- Tips on Buying an Apartment
- Purchase Guidelines
- NRI Buyers Guide
TIPS ON BUYING AN APARTMENT
Living in an apartment offers the advantages of community living. A swimming pool, club house and landscaped gardens come for a small price. One doesn't need to go far to workout in a gym or to play a game. Security is a major factor in apartment complexes apart from the conveniences in terms of maintenance and civic amenities that it offers.It has the distinct advantage of water and power being available for sure. Help is on hand and life is a lot easier.
The apartment culture is all about a community bonding and breaks barriers.With the growing trend of nuclear families where both spouses travel, an apartment may be easier to lock up and leave for long periods of time.
Location, budget, the need and lifestyle go into decision making while buying an apartment. Read on for a few tips to guide you in making the right choice.
Define your requirements for a home
Do you want to buy an apartment for self occupation or for invetment.
- The preferred size of the apartment. How many bedrooms do you require.
- What should be the optimum size of each room?
- Does it meet your present and possible future requirements?
- This check should simultaneously be made for sizes of living room, dining room, kitchen, balconies and servant room.
- What is your budget & accordingly look for something suitable. You also have the option to avail of a housing loan.
- The location you would prefer. Close proximity to schools, colleges,hospitals, supermarkets, etc.
- What about parking? Do you require an open or covered parking?
- What about water and power supply?
- Is it sufficient to meet all your needs and demands?
- How good is the ventilation and direction?
- What are the specifications offered i.e. the kind of floorings being offered, the tiles in all the rooms, the quality of woodwork for doors, windows etc.
- What are the amenities offered like club house, swimming pool, gym,.supermarket, landscaping, etc.
- Security and maintenance.
Things to take care before you buy a house from a builder/developer Legal Aspects
- Check whether the title of the property is clear
- Carefully scrutinize the contract, and consider legal review before signing.
- Ensure that the builder has entered into proper development agreements.
- Check if the builder has the authority to sell. Scrutinize draft of agreements to be executed for sale by the builder.
- The sanctioned building plan should be verified and then one has to seek confirmation from the municipal authorities that if it adheres to building bylaws.
- Be sure that the builder/developer has acquired approvals from the Municipal Corporation, Area Development Authorities, Electricity Boards, Water Supply & Sewage Boards.
- Check, if the builder has title and possession, including the right to convey transfer. Check if the transfer of property approvals have been obtained from the statutory land development or planning authority or competent authority constituted under the Urban Land Ceiling and Regulation Act and the Income-Tax Act. If so, have the approvals been obtained?
- Ask for completion and occupation certificates.
- Where is the building located? Check the approach roads
- What is the distance from other facilities like schools, colleges, transport facilities, markets, hospitals, etc?
- What is the general profile of occupants in the building and surrounding areas.
- Visit the developer's earlier projects to check out the quality of the construction, landscaping, and other amenities. Who are the architects & the contractors. Is your home earthquake-proof?
- Ask residents if the developer has delivered what was promised.
- Check for the specifications offered by the builder - flooring, sanitary / kitchen fittings, etc.
- Check on amenities provided in the building and if any additional cost is involved for the use of these amenities.
- Check on the availability of uninterrupted supply of utilities like water & power, a good drainage system.
- What is the approximate stamp duty & registration cost involved.
- If the building is under construction, confirm tentative time for completion - enforce suitable penalty in case of delay.
- Check your financial situation. How much of loans will banks, financial institutions or your company can provide.
Real Estate Jargon
Super Built up Area
This includes the apartment along with the corridors and passages, lift wells, electrical and sanitary ducts, stairways and fire escapes, common areas such as lobbies and club houses. The space considered super built up is in effect the entire building including the thickness of walls, balconies and all other common amenities which are divided in proportion to individual apartments. This varies from building to building. If the building has wider corridors and more amenities, the super built up area will be larger.
This comprises the apartment including the thickness of all the exterior and interior walls. It includes only the dwelling unit and walls around it and not the common amenities or corridors in the building.
This is the actual and physical useable area in the apartment. It is the area within the four walls of the apartment, where you can lay a carpet. It does not include the wall thickness or any of the common amenities in the building.
Documents to be verified before Purchase of a Flat?
Before you purchase a flat, you have to have a title and document scrutiny conducted by a competent advocate. You cannot do it yourself. You have to use the services of a competent advocate. It is a professional job to be done with professional assistance.
What is the difference between Built up Area, Super Built up Area and Carpet Area?
- (a) Carpet Area : This is the area of the Apartment / Building which does not include the area of the walls.
- (b) Built up Area : This includes the area of the walls also.
- (c) Super Built up Area : This includes the Built up Area along with the area under common spaces such as the Lobby, Lifts, Stairs etc. This term is therefore only applicable in the case of multi-dwelling units.
What are all the important documents one should check before buying any property?
If you want to purchase a property, you have to look at the approved layout plan, approved building plan, ownership documents, Encumbrance Certificate, etc. Contact an advocate before you purchase a property so that he can advise you.
Who is liable to pay Stamp Duty the Buyer or the Seller?
The liability of paying Stamp Duty is that of the buyer unless there is an agreement to the contrary.
The Stamps are required to be purchsed in whose name?
The Stamps are required to be purchased in the name of any one of the executors to the instrument.
What is meant by the market value of the property and whether Stamp Duty is payable on the market value of the property or on consideration as stated in the agreement?
Market value means the price at which a property could be bought in the open market on the date of execution of such instrument. The Stamp Duty is payable on the agreement value of the property or the market value which ever is higher.
What is the prevailing practise for fixing guideline value in sale of flats in the case of Newly Built Flat or Old Flat?
a) When a newly built flat is registered the stamp paper is to be paid for the undivided share of land which is to be conveyed.
b) When an old flat is registered the Stamp paper is to be paid for the total consideration. (i.e. for the land and building).
Which are the instruments that attract payment of Stamp Duty on?
The instruments like Conveyance Deed, Exchange of Property, Gift Deed, Partition Deed attracts Stamp Duty on market value of the property.
Who is the appropriate authority for knowing the market value of the property?
The Sub-Registrar / District Registrar of the area in whose jurisdiction the property is located is the appropriate authority for knowing the market value of the property.
What exactly do we mean by a Free Hold Flat? What are the advantages and disadvantages, if any?
A freehold property (plot or a flat) is one where there is a whole and sole owner(s) ownership is full and unconditional (within the provisions of the laws of the land) and there is no lessor / lessee involved.
How to verify the authenticity of the various documents submitted by the seller of the house, particularly with regard to the possibility that the house has not been sold earlier to a third party?
Regarding authenticity of documents, again you have to take the help of an advocate to verify.
Upon buying a flat from a builder in a building under construction, what are the permissions and papers that one should check with the builder, so as to ascertain the genuinity of the builder?
When you are buying a flat from a builder in a building under construction, you have to check the following: Approved Plan of the Building along with the number of floors. Ensure that the Floor what you are buying is approved. Check if the land on which the Builder is building is his or he has undertaken an agreement with a landlord, if so, check the title of the land ownership with the help of an advocate. Check Specifications given in the Agreement to sell off the Sale Brochure. Is he providing the same actually on the ground or not? Check the Reputation of the Builder.
What are the Extra Charges that a transaction comprises of?
a) EB Deposit for 3 Phase connection and expenses.
b) Underground Drainage Connection Deposit and expenses.
c) Water Connection and expenses.
d) Property tax assessment and tax expenses and
e) Sales Tax as applicable.
- II. Car Parking if applicable as this depends on whether or not a slot is opted for.
- III. Stamp Duties and Registration Expenses.
- IV. Monthly maintenance Charges
- V. Corpus Fund.
Who is a non-resident Indian (NRI)?
An Indian Citizen who stays abroad for employment/carrying on business or vacation outside India or stays aboroad under curcumstances indicating an intention for an uncertain duration of stay aboroad is a non-resident. (Persons posted in U.N. Organisations and officials deputed abroad by Central/state Government and Public Sector undertakings on temporary assignments are also treated as non-residents). Non-resident foreign citizen of Indian Origin are treated on par with non-residential Indian Citizen (NRIs) for the purpose of certain facilities.
Who is a person of Indian Origin?
For the purpose of availing of the facilities of opening and maintenance of bank accounts and investments in shares/securities in India.
A foreign citizen (other than a citizen of Pakistan or Bangladesh) is deemed to be of Indian Origin, if, he, at any time, held an Indian Passport, or he or either of his parents or any of his grand parents was citizen of India by virtue of the Constitution of India or Citizenship Act, 1955 (57 of 1955).
Note: A spouse (not being a citizen of Pakistan or Bangladesh) of and Indian citizen or of a person if Indian Origin is also treated as a person of Indian origin for the above purposes provided the bank accounts are opened or investments in shares/securities in India are made by such persons only jointly with their NRI spouses. For investments in immovable properties.
A foreign citizen (other than a citizen of Pakistan, Bangladesh, Afghanistan, Bhutan, Sri Lanka or Nepal), is deemed to be of the Indian Origin if he held and Indian Passport at any time, or he or his father or parental grand-father was a citizen of India by virtue of the (Constitution of India or the Citizenship Act, 1955(57 of 1955).
Do non-resident Indian citizen require permission of Reserve Bank to acquire residential/commercial property in India?
Do foreign citizens of Indian Origin require permission of Reserve Bank to purchase immovable property in India for their residential purpose?
Reserve Bank has granted general permission to foreign citizens of Indian Origin, whether resident in India or abroad, to purchase immovable property in India for their bonafide residential purpose. They are, therefore, not required to obtain permission of Reserve Bank.
In what manner the purchase consideration for the residential immovable property should be paid by foreign citizen of Indian Origin under the general permission?
The purchase consideration should be met either out of inward remittances in foreign exchange through normal banking channels or out of funds from NRE/FCNR accounts maintained with banks in India.
What are the formalities required to be completed by foreign citizen of Indian Origin for purchasing residential immovable property in India under the general permission?
They are required to file a declaration in form IPI 7 with the Central Office of Reserve Bank within a period of 90 days from the date of purchase of immovable property or final payment of purchase consideration alongwith a certified copy of the document evidencing the transactions and bank certificate regarding the consideration paid.
Can such property can be sold without the permission of Reserve Bank?
Yes, Reserve Bank has granted general permission for sale of such property. However whether the property is purchased by another foreign citizen of Indian Origin, funds towards the purchase consideration should either be remmitted to India or paid out of balance in NRE/FCNR accounts.
Can sale proceeds of such property if and when sold be remitted out of India?
In respect of residential properties purchased on or after 26th May 1993, Reserve Bank considers applications for repatriation of sale proceeds up to the consideration amount remitted in foreign exchange for the acquisition of the property for two such properties. The balance amount of sale proceeds if any or sale proceeds in respect of properties purchased prior to 26th May 1993, will have to be credited to the ordinary non-resident rupee account of the owner of the property.
Are any conditions required to be fulfilled if repatriation of sale proceeds is desired?
Applications for repatriation of sale proceeds are considered provided the sale takes place after three years from the date of final purchase deed from the date of payment of final instalment of consideration amount, whichever is later.
What is the procedure for seeking such repatriation?
Applications for necessary permission for remittance of sale proceeds should be made inform IPI 8 to the Central Office of Reserve Bank within 90 days of the sale of the property.
Can foreign citizen of Indian Origin acquire or dispose of residential property by way of gift?
Yes. Reserve Bank has granted general permission to foreign citizen of Indian Origin to acquire or dispose of properties up to two houses by way of gift from or to a relative who may be an Indian Citizen or a person of Indian origin whether resident in India or not, subject to compliance with applicable tax laws.
Can immovable peoperty held in India, be transferred by way of gift to relatives/registered charitable trusts/organisations in India?
Yes. General permission has been granted by Reserve Bank to non-resident persons(foreign citizen) of Indian Origin to transfer by way of gift, immovable property held by them in India to relatives and charitable trust/organisations subject to the conditions that the provisions of any other law, including Foreign Contribution (Regulation) Act, 1976, as applicable, are duly complied with.
Can foreign citizen of Indian Origin acquire commercial properties in India?
Yes. Under the general permission granted by Reserve Bank properties other than agricultural land/farm house/plantation property can be acquired by foreign citizen of Indian Origin provided the purchase consideration is met either out of inward remottance in foreign exchange through normal banking channels or out of funds from the purchaser's NRE/FCNR accounts maitained with banks in India and a declaration is submitted to the Central Office of Reserve Bank in Form IPI 7 within a period of 90 days from the date of purchase of the property/final payment of purchase consideration.
Can they dispose of such property?
Can sale proceeds of such property be remitted out of India?
Yes. Repatriation of original investment in respect of properties purchased by foreign citizen of Indian Origin on or after 26th May 1993 will be allowed to be remitted up to the consideration amount originally remitted from abroad provided the property is sold after a period of three years from the date of the final purchase deed or from the date of payment of final instalment of consideration amount, whichever is later. Application for the purpose are acquired to be made to the Central Office of Reserve Bank within 90 days of the sales of property in Form IPI 8.
Can the properties(residential/commercial) be given on rent if not required for immediate use?
Yes. Reserve Bank has granted general permission for letting out any immovable property in India. The rental income or proceeds of any investment of such income are eligible for repatriation.
Can NRIs obtain loans for acquisition of house/flat for residential purpose from authorised dealers/financial institutions providing housing finance?
Reserve Bank has granted general permission to certain financial institutions providing housing finance e.g. HDFC, LIC Housing Finance Ltd., etc., and authorised dealers to grant housing loans to non-resident Indian nationals for acquisition of a house/flat for self-occupation subject to certain conditions. The purpose of of the loan, margin money and the quantum of loan will be at par with those applicable to housing loans to residents. Repayment of loan should be made within a period not exceeding 15 years out of inward remittance or out of funds held in the investor's NRE/FCNR/NRO accounts.
Can Indian companies grant loans to their NRI staff?
Reserve Bank permits Indian Firms/Companies to grant housing loans to their employees deputed abroad and holding Indian passports subject to certain conditions.