact has been suppressed/left undisclosed by the owner of the land. It is better to get the original deed examined by a lawyer. Along with the title deed, the buyer can also demand to see the previous deeds of the land available with the seller.

Tax receipt and bills

Property taxes which are due to the government or municipality are a first charge on the property and, therefore, enquiries must next be made in government and municipal offices to ascertain whether all taxes have been paid up to date. The owner should also possess the latest tax paid receipts, which you may inspect. Enquiries should also be made in various departments of the municipality to ascertain whether any notices or requisitions relating to the property have been issued and are outstanding and not yet complied with. 

While inspecting the property tax receipt, it can be noted that there are two columns in the tax receipt. Make sure that the name entered in the owner's column is correct.  The second column will be for the name of the one who paid the tax.  Sometime the owner may not have the tax receipt with him, in such cases, contact the village office with the survey no. of the land and confirm the original owner of the land. If you are buying a house along with the property, then the house tax receipt should also be checked. Also ensure that the electricity and water bills are up-to-date and if there any is balance payment to be made, ensure that it is made by the seller.

Encumbrance Certificate

Before buying any land or house, it is important to confirm that the land does not have any legal dues. It is available as a certificate called encumbrance from the sub registrar office where the deed has been registered, stating that the said land does not have any legal dues and complaints.  The encumbrance certificate for the past thirteen years should be taken or for more clarification, you could demand 30 years encumbrance certificate to be checked.  If you still have anymore doubts, you can take a Possession Certificate of the ownership of the particular land, which is available from the village office.

Pledged land

Some people may have taken loan from the bank by pledging their land. Ensure that the seller has paid back all the amounts due. Don't get satisfied with the receipt of the payment made. A release certificate from the bank is necessary to release all the debts over the land legally.  You could buy a land without the release certificate. But if you want to take a loan in future, the release certificate is a must.

Measuring the land

It is advisable to measure the land before registering the land in your name. Ensure that the measurements of the plot and its borders are accurate. You can do this with the help of a recognized surveyor. This will avoid a lots of problems in the future. You could also take the Survey Sketch of the land from the Survey Department and compare for accuracy.   

More than one owner

In some cases, the land will be owned by more than one people. So before registering, check if there is more than one owner,  and if there is, get release certificate from the other people involved.

Buying land from NRI land owners

A person staying abroad can also sell his land in India by giving a Power of Attorney to a third person authorising him the right to sell the land on his behalf. But in such cases, the power of attorney should be witnessed and duly signed by an officer in the Indian embassy in his province. There is no legal support for Power of attorney signed by a notary public.

Agreement 

Once all the matters, financial/otherwise are settled between the parties, it is better to give an advance and write an agreement. This ensures that the owner does not change his word regarding the cost as well as make a sale to someone else who offers more money. The agreement should be written in 50 Rs stamp paper. The agreement should state the actual cost, the advance amount, the time span within which the actual sale should take place and how to proceed in case of any default from either parties, to cover the loss. The agreement can be prepared by a lawyer and should be signed by both the parties and two witnesses. After signing the agreement if one of the parties make a default, the other party can take legal action against him.

Registration 

The land can be registered in a sub registrar office, after preparing the title deed including all the relevant information. You could get the title deed written by a government licensed Document writer. Even lawyers can prepare the deed, but the document can only be computer printed or typed, not handwritten. Handwritten documents can be prepared by only those who hold the scribe license. 

A draft should be prepared before actually writing the document in stamp paper. Make sure all the details mentioned are accurate. If there is incorrectness in the document after registering, a secondary document with the correct details has to be registered and depending on the incorrectness, the registration expenses will be repeated.

Make sure that the deed is registered within the time limit mentioned in the agreement. Original title deed, Previous deeds, Property/House Tax receipts, Torence Plan (optional) etc plus two witnesses are needed for registering the property. Torence plan is a detailed plan of the property prepared by a licensed Surveyor which will have accurate details of the measurements including width, length, borders etc. This plan is needed only in some specific areas. For land costing more than five lakhs, the seller should submit either his Pan card or Form Number 16 during registration.

The expenses involved during registration include Stamp Duty, registration fees, Document writers/ lawyers fees etc.  The stamp duty will depend on the cost of the property and varies from Municipality to Corporation to Panchayat.  In Panchayat the stamp duty will be 4% of the cost of the land whereas in Municipality it is 5% and in Corporation 6%.  Two percentage will be charged as the registration fees. Document writers fees also depend on the cost of the property and varies with individuals. There is a percentage prescribed by the government as Document writers fee and they cannot charge more than the prescribed limit. 

After registration, the registered document will be received after 2-3 weeks, from the registrar office.

Ecosystem of Indian Real Estate Industry

After global Financial Crisis Indian Real Estate industry has recovered to the greater extent to accommodate all the stakeholders of the industry in the comfortable situation to take industry to the newer level of stabilization. The typical real estate ecosystem comprises of different stakeholders that includes the builders and property developers, architects, government/regulatory, authorities, banks, private equity players, funding agencies, buyers, brokers and property consultants.

The dynamics in India’s real estate ecosystem is driven by ‘Extrinsic’ and ‘intrinsic’ factors. Extrinsic factors are those which impact the dynamics from outside the real estate ecosystem, the intrinsic factors are those which impact the dynamics of the ecosystem with in industry.