Points to remember when buying a resale house
Buying a house in an old project can be a good investment if the property is in a strategic, high-demand location with low or no new supply
The primary advantage of going in for a resale flat lies in buying property in a strategic location with no new supply. If one has personal cash resources at one’s disposal and is not relying on a home loan (a home loan on a very old property cannot be taken for granted), buying a house in a project that is at least 20 years old can be a good investment bet if the property is in a strategic, highdemand location with low or no new supply. This would mean that the project would come up for redevelopment, ensuring a tidy profit for the owner.
All the documents applicable in the case of a primary residential property sale would be required for a clear resale flat transaction, as well. The seller should be able to produce all original documents.
The buyer should establish the existence of a proper society. The original sales deed and the society share certificate are most important, since the transaction cannot proceed without them. Also, the buyer should bear in mind that in the case of a resale property, proper transfer and re-registration is necessary.
The documents required for registration of residential flats, apart from the sale deed, include a letter from the society that reflects details such as the number of floors in the building, the construction year, the apartment’s built-up area and the number of lifts in the building.
Also required is an assessment bill to the society from the municipality in question, a no-objection certificate from the collector if the building exists on collector’s land, a copy of the property card, and a receipt for the payment of registration fees. In addition, the buyer of a resale flat should ask for a clear ownership history if the residential property has changed hands before.
The local registrar will establish the authenticity of these documents. If one is buying the property via a home loan, the bank will do routine due diligence.
Resale properties cheaper?
Are resale properties always cheaper? Not necessarily. In the larger cities, new residential property supply is scarce or non-existent in many central locations. In such areas, there would not be a question of discounts on resale properties. Discounts are more prevalent in areas where the market is more competitive. That said, resale properties are sold either by the primary owners or by investors. As such, there is a higher possibility of flexibility in payment terms.
There are certain challenges that a buyer of a resale flat may face. These could include lack of a proper chain of documentation, especially in cases where the property has changed hands more than a couple of times. If the property is more than 18 or 20 years old, it is possible that it was never formally registered in the first place. Registering it at the current point in time would put the onus of paying the stamp duty in arrears on the buyer.
There may also be additional expenses for repairs to masonry, plumbing, electrical wiring and fittings. Also, obtaining a home loan for a property which is anywhere close to 50 years of age can be a challenge.
Finally, one should bear in mind that India’s residential property market is constantly evolving. In an older building one is unlikely to find the facilities and amenities that are available in the newer projects on the market.