Points to consider while pre-booking a project:
1. Builder’s track record - While pre-booking a project, be very sure to check, research and know well regarding the builder and their track record. Since there is nothing more tangible to check, except for the construction site perhaps and the building materials stocked, spend extra care to check the profile of the builder and their past projects, creditability, performance and delivery record. It is better to avoid the newbies and stick to the established ones even if you have to shell out some more amount for that.
2. Necessary approvals and permits - Before taking the plunge, check if the project has secured all the necessary approvals and permits. The two main permits required are Intimation of disapproval or IOD which carries all the conditions that the builders need to abide by while constructing the buildings. IOD needs to be re-validate every year during the building phase from the competent authority. The second one is Commencement certificate or CC which is issued by the local authorities and it is the approval to begin the construction.
3. Sample flats - If possible, ask to see the sample flat. Then again, be careful. Make sure that the sample flat is apt in measurement as that of the actual flat you are buying. Also sometimes the sample flat features expensive accessories and fittings which may not be there in your actual flat. Therefore, be clear about what and how much you are buying.
4. Mortgaged property or not - Check if the project your are buying is mortgaged or not. Normally it is. Builders mortgage the properties and take loan for construction from banks and NBFCs. Therefore, if the builder fails the payment to them, they may ask the buyers to vacate the property as it now belongs to them. So?? So, before buying mortgaged property receive NoC from the bank it is mortgaged to. In that case, even if the builder fails payment, your property cannot be taken over by the bank.
5. Title search – Verify the title documents. There are cases when the buyers enters into agreement with the developer who doesn’t wholly have the ownership of the property. Therefore there stand a chance when the agreement can actually go null and void. Engage a competent lawyer for the title search or better opt for home loan. The loan departments do the necessary title search and verification before leashing out the money.
So, here we end the full volume of our series “All you need to know while considering pre-booking a project”. Do let us know if it has been beneficial to you or in case if you have any more questions. Do drop in your words in the comment box.
We were discussing about pre-booking of property and what we are required to know and consider while doing so. In part I of this series we have discussed the difference between pre-launch and soft-launch properties, the two kind of properties available for pre-booking, and how the developers actually market them. In this part, we will mainly talk about the advantages and disadvantages of booking such properties. So let’s begin with advantages.
Advantages of pre-booking a property:
1. The property available for pre-booking is generally about 15-30% lesser priced than the ready-to-possession ones.
2. The buyer has the liberty to opt for construction-linked payment plan, wherein one do not need to shell out the entire amount at one go and will pay according to the stage of the construction.
3. Normally, the floor-rise price hike is exempted if one is pre-booking a property, therefore one can choose the desired floor without paying any extra amount.
Disadvantages of pre-booking a property:
Now it’s time for disadvantages and I am afraid they are a little more in number than the advantages. Let’s check out:
1. The main disadvantage is that the completion of the property can be delayed. So if you have time-constraint it may not hold very well for you.
2. Though the chance is little yet consider that the original construction plan upon which you have chosen the property may change a little or vast in due time.
3. The requisite approvals from relevant authorities may still be pending till the actual construction starts. So there is always a little risk that they may get cancelled.
4. The service tax of 3.5% that is levied on the property under construction are most of the time very cleverly passed on to the pre-booking customers.
So, now that we already know about the advantages and disadvantages of pre-booking, the main question is whether one should go ahead with such venture or not? Well, there are mainly two circumstances when you should consider pre-booking and they are:
1. You do not have enough funds or you are actually chancing upon a property more in value than that of your budget.
2. The property you are buying is for investment purpose and therefore delaying its completion would not hamper your present residential status.
So, if you are afterall going ahead with the pre-booking option, there are various points that you should evaluate and consider and post that make a decision such that you can minimize any risk to almost negligible.
In our next post of this series, we will discuss what the considerations you are required to make while pre-booking a property.