FAQ

Money & Investment Terms

In addition to the price of the property, the buyer needs to pay the registration cost, stamp duty on registration, service tax, Value Added Tax while buying a property.

The documentation required while purchasing a property includes a blue print of the building plan/layout, certificate of commencement, certificate of completion, permission of non-agricultural use of land in case the land is originally an agricultural land. A 7/12 extract in case of land property [specific to states like Maharashtra] and a NOC from the builder are also needed. In case of resale, previous sale deeds are a must. All these documents should be thoroughly verified by a competent advocate.

Before signing the purchase agreement, the buyer should check the details like base price mentioned, additional charges like PLC, club membership, carpet area along with facilities, taxes applicable, payment mode, occupation certificate, building insurance, schedule of possession and penalty clause in case of project delay.

There are many factors to be considered at the time of property purchase like the locality or the area of the home, whether all the basic and civic utilities are available, transport facilities, construction quality, the carpet, built-up and super built-up area of the flat, provisions of basic features like water and power supply, and most importantly, reputation of the developer.

Stamp duty refers to the tax paid to the government just like sales tax or income tax and should be paid on time and in full. A stamp duty paid document is an important and legal instrument to be taken care of.

As per a ruling by the National Commission, the buyer is entitled to get a refund of the amount along with the interest and compensation in case of project delay. He can also lodge a customer complaint and take legal help.

Registry is the database which stores all the important documents etc. Whereas, Power of Attorney refers to the right/authorization given by the owner to someone whom he trusts and to whom he assigns the power and rights to deal with the property under inevitable conditions.

A Freehold Flat is the one which has a whole sole owner of the property with the ownership being complete and unconditional as per the regulations of the law of land and does not have any kind of involvement of any lessor/lessee.

Developers

A buyer can choose a good developer by getting references from people, finding out how happy they are with their homes, construction quality and builder’s conduct. They can get quotations from shortlisted builders in writing, mentioning all the details of the project like site maintenance, necessary approvals and permissions, required clearance, material supplies, charges, etc. It is very important to check the reputation of the builder.

In case of a multi-storey apartment, the apartment owners and tenants have to pay many other charges for the services and amenities enjoyed like the Preferential Location Charge, External electrification charges, Firefighting equipment charges, Infrastructure development charges, External development charges, Car parking space, Club membership etc.

The real estate online web portals can be helpful for comparing projects across different cities, locations on the basis of property designs, price , features and facilities provided and, of course, the reputation of the builder.

A buyer needs to check the genuinity on various grounds like the approved building plan with all the details, assurance that the floor being purchased is approved, building is being structured as per the specified rules and regulations of that area and to make sure that the urban land NOC if required has been taken or not. It should also be confirmed that the land on which the building is coming up is builder’s own or is under some kind of agreement with the landlord.

Home Loan

There are different types of home loans available depending upon the purpose for which the home loan is being taken.

  • Home Purchase Loan
  • Home Improvement Loan
  • Home Construction Loan
  • Home Extension Loan
  • Land Purchase Loan
  • Loans for NRIs

In order to avoid any unpleasant surprises in future, the buyer should at the first place be aware of his financial credibility, eligibility and affordability. He should compare the interest rates offered depending on the type of loan, and should be aware of other things like refinancing option, flexible payments option, foreclosure charges if any and part payment facility.

For taking a home loan, the applicant should be either an NRI or an Indian resident, should be of minimum 24 years of age at the time of loan commencement and below 60 years at the time of loan maturity and should have a steady income source.

The extra costs usually accompanying a home loan are the Processing Charges, Pre-Payment Charges and Miscellaneous Costs like some sort of documentation or consultation charges.

Both principal and interest of home loans have tax benefits as specified under section 80C of the Income Tax Act 1965:

Principal amount of repayment of loan along with other savings such as PF, PPF, Life Insurance premium etc up to a maximum of Rs 1, 00,000/- will be eligible for deduction from gross income.

Interest paid up to a maximum of Rs 1, 50,000/- will be eligible for deduction from gross income on loan after completion of construction and will be deductible from income from property.

NRIs

While purchasing property in India, the NRI needs to be aware of the market trends of property rates in that area, check all documents related to the property, check for approved layout plan, all clearances from municipality & electricity etc, check the building bye-laws in that area to find out violations if any and confirm whether all the charges and taxes have been duly paid or not.

As per RBI, for housing loans being given to NRIs, the loan amount should not exceed 85% of the property value. NRIs own contribution in the loan amount as well as repayment of the loan is to be done via foreign remittances through normal banking channels.

The Municipal authority in some states is the ultimate monitoring authority whereas for smaller states and rural areas, the town and country planning corporation acts as the monitoring authority.

No permission is required from RBI in case of an NRI purchasing property in India except for plantation / agricultural land /farmhouse.

No, there are no limits on the number of residential properties that can be purchased by an NRI but repatriation is allowed only for two such properties.

An NRI can make all requests for purchase of agricultural land/plantation property/farm house to: The Chief General Manager,
Reserve Bank of India, Central Office
Exchange Control Department
Foreign Investment Division (III)
Mumbai 400 001

The authorized dealer can allow repatriation of sale proceeds provided the property was purchased as per provisions of the Exchange Control Rules/Regulations/Law in force at the time of purchase, or the provisions of the Regulations framed under the Foreign Exchange Management Act, 1999. The amount to be repatriated should be lesser than the foreign exchange taken to purchase the said property.

Yes, an NRI can take loan against the security of immovable property from any authorized dealer provided the loan amount should be utilized for borrower’s business purposes or for catering to any other personal requirements. It should not be used for any prohibited activities nor can be remitted outside India.

Glossaries & Abbreviations:

BSP

Basic sale price is the basic price of the property. This cost does not include other charges like EDC/IDC/IFMS/EEC/PLC/Club membership and car parking.

PSF

Per Square Feet.

BWSSB & KPTCL (WATER & ELECTRICITY CHARGES)

BWSSB strands for Bangalore Water Supply and Sewerage Board and KPTCL stands for Karnataka Power Transmission Corporation Limited.

Development Charges

Developers have to pay these charges to the government for civic amenities such as roads, water/electricity supply, sewerage and drainage. The development charges are fixed by the local authorities and are passed on to buyers in proportion to the built-up area of their properties.

PLC or Preferential Location Charge

Is the extra charge paid to a unit which has a better location within a particular layout or complex.

IFMS (Interest Free Maintenance Security)

One time charge levied by developer to maintain the society. This is a common pool of funds which works as a maintenance charge.

EEC and FFC

EEC is external electrification charge and FFC is fire fighting charge and these are levied for obvious reasons.

CAM

Common Area Maintenance which includes hallways, pathways and utilities. CAM fees is accumulated by the landlord from tenants to cover maintenance.

FAR or Floor Area Ratio

The maximum amount of construction allowed on a given plot of land. This is purely dependent on the plot area and would vary from one locality to another based on different factors.

Sale Deed

Sale Deed provides the buyer an absolute and undisputed ownership of the property.

Built Up Area:

Built-up area denotes to the entire area of the floor including carpet area, walls, lobbies/corridors, atrium areas and basement.

Carpet Area

The actual usable area within the walls of the unit is Carpet area.

Super Built Up Area

Super built-up area includes common amenities, such as the area of lift shafts, lobby, and corridor, proportionately divided among all flats. The common usable areas, such as a swimming pool, garden and clubhouse may also be included in it.

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