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

HT Estates - - HTESTATES - Su­nil Tyagi

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.

Main­te­nance charges

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).

Trans­fer charges

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.

Other charges

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

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