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HOW TO BUY AN APARTMENT IN UNDER CONSTRUCTION PROJECT?

This is one of the most un understood part of home buying. For the layman, booking a new under construction apartment means walking into any under construction project and going through the entire promotion routine of the sales team of the project. And then coming back awestruck and wanting to break that FD to acquire the beautiful dream they have sold you. But wait! There is more to it than meets the eye. Unless you do your due diligence, you may end up in a financial swamp that you will spend the rest of your life trying to get out of. So let us see how to buy a beautiful house of your dreams in the right way. And yes, today you have the government behind you to help you in the form of RERA (Real Estate Regulatory Act 2016). They have laid down stringent regulations and safety net for new under construction projects developed by any developer. So it starts from there;


*The Developer

The most important and crucial part of deciding on any under construction project is the reputation of the developer in terms of their past history of completing and delivering projects on time and with promised amenities. Just having many projects is not necessarily a benchmark of being a good developer. But visiting one project will definitely give you an idea of their quality of construction. You may have to research about their caliber before considering their options. Best thing is to have a word with people who have already purchased there or of course you can google too - provided you do enough research. You can also check out the company's financial status - like whether they are listed companies or part of conglomerations etc

Some of the reputed developers are TATA Housing, Shapoorji Pallonji, Lodhas, Godrej Properties, Mahindra Life Spaces, Rustomjee etc with Adani Realty and Birla etc. recently joining the bandwagon. You may find many developers localized in particular areas.


* The Project

This is decided based on whether you are an end user or an investor.

If you are and end user, the locality and location of the Pre-launching / Launching or under construction new project should be considered primarily to ensure whether it will suit yours and and your families life activities. Like accessibility to nearest transport modes and essential facilities nearby like doctors, schools, banks etc. Some developers start projects in localities far from existing townships and develop that area as a new town ship since they could acquire land at much cheaper rates there. However this could end being far from your work place, Children's schools etc.

If you are an investor, you have the liberty to invest in under construction projects which at the current moment may not be in developed localities but may eventually turn into one and fetch a much higher appreciation than in projects that already are in saturated areas.

However, different cities may have different criteria. Under construction projects in Pune may have a different connotation with respect to their location vis a vis the city center. While under construction projects in Mumbai may have different implications with respect to accessibility because Mumbai us a linear city.

Apart from the locality, other things that need consideration are the quality of construction, land area of the project, the number of towers and amenities. You may not get everything in one project and you may have to trade off what you feel may be less important in your bucket list.

* The Flat

Nowadays, you may hear about the term loading when people discuss buying apartment in new under construction projects. This is because of the Carpet, Built Up and Super Built Up concept. What do they mean ? Carpet area is the wall to wall usable area inside an apartment. However nowadays this is also is spoken of in two parts - the usable area as presented by the developer and RERA carpet area (as specified by RERA). Usable area may include balconies, flower bed area etc. While RERA Carpet is without them. So be careful when the term Carpet Area is used. A significant difference from earlier buildings and current ones is the design. Today they tend to give you beautiful designs which may actually give an impression of less space. So you might want to gauge the real picture carefully. There could be dry areas provided. The total carpet area is increased by the wall thickness size to get the Built up area and further add a proportionate percentage of the common areas, amenity areas, parking etc to arrive at the Super Built Up area. Though as per RERA all flat configurations have to be shown in actual usable carpet area, many people talk in terms of Super Built Up area which can be misleading of the actual available space inside the house.

Sometimes a 2 BHK in an under construction project may offer better options compared to a 1 BHK in an under construction project. Basically because, nowadays due to the customer's need for amenities and budget constraints multiple options of different different carpet areas for the same configuration are offered. Also the concept of half bedroom has arisen to meet the need for more rooms but within lower budgets.

Other than that, check out the quality of fittings and fixtures.

Some of the other important factors that effect the choice of the flat is - Floor, View and Direction. Higher the floor, higher the price band. To get a preferred view, you may need to book much earlier than the others. Many people are into Vaastu nowadays and hence generally want a Vaastu compliant direction (Basically exit direction) for the main door. So better get that checked within the family or from a Vaastu expert if you are into it.


* Price

The Achilles Heel in the entire exercise ! Generally there are different price levels starting from the explorative pricing adopted during the prelaunch period to the prices at Launch stage and then the escalation stage. All are based on inventory sale projections. At the prelaunch stage they may take a bankable or non bankable cheque or card payment as Expression of Interest(EOI) towards the project. This may ensure your preferred unit being blocked till the time of booking - at/after the launch where the actual configurations, prices etc. are disclosed. You then have the option of booking the flat with a token amount or withdrawing the EOI.

The various components of the pricing are - Flat Cost, floor rise, Other Charges like Parking, Club House charges, Maintenance charges, Infrastructure charges etc, GST, Stamp Duty and Registration Fees.

A typical 1 BHK in an under construction project in Mumbai would cost between 1 to 2 Crores in the suburbs. A 2 BHK between 2 to 4 Crores

Whereas in Under Construction Projects in Thane Municipal limits, a 1 BHK could would cost between 45 Lakhs to 80 Lakhs and a 2 BHK could cost between 80 Lakhs and 2 Crore depending on the locality and developer.


As of today the stamp duty in Maharashtra is 6 %, GST on under construction property is 5 % and registration fees is a flat Rs.30000.

A statutory requirement while buying a property is to deduct an amount of 1% from the transaction value and paid into the TDS account of the seller (in this case the developer). This onus has to been put on the buyer as per tax laws.


* Payment Options

In the event you have have decided to book the flat after launch, you may be presented with various payment options like

Subvention
Construction Linked Plans
Annual Plans
Loan options

Subvention schemes come as 5:95, 10:90 etc. What this means is you pay either 5% or 10% or as per whatever ratio of subvention is offered upfront. Then the remaining amount is paid at either on possession of the flat or one year before possession etc. This effectively means your loan / EMI starts after that. Subvention schemes can be offered by the builder himself directly or by a bank (where the Developer pays the pre EMI till the buyers EMI starts).

Construction Linked Plans means paying as per the progress off the construction.

Annual Plan means paying a fixed amount every year.

Loans are the typical traditional option. Depending on your eligibility the bank will pay the developer upfront the loan amount after you have paid your own contribution towards the price which may be 10% or 20% as per the loan plans. Generally developers would have tied up with various banks to offer their best products to the client at the time of purchase. Generally they require your bank statements/ITR/Salary slips etc. to estimate your eligibility for the required amount.


* Documentation

Very important part of your purchase. Though generally most RERA developers would have their statutory profile proper, it is always necessary to check some of the following documents at the time of purchase:

Mainly - Title Documents, Occupation Certificate, Government approved Floor Plan Layout, Sale Agreement

You can refer to a property lawyer to confirm all these documents or if you are going for a loan, the Banks will do the needful for you. When you take a loan, the documents are pledged / mortgaged with them. And they give you a confirmation of the list of documents received by them on their letterhead. After repaying the loan, you have to take back the documents from them.



RERA Rule :

RERA does have its regulations that state that every under construction project should have an escrow account where the funds ear marked as capital for the project and all moneys collected towards the project from buyers have to be parked . And a major chunk of that money can be used only for that project. So that means, every RERA registered project should have sufficient funds to complete and deliver as committed. Also the developers are required by RERA to deliver within stipulated period with a grace period of one year.

RERA also regulates developers and agents in all under construction project deals. They secure the interest of the property buyer.


For more information visit https://www.landshoppe.com

AUTHOR : Anit%20Gopinath
Posted on : 2022-03-03 00:00:00;

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