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Page No.
Introduction
Searching/Short listing a house
Buying a house can be tedious or pleasurable according to how you go about it. Here are a few tips to make it
a pleasurable activity. To make sure you find the right property at the right price in the right location, there is no
getting away from the fact that you need lots of information at your fingertips and a lot of options to choose from
as well.
Firstly, make sure you know why you are buying. Normally property buyers fall into two major categories:
1 End Users
2 Investors
Being sure why you are buying also influences various choices you make. This includes choosing:
lThe location l The stage of construction l The developer l The price bracket
There are no right and wrong decisions whatever your reason for buying a house, it is the right one. But there
can be right and wrong ways of going about it.
Looking for the right property are able to suggest options across different corridors.
There are many ways of looking for a property. This They also offer 1-4 per cent discount which they
includes: aggregate from developers as part of the agent activity.
They are also able to suggest second-sale options in
l Checking out the options available online in property areas of your choice and your budget. However, India
portals such as MagicBricks.com. does not have a system of registration and rating of
l Check out print ads that appear in newspapers and brokers and it is best to use a broker who has earlier
magazines. given good service to someone known to you. You can
also use online services of portals to find the brokers
l Use brokers in the neighbourhood who will be able to
operating in that locality or neighbourhood.
advise you on various options.
l Choose a developer and see what he has to offer. Developers: If you have strong preference for which
developer you would like to go with, track the projects he
Online Options: Statistics show that over 80 per cent of
has come up with in different locations and choose the
property searches today begin online even if actual
one best for you.
transactions conclude offline. The advantage of looking
online is that property portals such as MagicBricks.com
aggregate the range of properties in the market and
allow you to search for options on the basis of city, The first steps
location, developer or even price brackets. Use the
search box to fill in the details of your requirements. You What are the things to actually look for
get a drop-down of the properties that are actively
available in your range. It also gives you contact details when zeroing-in on a house?
of those who have posted the properties. Budget, location, type of property, objective of buying
and choice of property are the determining factors for
Online searches also allow you to compare different purchase of property from an end users perspective.
properties on different parameters. This makes it easier to Real estate values are governed by demand and
shortlist the properties. Also, check out floor plans, supply. This may vary on a project to project basis. The
building schedules as well as walkthroughs so that you projects which see good demand normally do not see a
only need to physically visit those properties that meet price correction.
your criteria.
MagicBricks.com also allows you to post queries on
While buying a house the top questions to
Open House and get them answered by experts. This
gives you access to experts that you would otherwise not keep in mind are:
have. Check out the property advice section which l When to Buy?
offers advice on various issues from a number of experts. l What to Buy?
Newspaper Supplements: These give property related l Where to Buy?
information and also carry advertisements of property l How to Buy?
launches. Once you have made up your mind to buy
l How much to pay for it?
property, it is useful to regularly check out
advertisements. This helps you understand which l Which locality to buy in?
locations offer new properties, what are the amenities l What type of property to buy?
offered and also future infrastructure such as metro links,
l How to extract maximum return from your property
new transport corridors etc.
investment?
Brokers: Many cities are broker dominated. They work as
agents for specific developers or projects or both and
g u i d e t o b u y i n g a h o u s e
CHAPTER-1
Realty Check
The Need To Buy Property
When to Buy?
The common dilemma that the consumer at our Open House forum poses is what is
the right time to buy? The right time to buy your house is when you feel that you are
ready for the responsibility that comes along with buying a house. It is important to
consider the objectives of buying a house. Ask yourself why you want that house?
What really is the motivating factor when it comes to your decision to buy that house?
Do you want to buy it because you want to live in it with your family or do you look for
an extra income that the house will bring in the form of rent? Or, are you simply
buying it for long-term value leverage? The more you know about why you should buy
a home, the more focused your search will be and the better you will be able to
select one that meets your requirements.
lease one. If you find a house that you would like to stay in, that is close to your
workplace or easily accessible from there, then buy it. But remember that the
Equated Monthly Instalment (EMI) on your property should not be over 40 per cent of
your monthly salary. That way you would be comfortable paying it back. You need
10-15 per cent of the cost as your personal contribution to the purchase, as banks do
not lend 100 per cent.
If you are paying a monthly rent that would constitute over 75 per cent of your EMI
please think in terms of buying. (Check out the MB Buy Vs Sell Calculator which can
serve as a broad indicator on whether you should lease or buy).
What to buy?
There are many residential formats to choose from - Residential plot, apartments,
single floors, independent houses and multi-storey flats. Given below is a
representation of how each type of property is represented city-wise on the
MagicBricks.com portal. This is a representation of property in the top six cities.
Each type of property has its own advantages and disadvantages. Given below are
some comparisons made by experts on Open House, the consumers forum on
MagicBricks.com.
Plot Vs Multi-storey?
In India, plots are much in demand. Even today most small cities are witnessing more
demand for plots than for apartments. Multi-storey apartments are becoming the
norm in established urban areas where cost of land and the convenience and
security that apartments offer have pushed demand from the younger generation.
Also, as family sizes become smaller, many are selling large plotted developments in
established city areas for smaller more compact apartments with centrally managed
facilities, normally in gated communities in the suburbs.
Independent plot or apartment within a gated community?
Gated Community is a form of residential complex, sometimes characterised by high
walls and fences. It boasts of controlled entrances, surveillance of those entering the
01
g u i d e t o b u y i n g a h o u s e
Multi-storey Apartment 37 88 30 54 85 51
Single Floor 50 NA 23 4 2 11
Indpendent House 9 11 8 10 5 9
Residential Plot 2 1 34 23 4 23
Villa 2 NA 5 9 4 6
Should I take a
home on rent or premises, clean surroundings and amenities. These communities offer freedom from
the hassles of everyday civic problems, ranging from water cuts and pebble-strewn
should I buy? streets to living with the stench of unpicked garbage cans. An apartment in a gated
There is no harm in
renting a property
till you are ready
with enough
community by a reputed developer is normally a safe bet.
An independent house, on the other hand, is normally customised to the buyers
requirements. The advantage of having an independent house is that it provides
ample open space and clutter-free living. Whatever the
choice, make sure you pre-determine who is to look after
the common facilities such as roads, water and power
finances to buy. If supply and back-ups etc. There are some
you find a place developments where villas or townhouses are
where you want to provided within the gated complex with all the
advantages that normally come with
stay and can apartments. These are more expensive but safer
manage to get and hassle free. You should however, be prepared
to pay enhanced maintenance charges for these
enough formal facilities.
finance, look at Single-floor Units Vs Multi-storey Apartments
buying as your A single floor apartment is one where the builder buys
monthly outflow will a piece of land, often old plots which are up for re-
development, constructs flats on each floor
lead to creating an according to the permissible Floor Area Ratio (FAR)
asset. But make and building byelaws and sells them as independent
units within the same building. The land belongs
sure your EMI is not
more than 35-40
per cent of your
proportionately to all the buyers of single floors. Since
there are smaller numbers of units than in a multi-
storey apartment, these lack economies of scale
and so have fewer common facilities such as
monthly salary. maintenance and back-ups compared to larger
multi-storey apartments. But these are newer
apartment units in downtown or preferred
areas and come at a price lower than multi-storey units.
A multi-storey remains the most preferred housing unit in metros and large cities
today. It is a cluster of apartments in a high-rise building developed in a plot with all
amenities available within a gated community. These units can be aggregated and
constructed by developers or in the cooperative mode as Cooperative Group
Housing Societies (CGHS). These need good common facilities management to take
care of aggregating services and providing them to individual units for a fee. This fee
is levied as monthly maintenance charges. They cover water and power supply,
including back-ups, lift and common area maintenance and landscaping. Many
developments also provide plumbing and electrical services for a fee.
02
Where to buy?
Generally, there is a price differential between different locations which will always be
proportionate to its strategic placement which could be linked to accessibility to
highways, markets, business districts and overall livability. It is quite possible that a
particular area has good infrastructure, access to markets and entertainment means
but if it is loaded with existing and upcoming projects, the price rise in that area may
not be dramatic, but a gradual one. One may make an estimate of the number of
available and proposed flats in an area through good brokers and ascertain the past
price movement in the short term. Things to be kept in mind while finalizing the
location for your house:
What is the l The location should be within approved/sanctioned master plan.
difference l The location should have good connectivity.
between plinth, l Infrastructure services such as power, water supply, drainage and sewerage should
carpet and be present.
covered area in a l Location should be within an active business activity such as educational
flat/apartment? institutions, hospitals, IT parks, entertainment hubs, etc.
walls. When you purchase a house at the pre-launch or launch stage, the buyer pays small
sums linked to the progress of construction but also has a longer wait period before
the asset is liveable or starts paying for itself. This option is good in new and evolving
growth areas on the peripheries of cities where infrastructure itself is under
development and there is a wait period before it is liveable. Since, both infrastructure
and housing are being developed at the same time, the user gets the advantage of
moving in when both are ready. It also comes cheaper as property values are always
lower when the infrastructure in the area is under development. The downside of this
type of property is that possession will happen only after a minimum of 24-36 months.
During this period you would have to shell out a monthly rental for the place of stay
and the EMIs for the new property.
What to rent?
When you buy a property, the choice of locality is limited to those where properties
are available within your budget. But when you are looking at renting a property, your
canvas is much wider. Since a lessee has the option of seeking property that
matches all his/her requirements, it is always good to make a checklist.
Budget is always a prime consideration. Check your finances and see how much you
can allocate to rent. This should be an amount that you will be able to pay month-
on-month at the same time. Accommodate it within your house rent allowance
package or just a tad over for best results.
03
Now assess how big your accommodation should be. Remember that you have not
only to take up lodging, but also service it monthly, including the maintenance and
municipal charges which have to be paid by the lessee. The annual property taxes
and asset maintenance are the responsibility of the landlord.
Look that facilities such as public transport, security and daily grocery needs are easily
accessible. They make your stay more comfortable. Transport connectivity with
minimum traffic pressure points makes the daily commute to work less stressful. Look
for a neighbourhood where you have like-minded community so that there is
minimum clash of interests.
How to buy?
Does investment in Once you decide upon the locality, the next step is to check the developers who are
Tier II & III cities building there. The best way to do this is to do your own research. Find out who the
developers are and what they have to offer. Check out the floor plans and the types
make sense? of property that they are constructing. Many of these are available online so this can
Yes capital be done at your convenience. Once you have shortlisted some properties, do your
own footwork. Check out the projects on-site. Get an expert such as a broker to show
investment in Ter II you around. Sometimes what looks good on paper may not feel right when you see it
and III cities makes on the ground.
sense considering If the project is new, the choice of builder is a big decision. Check the builders track
that maintenance record, his financial strength, his ability to deliver on time, construction quality and the
payment terms, especially in case of a local builder. Do a background check on
is not high, developers and make your assessment about where you would feel safe to make
provided it's a loan your investment. One should always check with local real estate brokers the last
transaction price or the price of similar property in that location.
free investment
Negotiating Ability: After considering all the above, your negotiating ability is crucial
because if the which means, leveraging the available information and a fair understanding of the
property rates don't points discussed to strike a good deal.
go up, interest per
month will still be a
The area concept is very vaguely used in the housing industry. Some builders and
sellers take advantage of this ambiguity.
regular outflow. Carpet area is defined as the precise area within the walls of your home. If you had to
lay out a wall-to-wall carpet in your entire home, the area covered would be the
carpet area.
Built-up area is inclusive of not just the carpet area but also the area being occupied
by the walls of your home.
Super built-up area takes into account all the area under the common spaces which
is the apartments proportionate share of the lobby, staircase, elevator and the
corridor outside the apartment.
The confusion over super built-up area arises over what all is exactly included under
this definition according to the judgment of the builder. Some may even include the
terrace, security room, electrical room and/or pump room. The cumulative total of
these extras is taken into account and divided by the number of apartments in
proportion to their size.
l If you get a quote for 1,000 sq ft, immediately find out if it is the carpet area or
super built-up area.
l There is no fixed ratio of super built-up to built-up or carpet area. Generally, the
ratios in multi-storey apartments are 75:35 (super built-up area to carpet area).
In a single floor there is very little loading of common areas to the tune of
5-10 per cent.
04
exit a property
based on its Our panel of contributors for this chapter are:
holding period, l Niranjan Hiranandani, MD, Hiranandani Group
return on l Paras Gundecha, President, MCHI-CREDAI (Mumbai)
investment
achieved, cost of
l
l
Getamber Anand, Vice President, CREDAI
Mohit Arora, Director, Supertech Ltd
funds, etc.
l Partho Mukherjee, Principal Advisor, MagicBricks.com
l Ananta Raghuvanshi, Director-Sales and Marketing, DLF India
05
CHAPTER-2
Selection
Shortlisting Your Property
How to choose the right property?
One should buy property in an area which has adequate basic amenities such as
power, water, sewerage, etc. It is important to do your checks and balances while
deciding on a project. Infrastructure in the area, connectivity, builders goodwill and
price of the property are key components a buyer needs to take into consideration.
A buyer should also carefully check points such as the builders experience, number
of projects completed and delivered, banking institutions involved and present buy
options available to suit your requirements. It is better you conduct a field survey
before identifying a suitable property meeting your budget and location preference.
booking.
a project that is richer in features and therefore commands a higher value. Once
there are a couple of projects in a locality that command a higher value, it pushes
the base value up.
Developers too, allow investors to make money by periodically revising values of
projects that are still under construction. Once this new value is released, brokers
and underwriters, small and big investors offload their properties at a value higher
than the original sale price but lower than the new sale price. They thus, book short-
term profits. This cycle happens at least two to three times during the
development cycle. End users enter towards the end of the cycle and purchase at
values that are at least 50 per cent higher than the original sale price. However,
with very little holding time, they get to buy very close to possession.
Where can I find
authentic If you are buying on a corridor where there are several projects, check on price
and specifications of multiple projects to get the best deal. If there is more stock
information about than demand, you have a better chance of negotiating a better value in the
properties? secondary market.
l Builder/Developer: Check the builders track record, his financial strength, his ability
You can choose to deliver on time, construction quality and the payment terms, especially in the
options from case of a local builder.
property websites
such as When is the best stage to buy?
MagicBricks.com If you have the required finances, ready-to-move-in is the ideal option for a home
buyer. For an investor, a ready-to-move-in property is feasible for business as he can
which post property buy and put it up for lease without any waiting period. Whereas, a house under
details, including construction eases the financial burden wherein you can finance your property
model apartments. through bank loans and pay less cash upfront. The downside of this type of property is
that possession will happen only after a certain time period. If you are a new investor
It is important that with limited finances, look for an under-construction property with a suitable payment
you or your relatives plan and keep a horizon of 2-3 years for possession. But make sure you go for a
reputed builder.
visit the site and
experience the
brand before
How do you choose the right type of property?
Depending on the chosen budget, one can decide the type of property. If you are
booking. an end-user, the size of your family, along with the budget can be a determining
factor while choosing the type of house you need. There is a wide range to choose
from today as the market abounds in various housing formats from 1, 2, 3 and 4BHK
apartments, to studios, villas and row houses, to builder floors and independent
houses. Multi-storey projects and townships with all amenities in one project
clubhouse, swimming pool, meditation center, health clubs, departmental stores,
schools, cinemas, sports facilities, banquet/party halls are what most end-users are
looking at today.
07
l Check the tentative layout/building plan and verify the plinth area of the
apartment. It is advisable to check the carpet area of the apartment and find out
if the difference between plinth area and carpet area is reasonable.
l Ask for Occupation/Completion Certificate.
l Ensure the Conveyance Deed is registered after the entire payment has been
made.
l For buying a property you need to check Deed of Conveyance, Mutation
Certificate (for complete property), Land Registration Status, Sanction Plan, Search
Report and Payment Schedule (for under construction). It is a must that you go
What are the through all the documents relating to the origin of the property, chain of Title,
Occupancy Certificate, sanctions from various authorities dealing with building
documents plans, fire safety and Completion Certificate.
required for l For re-sale property, check demand notice relating to renovation, tax dues and
registering a flat? latest receipts of payments made towards various out-goings such as water,
l
Hafeez Contractor, Founder & Principal Architect, Architect Hafeez Contractor
Ananta Raghuvanshi, Director-Sales & Marketing, DLF Homes
l Partho Mukherjee, Principal Advisor, MagicBricks.com
proof.
l Bopanna Madayya, VP Sales & Marketing, QVC Realty
l S Padmanabhan, VP, Maangalya Developers
l S Ramakrishnan, CEO, MARG ProperTies
08
CHAPTER-3
Spot On
Choosing The Right Location
INVESTING IN CITIES
proximity to the main locality but sport lower price tags. Also, look for property that is
being re-developed in city areas. They will be new and come with a maintenance-
free period. Older houses come cheaper but make sure you invest in refitting and
refurbishing the old plumbing and electrical lines before moving in if you want a
hassle-free stay.
If you are looking at more open spaces with modern complexes, move to growth
corridors on the suburbs and peripheries of cities. Since, they are built to suit modern
lifestyles and social facilities benchmarks are raised, you will get more add-ons such
as landscaping, cycling and jogging tracks, club houses and swimming pools and
other sports facilities. As they are at a distance from the city centre, they come with
cheaper price tags and construction linked instalment plans.
09
g u i d e t o b u y i n g a h o u s e
as a ratio of capital to rental values. Normally residential property gives a simple yield
of 2-4 per cent.
Appreciation largely depends on industrial, commercial and infrastructure
development in the area. Project-specific price increases can be expected across
these markets. This pertains specifically to projects that are being delivered or are
nearing completion.
should be
appreciation value Panvels future seems very promising. Therefore, the area is attracting lot of
developers and real estate investors. Similarly, Bandlaguda, located in South
Hyderabad, is witnessing immense interest from buyers and investors, especially for
considered. plots. Located close to the airport, Hi-Tech City and Outer Ring Road are the major
advantages of this locality. North Bangalores property values rose and buyer interest
peaked after the new airport was commissioned.
10
When it comes to
choosing a
location, look at
connectivity and
What are the advantages of investing in peripheral areas?
Peripheral areas are further from the core city than the suburbs. They form the fringes
of suburban areas and are chosen by buyers because they are cheaper than city
centres and even suburbs.
availability of basic
You can get bigger spaces at affordable prices with modern facilities which are not
civic and social available in age old properties within city limits. Rate of return on investment is more
infrastructure. Areas in peripheral areas, depending on the location. You also get more greenery and
that come under open space in the peripheral areas.
new infrastructure
and industrial What are the disadvantages of investing in peripheral areas?
Lack of accessibility to public transport and connectivity to city centres, under-
gowth plans are developed infrastructure and sometimes even lack of basic amenities such as water,
those that will grow
in the years to
electricity, etc as compared to the main city could be some disadvantages.
11
Do infrastructure, What are the long term benefits of investing in Tier-3 cities?
transport and The benefit of investing in Tier-3 cities is that with very little investment you can
connectivity drive become a part of the growth bandwagon. Lucknow and Hyderabad are two cities
which are worth looking at.
real estate prices?
l
Our panel of contributors for this chapter are:
Satish Magar, President, CREDAI, Pune
Paras Gundecha, President, MCHI-CREDAI, Mumbai
look at Delhi-NCR,
Gurgaon is one l Getambar Anand, Vice President, CREDAI
area where new l T Chitty Babu, President, CREDAI, Chennai
axis corridors are l Manoj Gaur, President, CREDAI, Western UP
opening whether l Harsh Vardhan Patodia, President, CREDAI, West Bengal
it is the Northern
l Kunal Banerjee, President, M3M Ltd
Peripheral Road,
l Sushant Muttreja, Earth Infrastructure
KMP Highway, or
l Sanjay Chawla, CEO, ERA Landmarks
the Southern
Peripheral Road. l Ish Anand, CEO, Phoenix Hodu Developers Pvt Ltd
These bring the l Bopanna Madayya, VP Sales & Marketing, QVC Realty
area under
development
l Ananta Raghuvanshi, Director-Sales and Marketing, DLF India Ltd
zone.
12
CHAPTER-4
Transactor
How To Choose An Agent
What do you suggest is the best medium to buy a property
through a realtor, a developer or an individual?
It depends on the property you are buying and who offers it to you. In case the seller
is a realtor, it is best to buy through him after doing a background check on his
reputation because he would know what legal checks must be made by you before
putting the money on the table. In case a seller is an individual he must hire the
services of a good lawyer to do a due diligence on title, etc before you write that
cheque. This money spent on due diligence may pinch today and seem
unnecessary but in the long run you will realize that this is a wise decision.
DEVELOPERS
13
g u i d e t o b u y i n g a h o u s e
member of either association or even not adhering to the rules there is no mandatory
code that can be enforced. In such cases, consumers have to resort to consumer
courts and the legal machinery.
consumers have? l Check for all the legal pre-qualifications and due diligence mentioned earlier.
l
Choose a builder who has a previous track record
Ask how many million sq ft he has already constructed and how many projects are
underway
Check out his past track record for timely delivery
l If public listed, check out balance sheet and quarterly reports to see how the
interest or you can
company has been faring financially
move to the court.
have these
Brochure should
l
l
Check if the project you are interested in is a Joint Venture (JV). If so, check out JV
partner as well and the details of the JV.
Also, check the neighbourhood market and features and rates in the vicinity of
provisions. other re-sale properties. Once you benchmark a property on the corridor, you will
be able to decide if the price asked for is justified or not.
14
Besides the per sq feet charges, what are the other charges in
a multi-storey apartment?
The other charges are maintenance, security, registration charges, preferred location
charges, external development charges, internal development charges, service tax,
etc. You must read the fine print to plan your budget properly.
How to find out the built-up area and actual carpet area?
The application form and the buyers agreement is available at the time of launch in
the builder's office and the clause explaining the super area loading is also a part of
Should one buy this document.
property with
lesser area from a How can a buyer be protected if the project is delayed?
As far as delay in completion of the project is concerned, it is important to check if
well-known there is a clause for damages provided in the agreement for sale/allotment letter. On
developer or go the approvals, you have to ask the developer to furnish copies of the approvals
for a larger area received from the statutory authorities like the municipal authorities, development
authorities and other statutory bodies.
by a lesser-known
developer? Can the developer impose 10 per cent payment before
l
Ravindra Pai, MD, Century Real Estate Holding
Sudhir Vohra, Architect & Urban Planner, Sudhir Vohra Consultants
good buy. l Rohtas Goel, MD, Omaxe
15
CHAPTER-5
Money Matters
Tax Implication
What are the taxes you have to pay while purchasing property?
If you are buying a new property, you have to pay Service Tax, VAT and Stamp Duty
on the total amount of purchase. If you buy re-sale property, then you do not have to
pay any of these taxes.
When are capital gains applicable and how can capital gain
tax be saved/reduced?
Capital Gain is applicable when:
l The sold property has been withheld by a person for a period of more than three
Tax Matters
16
g u i d e t o b u y i n g a h o u s e
more than 36
months and then it If a person invests a part of
is sold, the resultant his capital gain amount in
residential property, then is
capital gain would the remaining amount
be long term exempted from Income Tax?
capital gain on No, Income Tax is payable on the
which the capital remaining amount unless it is invested
in Capital Gain Bonds.
gain tax @ 20%
would be payable.
Can Capital Gain Tax be saved if the amount is invested in a
The short term
commercial property, agricultural land or plot?
capital gain is to No, Capital Gain Tax cannot be saved if the sale proceeds are invested in a
be added with the commercial property, agricultural land or plot. However, tax could be saved in a plot
other income of if a residential building is constructed within three years of selling the property.
slab rates of
calculated at the investing in a residential property?
Yes. One can buy a residential property from sale proceeds of a commercial
property to save capital gain taxes.
Income-tax.
Can two properties be bought from sale proceeds of one
property to save Capital Gain Tax?
No, one has to invest in one property to save taxes. In case two properties are sold,
one can either buy a single or two properties to save taxes.
17
Tax Implication
g u i d e t o b u y i n g a h o u s e
What is the last date for depositing capital gain amount as per
the Capital Gain Account scheme?
The last date to deposit the capital gain amount in the Capital Gain Account is the
last day by which one has to file the Income Tax return.
What are the capital gains and other taxation rules pertaining
to selling and buying land by a Non-Resident Indian?
The rules and laws are same for both Indians and Non Resident Indians (NRI). In fact,
the sale proceeds of an NRI from a property in India can be invested in a residential
I am planning to property outside India to save Capital Gain Tax.
buy a commercial
shop from my sale In whose name should a new property be registered to save
proceeds of a taxes?
Taxes will be saved only if the new property is registered in the name of the person
residential plot. who receives the capital gain, ie. the owner of the previous property. In case the sold
How much capital property was owned in a joint name, the new property should also be in the joint
gain tax do I have name of the same two people.
to pay?
apartment.
Our panel of contributors for this chapter are:
l Subhash Lakhotia, Tax Consultant, MagicBricks.com
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Tax Implication
g u i d e t o b u y i n g a h o u s e
CHAPTER-6
Advisors
Legal Perspective
What documents and formalities are required while buying
property?
Documents required while buying property are Identity Proof like Voters ID Card,
Passport, Driving License, Ration Card and Pan Card. Be careful of the Sale
Deed/Agreement and also check that the complete property chain is mentioned in
the Deed.
l Details of area including super area, covered area and carpet area
l Costing
l Date of possession, penalty in case of delay
l Exit option
l Specifications committed
l Payment plan
l Details of Land on which project is constructed and the project approval details
l Possession related charges
You can always buy property without appointing a power of attorney (POA). You can
For a resale go about it yourself. You just need to check that all the required papers are in order.
property, check if For this, you can also seek legal advice and guidance from a lawyer.
the property is
registered, the Can you sell property without the original registery?
construction date, First, you need to file a police complaint about the lost paper. Then you can apply for
a Certified Copy from the sub-registerars office. Also, give a public notice in
is the property free newspapers.
from debts or
disputes, is the title Is a daughter eligible for equal share in her parents property?
clear, check also Yes, as per the prevalent law, son and daughter are eligible for equal share in their
for NOCs from parents property.
various authorities.
No insurance Can a son sell property on his fathers behalf if the latter is
premiums are
available for
elsewhere and bed-ridden?
Yes, a son can sell a fathers property on his behalf if the father appoints him and
grants him the power of attorney to do so.
insuring plots.
Can a property which has been transferred through Gift Deed
be sold by the person after getting it registered in his/her
name?
Note that an occasion is not required for making a gift of property. The person
receiving the gift can sell the property from day one after receiving the same as a
gift. There is no Income Tax on the gift amount of the property, especially if it is from a
blood relative. Generally, the gift made is irrevocable.
20
Legal Perspective
g u i d e t o b u y i n g a h o u s e
per your agreement, getting any relief from any judicial agency would be very
difficult. If you are ready to accept the penalties awarded to you for your defaults,
you can demand specific performance on the part of the builder from the consumer
grievances forum.
in an agreement which goes beyond 11 months, the Lease Right Title and interest is
Title deed is the transferred, wherein eviction becomes difficult.
chain of
documents Is it possible to build the third floor above the second floor
through which the without a No Objection Certificate?
vendor acquires You need a No Objection Certificate (NOC) to get your plan sanctioned. You can
the right, title and build the third floor only if it is approved.
interest in the
property. There are Can a residential property without any Will be divided or
cases where the sold?
Children will have to mutate their names and sell the property.
seller mortgages
the property but
Can registery be done by the builder without your presence?
does not inform the
If you have given him the Power of Attorney, the registery can be done by your
buyer, so you must builder in your absence.
inspect the originals
before buying What are the formalities to be observed by a foreigner
property. For interested in buying property in India?
certificate of Title, Formalities would differ based on what you mean by a foreigner. There are different
rules for NRIs, foreigners of Indian origin and foreigners of Non-Indian origin. Also, it
you have to hire would depend upon the residential status and the kind of property such a person
services of a legal would wish to buy. Depending on the category of foreigners, there are different
practitioner who
does due diligence
protocols to be followed.
21
Legal Perspective
g u i d e t o b u y i n g a h o u s e
CHAPTER-7
Borrowing Funds
Home Loan
What are the factors you should keep in mind before getting a
home loan?
The main criteria are:
l Your income and your track record of repaying previous loans this is obtained
from the Credit Bureau.
l Your current expenses including other loans you are servicing. The amount of loan
related to the property value.
l Ownership of the property this means that the lending bank should be
comfortable that the seller has full and complete ownership of the property.
Smart Credit
l Getting a loan depends on the report of the local bank surveyor who will inspect
the property and give his recommendation.
l Home loan eligibility depends on your ability to pay (ie. based on your salary) and
not on the age of the building. However, the quantum of loan depends on the
age and undivided share too, in addition to your repayment ability.
You can pre-pay the loan amount, though some banks will levy penalty on pre-
The amount of the payment. But there are exceptions. For example, the State Bank of India does not
loan you are charge any penalty for pre-payment of loan. One should always ask the bank about
the pre-payment rules so that they do not face problems at a later date. Today, it is
eligible to, will vary wise to go with a bank that allows periodic part pre-payment of loans. This allows you
on the existing to keep paying back the principle amount when you get increments or sales
debts and your incentives or any other lump sum amount.
past record of
repayment. You What are the documents a bank asks for while approving a
home loan?
can get a loan of
The documents required for approval of home loan will vary from bank to bank.
Rs 20-25 lakh, However, the bank would require details of the property as also the details of your pay
assuming you have
no other debt still
slip and copy of two years income-tax returns.
23
Home Loan
g u i d e t o b u y i n g a h o u s e
then pay it back over a period of time using EMIs. Reverse mortgage is a type of
mortgage in which a home owner can borrow money against the value of his home.
Reverse mortgage is the loan given to senior citizens for their monthly expenditures
against their own property. The loan is given till the death of the owners and the
amount is recovered against the property after their death. The National Housing
Bank in India promotes a scheme in which the tenure is 15 years and the owner of
the house and his/her spouse continue to live in it till their death which can occur
later than the tenure of the reverse mortgage.
24
Home Loan
g u i d e t o b u y i n g a h o u s e
The documents
required for
approval of home
loan will vary from
Yes, it is possible that you are working in a particular city while procuring home loan for
construction of your house in another city. It is legally allowed for you to purchase
property in another city. Domicile is not a pre-condition to buying property
any more.
l
Dhrirajlal Rambhia, Chief Advisor, MagicBricks.com
Subhash Lakhotia, Tax Consultant, MagicBricks.com
tax returns.
25
Home Loan
g u i d e t o b u y i n g a h o u s e
CHAPTER-8
Handle your Finance
Managing Finance
Is real estate a better investment as compared to the stock
market?
The real estate market is similar to the stock market, with its peaks and troughs always
seeming to make perfect sense in retrospect. Also, both markets reflect the economy
of the country and offer good investment opportunities. However, the risks must be
understood along with the opportunities. Realty index will appreciate five times, but
not the stock market.
Investing in stocks:
The profit margin inherent in stock investment has always been higher when
compared to other asset classes. Stock market investments offer advantages such as
Money matters
liquidity and flexibility, which real estate does not. Stocks also offer growth rates that
the real estate market can rarely match.
Investing in real estate:
Home ownership is the most primary form of real estate investment. Unlike stocks, real
estate is a tangible asset that provides for greater psychological comfort, security
and satisfaction. Also, the return on investment for real estate is reasonably consistent
because of the phenomenon of property appreciation. Stock markets are far less
predictable.
26
g u i d e t o b u y i n g a h o u s e
of the city. It should be from a good developer and fit your budget. Also, consider
that at the launch stage and when you exit, you get some value appreciation. That
becomes your seed money. Most banks allow you to exit one loan and take another.
So, you can sell off the smaller priced property in a peripheral location and use that
as seed money to buy where you would like to stay. Else, you will always be behind
the market in terms of finance.
There is no set
formula but
statistics show that
if your home loan
your parents or spouses income. Secondly, your familys current expenses, including
all other loans you are servicing, are very important to be considered.
Do not spend more than 50 per cent of the total income on a monthly EMI.
Managing Finance
g u i d e t o b u y i n g a h o u s e
CHAPTER-9
Profit on property
Return on Investment (ROI)
What would be a safe and sound approach to buy property?
Do your complete research on the Web and physical survey of the projects. Invest in
projects which are at least 25-30 per cent complete as this will be comfortable in
terms of approvals. Brokers may sometime offer better rates than the developers
sales team. Bank approved projects are preferred since they give comfort in terms of
the approvals.
What kind of return should you expect from your purchase after
two years?
It is impossible to predict a return in two years. Property buying as an investment must
be looked at in terms of long-term holding capacity. While in the last two years,
certain properties in metros have gone up by 20-80 per cent, in some cases that
cannot be an indication of what the future holds. An exit after four years usually yields
Price it right
good returns.
28
g u i d e t o b u y i n g a h o u s e
29
CHAPTER-10
Reap the benefits
Exiting the market
On what basis should I decide to sell my property?
Your decision to sell your property depends on the following factors:
Property market in your city/locality: The residential property market is location-
specific and the prices will vary for different areas.
How soon do you need the money? Do not sell your property in a hurry if you do not
need the money urgently. Getting the best deal may require patience or even spend
some money to add value to your house. You also need to consider the rental return
from the property as it will be a source of steady income.
Price it right: The biggest mistake sellers make is in pricing their property too high. The
best way to determine the ideal price for your property is to check with brokers in the
locality or by listing it on property portals online.
Consider the taxes: How much you actually get after you sell the property will
Winding up
depend on how long you held the investment. If you sell your house within three years
of buying it, you will lose the tax benefits.
In case of a mortgaged property: Selling a house that has an outstanding loan
requires a lot of documentation. So, try to pay the loan and then sell the house.
30
g u i d e t o b u y i n g a h o u s e
its return on
investment
achieved and cost
What are the documents I need, to sell a property in a housing
society?
The housing society share certificate and the sale/purchase deed of the property are
of funds. the main documents required to sell a residential property. If the property has been
sold and bought multiple times, a copy of previous deeds may be required to prove
the authenticity of the deal. Other than these, copies of Stamp Duty and registered
house documents will also be needed. In case of property being mortgaged, these
papers will be held by the bank and you can use a photocopy of the required
documents to initiate a deal. Depending on the kind of property and ownership,
some more documents, such as a No-Objection Certificate from the housing society
and a documented consent in case of jointly owned property, may be required.
31
However, an NRI can sell agricultural or plantation land or a farm house only to a
person who is resident in India and a citizen.
Can an NRI/PIO/
Our panel of contributors for this chapter are:
Foreign National
buy property in l Anuj Puri, Chairman & Country Head, Jones Lang LaSalle, India
India? l Kunal Banerji, President, M3M Group
Yes an NRI/PIO/
Foreign National
can buy Property
in India.
l
l
Vikas Vasal, Executive Director, KPMG India
Niranjan Hiranandani, MD, Hiranandani Group of Companies
Kaustuv Roy, ED, Cushman & Wakefield
l Sunil Mantri, CMD, Sunil Mantri Realty
NRIs can own l Ramesh Bhojwani, a Mumbai-based financial expert
non-agricultural
NA land only.
If you have
agriculturist
relatives you can
buy agricultural
land, in the name
of your blood
relatives.
32
CONTACT US
l Post your feedback on content@magicbricks.com
l Join our discussion forum at openhouse.magicbricks.com
l For business enquiries sales@magicbricks.com