Are you planning to buy a flat ? Then please read on..
Utmost care should be taken for buying a flat anywhere, particularly in cities like Bangalore.
Who is there in the world who has not dreamt of owning a roof above the head; house or flat in one’s life time? After years of struggle and abuse by the Landlords, it is but natural that one would wish to own a house, even if it is very small, to live in peace! There starts the search for a home, thence to banks or other agencies who would lend you the required sum and then walk the track of fulfilling your life time dream!
Since it is a big investment and perchance, once in lifetime, all care should be taken not to lose the hard earned money, not to fall prey to the man-eaters in the field who wait laying big hidden trap to lure unsuspecting young customers! One must be judicious in selection and cautious in approach.
A. Glaring and inviting advertisements – beware!
The advertisers who are engaged by the developers for marketing would use all the trick of the trade to lure unsuspecting customers with glossy ads. A common phrase they use is ‘afforable houses’!. Affordable apartments costing from just Rs.1.5 cr. to 100 cr only.! Limited edition! Hurry, etc.etc.!’ (Affordable to whom? Ambanis?).
Some of such advertisements boast of having swimming pool, paved path for walking, gym, party hall, the latest being ‘never before – 100 amenities’! Remember, the developer is not offering all this free of cost. The cost of all these amenities are loaded on to the cost of every flat in the apartment complex. Every such amenity would add up the cost of the flat and it is not as if the developer is giving all this for free when buying a flat!
Though the road, walking area, etc. are all necessary amenities, the swimming pool which is highlighted in the advertisement as a big attraction, think twice! It is a money eating amenity. Indian family living in urban area seldom go for swimming unless one is a sports person. We do not like to swim or bath in the open, half naked. Definitely our ladies will stay far away from such places. Most of the swimming pools so advertised and sold are being used by children to play, that too, on vacations! During the remaining period of the year, it remains an idle investment.
Maintaining and up-keeping of the quality of pool water is a costly affair and when neglected, it would lead to lot of skin problems. The swimming pool area also needs proper watch and ward to avoid accidents, which again will blow up the monthly maintenance bill. Ultimately this avoidable amenity would prove to be a money swallowing hole.
Another attraction they would offer is vicinity of airport. While schools, hospitals, shopping complexes etc. and an easy access to these are necessary, the nearness of aerodrome is a definite no, a big no, as the sound of alighting and departing aircrafts, day in and day out, would become such an ear sore than any convenience as it is not that a common man is hoping in and out of aircraft every morning and evening! Indians opt for air travel only for office or business purpose and not for personnel work and hence, even if the house is away, the cost of reaching the airport would be borne by the beneficiary on whose behalf the travel is undertaken. And for occasional personal air travel, spending a few bucks to reach the far away airport, once in a way, is the better choice than staying near an airport in order to facilitate a ‘once-in-a-blue moon’ air travel!
The nearness of airport also creates traffic jam. One will never be able to reach any other facility easily nor would get back home near the airport in time. Hence, if possible, stay away from airport.
The nearness to facilities the advertisement boasts is again, in most of the case, is false. The glossy sketch would give a first impression that such and such facilities exists very near, which is not correct. To save their skin, the advertisers would promptly add in small letters in some obscure corner that the sketch is ‘not drawn to scale!’. It is advisable to be at a reasonable distance but accessible near from these facilities than being too close to ensure easy accessibility, to avoid its possible bad effects like sound, traffic etc.
The size of the flat – built up area and carpet area. Super Built up area of every flat would include the individual share of common area, stair case area, thickness of wall etc. However, carpet area is what it literally means, ie., where one can spread a carpet. The advertisement and price is calculated at super built up area and what one will get to live is the carpet area, which would approximately be nearly 20% less than the built up area.
B. Legal hurdles
Most of the land the small developers select to construct apartment/row houses are not legally sound/clear. It is advisable to collect copies of the land documents and get proper legal advice and only then proceed to invest, else, on a later date, the thoughtless investor could be in soup.
A. Housing Societies
It is always advisable to buy land/flat/house by becoming a member of some housing societies or co-operative societies formed by group of employees. Even some govt. departments are forming layouts for their own staff/relatives of staff. This is a very safe method. In such a case, the society will clear the property of all legal issues and the individual buyer will be saved of all troubles, if this method is opted.
B. Under construction apartments
Once the area and apartment to buy are finalised, one will have to be further more careful. An under construction flat/apartment is sold cheap but it is a great risk. The developer may leave the construction half way, leaving the investor between devil and deep see. The reasons may be many. Even if the developer is honest, he could be stopped by many other external forces such as natural calamity, unfavorable weather, unfriendly authorities, etc. However, the bank or financial institution from where loan was availed will not give any leniency on these excuses, but would go ahead recovering the amount they loaned. The EMI will have to be remitted in time at any cost to avoid further troubles. Over and above, the rent for the property which is currently in occupation of the buyer will have to be paid. If these risks are taken care of and luck favors, the flat can be owned at a cheap price.
The present trend of small builders is to first locate a land to build the apartment with having no investment or very limited investment in their hands, get into an agreement with the land owner for a return of 40% of built up area free in place of the cost of the land and sell 60% of the remaining built up assets to public towards their construction cost and profit. For example, if there are 20 flats in a built up apartment complex, 8 flats will be handed over to the owner of the land towards the cost of the land and the builder would sell the balance 12 flats and earn a neat profit. Remember, here is the chance, if luck favors!
There are a few advantages which can be enjoyed with such small builders if he is good and co-operative. First of all, one can bargain the price. Since the builder is in dire need of money in plenty at the initial stages, the buyer has an advantage. Push him to the wall and bargain to the maximum advantage. Next is the payment which one can do in easy installments. The third advantage is that while the construction is in progress, one can ask for small changes required, like shifting a window, a switch board, colour of tiles, paintings etc., even if on extra payment (where again there is chance to bargain). And lastly, one can watch and witness the dream house shaping up. It is something to cherish.
These builders would maintain the building for a year or till they sell all flats of builder’s portion and leave in search of greener pastures and would hand over everything to the owners association which is to be formed by then.
However, remember, there is a greater risk of non completion, delay in completion of the building, etc, which should be closely monitored cautiously.
While registering the sale deed, it must be ensured that every owner of flats is also having ownership of a part of the land (whole land divided among number of flat owners as per the size of the flat) in which the structure is standing, however small the portion is! Because, God forbid!, tomorrow, if the structure collapses, flat owners have a claim of ownership on at least a tiny piece of land which is far better than being on the footpath!
D. Bigger projects
However, the scenario is entirely different with bigger builders where they first invest huge sum and later would start selling one by one of the flats and earn their profit, all the while holding ownership of everything even the sold out flats as the property is within the gated community and the common owner being the builder himself. Even there are few restrictions for selling a flat by individual flat owner in such area. One may have to first offer such flat to the developer himself at their price and on their refusal and only with their consent one can sell their property to an outsider! However, the risk here is next to nil in respect of the money you spent and in general, the documents would be legally clear!
However, the stay in such places would give a feeling of living still in a rented place, with a host of restrictions, rules and regulations, even for our guests, in the name of safety!
E. Ready to occupy flats
The cost of investment on ready to occupy flat will be very high. There will be no choice but to accept whatever is offered. Once occupied, the inmates may not feel all that comfortable, if that switch was on this side, if there was a power socket in the front hall, if there was a window on the other side, if the kitchen was a little bigger, if the colour of the front wall was something else, etc. Most of the big builders will not allow even to drive a nail on the wall. Generally, they will instead advise to use plugs.
In most of the bigger apartment projects having 60 and above flats, the developer himself will continue to maintain. This has a lot of advantages as there is no botheration at all. Disadvantages is that one will have no control, will feel as if still a tenant in our own house and the maintenance charges will be nearly as much as the rent we may pay. Any maintenance complaint may not be attended to the satisfaction or in time. The developer will have the upper hand.
F. Small apartments
Maintaining small units is a lot difficult as the resources will be small and finding manpower to do the overall management from among the owners is tough and locating agency for house keeping work will also be a herculean task. But since the control of the property is in the hands of its original owners, living in such premises is really bliss.
Once an association is formed by the apartment owners, all documents should be taken over from the developer. The land documents, approved drawings, plumbing details, documents of deposits made with local authorities such as electricity, water, sewage deposits, tax paid receipts, khata of land, the bills and guarantee documents of lifts, intercoms, generators and all such installations, etc. will be have to be carefully taken over and kept in safe custody of the association. It is a must that the owners association so formed is registered as it would help to take up legal steps if need be, in future.
Most of the apartments will not have commencement certificate and hence will not get occupancy certificate. Without these documents, “A” khata will not be issued. Without khata, no further transaction of the property will be possible. Khata of individual apartment should be obtained. The khata must be obtained where there are no shortcuts. The present Akrama-sakrama may be a boon for obtaining khata (applicable to Bangalore city).
i) When selecting the apartment, if possible, locate one where flats have no common wall. A few builders are now coming up with such design where there are space between flats, i.e. all flats have their own walls, advantage of which is that such flats will have natural light atleast from around all three sides! Living in such flat will give a pleasant feeling that we have a separate house of our own.
ii) Ensure that the main doors of flats are not facing each other. If so, privacy is lost. Also ensure that the corridor to where the main door opens is having plenty of natural light. Avoid structures where interiors are in pitch dark even in daylight! This is the case in most of the apartment blocks. The main door of the flat opens into a dark corridor! Also ensure that no window opens into another opposite window to ensure privacy.
iii) Earlier, people preferred lower floors. Now-a-days, people prefer upper floors to avoid mosquitoes, dust etc. Since lifts are provided in all apartments, going upward is the trend. Certain builders are charging more for upper floors, compared to lower floors.
iv) Water – Availability of water is a very important issue. Majority of housing projects have to fend for themselves for this depleting commodity. Every project, big or small, now dig bore well (with or without authority). This is a matter of concern. As per the Ground Water Board findings, the ground water level is going down at an alarming rate. Hence, atleast the possibility of government supplied water sources, atleast some time in the future should be ensured. If the yield from the bore well reduce and go dry at some stage, it will severely affect all occupants and every one will suffer.
v) Sewage disposal- Similarly, the subject of sewage disposal is something one should have a fore thought about. If the project has its own sewage treatment plant – well, that is something good, but again, maintaining it and continuing to use its effluent needs a team of people, extra land area and further investment. This is possible only in bigger apartment projects. Smaller apartment blocks should have accessibility to govt/corporation/municipality sewage disposal line. Otherwise, it would lead to lot many complications.
vi) Garbage disposal – Another point to check is whether the campus/project has garbage disposal arrangement. These may look unimportant at the initial stages, but given time, it will loom large. If the property is within municipality limits, then stringent laws will have to be abided.
vii) House keeping & Security – is again an issue which has to be carefully handled. Selecting the security agency/personnel will have to be done with utmost care or else the fence will start eating the crop. .
The golden rule in property is that in value, the land appreciates and building depreciates. With this in view, one can imagine how much sincerity is there in the advertisements where developers are luring public to invest. It is just a common sense that as the structure grow old, the value of the same reduces, whereas the cost of land always rises. If it is a free hold and without any structures, the value gained is more.
Therefore, as a long term investment, the best option is land. While the cost of land appreciates manifold, cost of building may increase a little, which would commensurate with the common interest the bank investment may pay. Nothing more! In terms of reducing money value, the said increase may only prove to be peanuts!
So, then why buy flat? It is for us to live peacefully. Not and never consider it as an investment.