Can a builder profit from your in­vest­ment?

Many buy­ers pay trans­fer fees of 100 to 1,000 per sq ft to builders to exit from a project, but this could be il­le­gal, say ex­perts

HT Estates - - FRONT PAGE - Van­dana Ram­nani

Nitesh Gupta booked a n ap a r t m e n t i n Indi­ra­pu­ram in 2008. A year later, his wife was di­ag­nosed with can­cer and he de­cided to sell the house and spend the pro­ceeds on her treat­ment. To his hor­ror, the builder in ques­tion re­fused to ex­e­cute a sale deed in his favour and also de­manded ₹ 300 per sq ft as trans­fer charges. Un­able to exit the project, Gupta could not get the money when he needed it the most and lost his wife within three months.

Su­mant Goel, too, could not rus­tle up fi­nances ur­gently for his son’s ed­u­ca­tion abroad by sell­ing his Gur­gaon apart­ment. The builder de­manded trans­fer charges of ₹ 150 per sq ft, some­thing Goel could not man­age at a mo­ment’s no­tice and, there­fore, had to post­pone the sale and look for ex­pen­sive ed­u­ca­tion loan op­tions.

Most de­vel­op­ers in Del­hiNCR and other states are charging­ing trans­fer fees from buy­ers who want to dis­pose of their apart­ments in group hous­ing pro­jects. How­ever, thethese charge­ses dif­fer from pro­jectp to project, bubuilder to builder,build even dde­pend­ing on the in­in­ven­tory pend­in­pend­ing with the de­vel­oper. In most cases, es­pe­cially, when it comes to up­com­ing builders, the first trans­fer charge is free. This is pri­mar­ily be­cause th­ese builders wish to at­tract as many in­vestors as pos­si­ble at the on­set.

It has also been found that in case of new and up­com­ing lo­ca­tions, there is a huge in­ven­tory pile-up and a de­mand-sup­ply mis­match as the units in the sec­ondary mar­ket are usu­ally avail­able at prices lower than the pri­mary mar­ket and the price at which the builder may have launched the sec­ond or the third phase. This is when a de­vel­oper steps in and stops buy­ers from trans­fer­ring their prop­erty for a cer­tain pe­riod.

The trans­fer charge also de­pends on the cat­e­gory and the qual­ity of the prop­erty and in most cases ranges from ₹ 100 sq ft to ₹ 1,000 per sq ft. In case of prop­er­ties priced in crores, trans­fer charges could be as high as ₹ 1,000 per sq ft. So, for a 6000 sq ft apart­ment worth ₹ 10 crore, a seller could be com­pelled to pay a whop­ping sum of ₹ 60 lakh as trans­fer fee.

Builders have dif f er­ent rules. Manoj Gaur, man­ag­ing direc­tor, Gaur­sons, says his com­pany, which has many pro­jects in Ut­tar Pradesh, has no trans­fer pol­icy and does not per­mit prop­erty trans­fer at the con­struc­tion stage.

In Haryana, sev­eral builders charge a trans­fer fee de­pend-

₹ ing on the cur­rent price of the project. The trans­fer charge would dou­ble if a prop­erty was bought at, say, ₹ 2,000 per sq ft and its cur­rent value was ₹ 4,000 per sq ft.

Nikhil Jain, CEO, Ram­prastha Group, says that they gen­er­ally charge a fixed rate of ₹ 100 per sq ft ir­re­spec­tive of the stage of con­struc­tion of the project.

Is it le­gal?

The ques­tion that arises then is whether trans­fer charges are

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