Important Questions & Answers to Ask & Understand
How can you ensure that the seller has full title and ownership of the apartment?
You need to verify that the seller does, in fact, own the apartment and is identified by name on the title documents. If you cannot verify these facts or if the seller does not legally own the apartment, you need to drop this property from consideration.
To verify title and ownership, you need to see the following:
- The actual deed and title documents
- Make sure that all documents are stamped properly
- Katha registration
What is the Real Estate Regulatory Authority (RERA) and why is it important?
On March 10, 2016, the government of India formed RERA to protect unsuspecting home-buyers from unscrupulous builders. Now that governmental regulations have been put in place for your protection, it is up to you as a prospective buyer to understand the regulations.
RERA’s most important clauses involve the following:
- Regulations: Specific regulations have been established to prevent fraudulent transactions as well as unnecessary time lags.
- Registration: Properties that measure more than 500 sq. ft. must be registered with RERA if it is to be advertised for sale. Avoid builders or sellers who do not abide by this regulation.
- Exclusive Reserve of Buyers’ Funds: RERA will not assign a number to a particular property unless the buyers’ money is being exclusively held for that property. If the property you’re buying has been assigned a RERA number, your funds are safe. Top builders and developers in a city like Bangalore ideally gives this fund reserve information to the buyers.
What factors should be considered when choosing a location?
If you have not yet made a final decision on the location, it would be wise to consider the following factors:
- Accessibility & Connectivity: How accessible is the city from this location? Is this location connected to all modes of transport including local roadways, railways, metro, and airport?
- Neighborhood & Community: You should consider the specific neighborhood and the surrounding community because they will definitely affect your lifestyle. If you have or will be raising a family you will want to know the crime statistics.
- Local Facilities: An ideal location would have the necessary facilities to provide for your basic needs, like health care, security, grocery stores, and good schools if you have a family.
- Amenities Provided: Most builders provide parking space(s), security cameras, a clubhouse and a fitness center. It is up to you to determine whether the property you are considering offers the type of amenities that fit in with the lifestyle you’re seeking.
What exactly do Carpet area, Built-up area, and Super Built-up area mean?
It is important that you know the distinction between each of the three types of areas so that an unscrupulous builder does not cheat you. Builders often try selling properties based on the size of its built-up area, which includes some unusable space. Or, the builder might show buyers an enormous super built-up area, which they would not be able to use as often as other owners.
These are the distinctions you need to know:
- Carpet Area: This would be the actual living space enclosed between the walls where the carpet would be laid. This does not include the space taken up by the inner walls. It only includes the actual usable living space in the apartment.
- Built-up Area: This is comprised of the carpet area, the thickness of the inner and outer walls plus the size of the balcony.
- Super Built-up Area: This includes the built-up area, the proportionate common areas of the lobby, staircases, lift shaft, and etc. In some cases, it also expands to include the clubhouse, swimming pool, and garden areas.
Do local banks offer loans on this particular development?
Every development should have an Approved Finance Number or Code (APF). Banks and other housing finance companies (HFCs) provide the APF, which signifies that the development has all the necessary approvals so that prospective buyers can safely invest in the development and the developer has credibility with the banks.
This means that buyers do not have to investigate by asking the developer to provide all kinds of documentation. Buyers only need to gather their own financial documents when applying for the loan. Once the developer discloses the APF Numbers, you will know that the project has all the appropriate credentials.
What about tax deductions?
When you take out a home loan you can save on your taxes under Section 80 c. We all know this, but what many buyers don’t know is that the Income Tax Act allows for other tax deductions as well. If you paid a registration fee, stamp duty and incurred other expenses related to buying your home, those too may be deducted from your gross income for tax purposes for the tax year in which you incurred those expenses.
If you purchased a house or apartment using a development authority’s installment finance scheme in which your installment payments are being sent to the authority, then the amounts you are paying towards principle can also be deducted under Section 80 c.
What are an OC and a CC?
After construction is completed on the project the municipal authorities in each city issue an Occupancy Certificate (OC) and a Completion Certificate (CC). The Completion Certificate signifies that construction on the building has been completed according to the plan appropriate authorities had approved. After the developers receive the Completion Certificate, all buyers will get an Occupancy Certificate that allows them to take possession of their apartments or houses. These certificates are mandatory and can be obtained when ownership and title are properly verified.
What will be your return on investment?
People always say, “The best investment you can make is in the property.” That very well may be true, but only up to a point. You need to ask what the value will be in the upcoming years? What other developments are planned in your location? Are there any Special Economic Zone (SEZ) benefits planned nearby? Will your accessibility and connectivity improve due to an upcoming metro station? Is there a highway close by? These are the things you need to look into before you choose a property to buy.
When all is said and done, when you can answer the above questions with certainty you will have the information you need to make a decision on which residential property to invest in. You can expect to receive further information in future blogs. I would appreciate hearing from you as well if you have any comments or feedback.