All about properties under construction
Before paying the booking price for an under-construction apartment, the buyer should take into account the total cost of the unit
Usually a space buyer’s agreement/flatbuyer’s agreement/agreement to sell is a legal document which is executed between the developer of a complex and a prospective buyer of a flat/ unit booked/ allotted in an under-construction project. Before paying the booking price, it is important for a buyer to review and understand the total price payable by him for purchase of the unit.
Basic vs total sale price
The basic sale price of an apartment is the base price of a particular unit, calculated per square foot of saleable area of such a unit. A certain portion of this price is reserved as earnest money which generally as per the terms of buyers agreement is liable to be forfeited by the developer in case of cancellation of allotment/booking due to default/ breach by buyer. Additionally, amounts towards preferential location charges ( PLC), external development charges (EDC), charges for internal development works (IDW), one-time electrification/instal- lation charges etc are also payable by a buyer which together with the basic sale price add up to constitute the total sale price of a unit.
EDC, IDW and other charges
A developer is required to pay EDC and charges towards IDW to the local urban development authorities/bodies and he usually recovers the same on prorata basis from buyers. EDC is payable towards utilisation and repair, maintenance and strengthening of external development works. These works are undertaken in the periphery of the colony/area or outside the colony/area for benefit of the colony or area. IDW charges are utilised towards infrastructure works development of which is necessary in the interest of proper development of a colony. Buyer may seek information from the developer on the method of computation of pro-rata charges towards EDC/ IDW and other related or similar charges, if any.
Preferential location charges or PLC
In most projects, there is also a PLC component for units that have a more advantageous location than other units in the same complex. The liability to pay PLC arises only if a buyer opts to purchase a preferen- tially located unit.Developers may charge differential rates for units having one preferential location attribute vis-a-vis units having two or more preferential location attributes. Buyers must keep in mind these chargeable preferential attributes when booking a unit. It’s interesting to note that even if a buyer does not opt for a preferential location and subsequently the unit turns out to be such, he will have to pay more towards PLC.
For the upkeep of a complex, common areas and facilities therein, maintenance agen- cies are often appointed by the developer. In order to enjoy these f acilities and amenities, all apartment owners are required to pay maintenance charges. Given that maintenance is a recurring cost and its quantum varies across projects, it is important to enquire about the rate and method of calculation of maintenance charges, facilities available and additional amounts payable towards electricity consumption etc.
Buyers may also check contributions to be made towards advance maintenance charges, sinking fund and maintenance security deposit (which may be interest bearing or non-interest bearing).
For enabling transfer of allotment of the property (prior to execution of sale deed/conveyance deed) in favour of a third party, developers levy transfer charges which are usually calculated on a per square foot basis. Some developers permit the first instance of transfer to be free of charge.
In projects that offer club/ community centre facilities, club membership fees may be chargeable and payable by the buyer for becoming a member of such facilities. Lately, many luxury projects are offering buyers fully furnished units, as well as units having specifications that can be customised as per the buyer’s preferences and requirements, for an additional amount.
Since maintenance is a recurring cost, it is important to enquire about the rate and method of calculation of maintenance charges at the time of buying a residential unit