I saw a ad by Sobha developer about investment in apartment flats in Bangalore. Price start 60 Laks !!! come on Sobha Developer... you call it a investment. Can you tell me why and how people will make money in these flats.
I am not sure who would buy flats in these apartments but the question here is that after all that happen in US economy and recession all over world, can people still call Real Estate as investment. At least Real estate is not an investment in India.
Friday, April 9, 2010
Wednesday, March 24, 2010
What is occupancy certificate and importance of it !!!
In 2006 AP government changed the building construction rules through GO 86. (Details can be found GHMC GO86 here ) and one important aspect of that is that GMHC issues occupancy certificate after they inspect the building and ensure that things are build as per plan.
The main problem earlier was that builders who were getting approval from GHMC (or eralier it was MCH and other municipal corporations) for constructing apartment, in reality they were not building as per the approved plan. GHMC was not capable to impose any kind of restrictions on builders and they were constructing buildings as per their will and not as per the plan.
Now because of new laws here is what happens
1. When builder gets approval from GHMC to construct the apartment building he has to mortgage 10% of flats. Builder can not sell those flats until GHMC issues occupancy certificate.
2. Once builder finishes the construction he acquires a completion certificate from a registered structural engineer and submits the same to GHMC. which with in few days does an inspection and issues Occupancy Certificate.
3. If GHMC founds any deviation from original approved plan, it can auction the mortgaged flats and correct the deviation.
4. Unless the building has got occupancy certificate from GHMC, any government agencies like Electricity Board, water board will not give connection. Even if they connection, they will charge three times than normal rate.
Since people are still not aware of these laws builders are not really following it. In my case I have bought an flat in pristine place apartment by SBC infraprojects in Gajularamaram. Now the apartment is almost ready but builder is not finishing up the rest of the work as he wants to first sell the remaining flats. Also he is not getting the electricity connection because he has to pay the three times minimum bill for the unsold flats, which he estimating to be 1 laks per month.
Government has created very good rule to protect the consumers but since people are not aware of the laws, not getting full advantage of it.
The main problem earlier was that builders who were getting approval from GHMC (or eralier it was MCH and other municipal corporations) for constructing apartment, in reality they were not building as per the approved plan. GHMC was not capable to impose any kind of restrictions on builders and they were constructing buildings as per their will and not as per the plan.
Now because of new laws here is what happens
1. When builder gets approval from GHMC to construct the apartment building he has to mortgage 10% of flats. Builder can not sell those flats until GHMC issues occupancy certificate.
2. Once builder finishes the construction he acquires a completion certificate from a registered structural engineer and submits the same to GHMC. which with in few days does an inspection and issues Occupancy Certificate.
3. If GHMC founds any deviation from original approved plan, it can auction the mortgaged flats and correct the deviation.
4. Unless the building has got occupancy certificate from GHMC, any government agencies like Electricity Board, water board will not give connection. Even if they connection, they will charge three times than normal rate.
Since people are still not aware of these laws builders are not really following it. In my case I have bought an flat in pristine place apartment by SBC infraprojects in Gajularamaram. Now the apartment is almost ready but builder is not finishing up the rest of the work as he wants to first sell the remaining flats. Also he is not getting the electricity connection because he has to pay the three times minimum bill for the unsold flats, which he estimating to be 1 laks per month.
Government has created very good rule to protect the consumers but since people are not aware of the laws, not getting full advantage of it.
Tuesday, March 9, 2010
Planning to buy a house in Hyderabad !!! Learn from my Experience !!!
Let me give a background of my experience with respect to dealing in real estate in Hyderabad. Around 7 years back in June 2002 I moved to Hyderabad and got married next year in June 2003. As all of us dream of our own house, I also had that dream and after recommendation of my friend I bought a 2 bedroom flat in Kondapur area in year 2004. Then in 2007 I decided to buy a plot in maheswaram area, beacuse of much hype of new international airport and ORR. I paid 2.25 laks but that project was not completed by builders and I got only 1 laks of my money back. Then in 2008 I decided to buy another bigger flat with 3 bedrooms and booked flat in SBC pristine place, Gajularamaram. After almost 2 years its ready to take possession but facing some issues. So while dealing with issues in my new flat, I thought I should summarize my experience for benefit of others who are planning to buy flat in Hyderabad so that they can take informed decisions. This is not a professional advice or legal advice. Its just my views based on my experience. My objective is to create awareness so that people can take informed decisions and don't get trapped in marketing gimmick of real state developers.
1. OLD Is Gold: I would suggest to buy an existing apartment/house in a good locality or an ready to occupy new construction apartment/house. I am suggesting this for 2 reasons.
1. First is that a new project plan which is yet to kick off the ground, there are possibilities that it never get off the ground, or it certainly will get delayed. No projects gets finished on time, and its very hard to get the interest money from builders.
2. Second reason is that if you are taking home loan, the amount you would pay towards pre-EMI and rent where you will stay for 2 years does not make much economical sense. It good to get in the house once you buy it instead of waiting for years to get completed.
3. A lot of builders have good amount of inventory left and they are selling at good rate.
But when you are buying an old apartment or house you need to make sure that their plan was approved and there is no deviation in it. If there was any deviation, it is regularized under Building penalization scheme (BPS).
2. Building Penalization Scheme (BPS) and exiting/old flats:
Earlier (before 2006-7) builder used to get approval from GHMC (Then it was MCH or individual municipal corporations which were merged to create GHMC ) but they always used to build apartments not as per the plan. All the apartments build before 2007 had some kind of deviation from approved plans . In 2007-8 government came up with a proposal where owner or builder can pay a fees and get their flat regularized. I was socked to know that the apartment flat I bought in 2004-5 had a deviation from original plan as I was under impression that since bank has provided loan everything will be fine. But In reality it was not the case so I paid 18K fees + 5K for preparation and some 2-3 visits to MCH office and finally I got it regularized.
Please note that under BPS Apartments or building which or on government land, road, etc can not be regularized. So make sure you go through BPS rules while buying an old apartment flat / house and buy only which has got BPS clearance.
3. Approved Plan: If you are buying apartment in a new project the very first thing to check is that the project should be approved by GHMC or HMDA ( was called HUDA earlier). The best benefit of having approved plan is that as per new rules after 2006-2007 all apartments, builder has to mortgage 10% of the flats to GHMC. GHMC will release those flats only after completion of project and if they found any deviation they can auction those flats and use that money to correct the deviation. This new rule is really a boon for home buyers. So make sure that plan is approved and check which flats are mortgage.
Some times builders, starts selling units before getting all the approvals as pre launch offer and lure the customers saying that prices might go up after they get approval. I suggest not to get in that trap, because your money will be blocked and developer will be earning interest on that money. And believe me in this market, prices wouldn't go up in time of few days or months. If you like the plan, ask builder/developer to call you once they have all the approvals. Other reason to avoid pre launch offer is that what if the plan don't get approved as it is shown to you and there is any change? Its hard to get money back.
You can check building approvals here. There are 2 links in bottom to check “Planning Permissions” and approval for “Extended HUDA Area”
http://www.hmda.gov.in/Planning.html
First reason for me to book flat in SBC pristine place was that it was approved by GHMC.
4. Don't buy in Gram Panchayat Approval: A lot of buildings/projects are coming up in suburbs of hyderabad like Bachupally, Nizampet which were earlier not part of MCH and were under gram panchayat. Now after AP government created GHMC by merging all the existing municipalities and some villages, and created HMDA by including nearby areas, still a lot of new buildings are coming up in these areas which are not approved by GHMC or HMDA. I talk to one of builder and he explained me that only for multistoried buildings they need to get permission from HMDA and for single or double story house, gram panchayat approval is enough. In these areas also they can get approval from HMDA, but since that is optional they take advantage of it and takes gram panchayat approvals since HMDA norms are stricter and fees are higher.
The problem I see with Gram panchayat approved projects is that they are highly un-organised developemnt and you might be getting very good house inside outside, but connecting roads, street lights, sewage, water, etc, all these things will be very tough to get and might face problems in future. These building are relatively low priced because of reason that they need to pay less fees to get approval. If you are buying house in projects like these, be sure to ask these questions and if you fully satisfied that in future will not have any problem, then only buy it.
One of my colleague had a very bad experience with a very good and big duplex house project called “Dollar Meadows” in Bachupally. After some time builder raised his hands and said he can not proceed further on that project. Since it was not approved by GHMC or HMDA, there were no mortgage houses which can be sold to finish the work left. Now they have formed there association and pooled money in association account to finish the project.
5. Look for Details: Now the most of the big projects are coming up with amenities like swimming pool, club house, gym, community hall, etc. But details of these are missing in brochure or agreement of sale. In my case we were told that there will be a 5 floor separate building for these amenities. But now when it is getting ready, we came to know that only first and second floor is for common amenities and other three floors are for service apartment which builder is going to own and rent it to others. (that's what is saying, but I am not sure is it legally correct) What I learned that as per government new rules any building having more that 100 units should provide a separate common amenities block and that should not be owned by an individual. ( I will update further on legality of this issue once i get more details)
So I suggest people who are buying flat in gated community and getting facilities like club hose, ask for more details like area of club house or community hall, etc and make sure that its clearly mention in agreement of sale or sale deed. A classic example of mis information in SBC pristine place is that we are getting community hall and amphitheater. But actually both are in same hall. In a hall builder is planning to place a projector to make it theater. So when you play movie, it will become amphitheater, otherwise use it as community hall. There is no problem in this arrangement, but it was not what we understood it at time of booking. So make sure you know the details in beginning and take a informed decision.
1. OLD Is Gold: I would suggest to buy an existing apartment/house in a good locality or an ready to occupy new construction apartment/house. I am suggesting this for 2 reasons.
1. First is that a new project plan which is yet to kick off the ground, there are possibilities that it never get off the ground, or it certainly will get delayed. No projects gets finished on time, and its very hard to get the interest money from builders.
2. Second reason is that if you are taking home loan, the amount you would pay towards pre-EMI and rent where you will stay for 2 years does not make much economical sense. It good to get in the house once you buy it instead of waiting for years to get completed.
3. A lot of builders have good amount of inventory left and they are selling at good rate.
But when you are buying an old apartment or house you need to make sure that their plan was approved and there is no deviation in it. If there was any deviation, it is regularized under Building penalization scheme (BPS).
2. Building Penalization Scheme (BPS) and exiting/old flats:
Earlier (before 2006-7) builder used to get approval from GHMC (Then it was MCH or individual municipal corporations which were merged to create GHMC ) but they always used to build apartments not as per the plan. All the apartments build before 2007 had some kind of deviation from approved plans . In 2007-8 government came up with a proposal where owner or builder can pay a fees and get their flat regularized. I was socked to know that the apartment flat I bought in 2004-5 had a deviation from original plan as I was under impression that since bank has provided loan everything will be fine. But In reality it was not the case so I paid 18K fees + 5K for preparation and some 2-3 visits to MCH office and finally I got it regularized.
Please note that under BPS Apartments or building which or on government land, road, etc can not be regularized. So make sure you go through BPS rules while buying an old apartment flat / house and buy only which has got BPS clearance.
3. Approved Plan: If you are buying apartment in a new project the very first thing to check is that the project should be approved by GHMC or HMDA ( was called HUDA earlier). The best benefit of having approved plan is that as per new rules after 2006-2007 all apartments, builder has to mortgage 10% of the flats to GHMC. GHMC will release those flats only after completion of project and if they found any deviation they can auction those flats and use that money to correct the deviation. This new rule is really a boon for home buyers. So make sure that plan is approved and check which flats are mortgage.
Some times builders, starts selling units before getting all the approvals as pre launch offer and lure the customers saying that prices might go up after they get approval. I suggest not to get in that trap, because your money will be blocked and developer will be earning interest on that money. And believe me in this market, prices wouldn't go up in time of few days or months. If you like the plan, ask builder/developer to call you once they have all the approvals. Other reason to avoid pre launch offer is that what if the plan don't get approved as it is shown to you and there is any change? Its hard to get money back.
You can check building approvals here. There are 2 links in bottom to check “Planning Permissions” and approval for “Extended HUDA Area”
http://www.hmda.gov.in/Planning.html
First reason for me to book flat in SBC pristine place was that it was approved by GHMC.
4. Don't buy in Gram Panchayat Approval: A lot of buildings/projects are coming up in suburbs of hyderabad like Bachupally, Nizampet which were earlier not part of MCH and were under gram panchayat. Now after AP government created GHMC by merging all the existing municipalities and some villages, and created HMDA by including nearby areas, still a lot of new buildings are coming up in these areas which are not approved by GHMC or HMDA. I talk to one of builder and he explained me that only for multistoried buildings they need to get permission from HMDA and for single or double story house, gram panchayat approval is enough. In these areas also they can get approval from HMDA, but since that is optional they take advantage of it and takes gram panchayat approvals since HMDA norms are stricter and fees are higher.
The problem I see with Gram panchayat approved projects is that they are highly un-organised developemnt and you might be getting very good house inside outside, but connecting roads, street lights, sewage, water, etc, all these things will be very tough to get and might face problems in future. These building are relatively low priced because of reason that they need to pay less fees to get approval. If you are buying house in projects like these, be sure to ask these questions and if you fully satisfied that in future will not have any problem, then only buy it.
One of my colleague had a very bad experience with a very good and big duplex house project called “Dollar Meadows” in Bachupally. After some time builder raised his hands and said he can not proceed further on that project. Since it was not approved by GHMC or HMDA, there were no mortgage houses which can be sold to finish the work left. Now they have formed there association and pooled money in association account to finish the project.
5. Look for Details: Now the most of the big projects are coming up with amenities like swimming pool, club house, gym, community hall, etc. But details of these are missing in brochure or agreement of sale. In my case we were told that there will be a 5 floor separate building for these amenities. But now when it is getting ready, we came to know that only first and second floor is for common amenities and other three floors are for service apartment which builder is going to own and rent it to others. (that's what is saying, but I am not sure is it legally correct) What I learned that as per government new rules any building having more that 100 units should provide a separate common amenities block and that should not be owned by an individual. ( I will update further on legality of this issue once i get more details)
So I suggest people who are buying flat in gated community and getting facilities like club hose, ask for more details like area of club house or community hall, etc and make sure that its clearly mention in agreement of sale or sale deed. A classic example of mis information in SBC pristine place is that we are getting community hall and amphitheater. But actually both are in same hall. In a hall builder is planning to place a projector to make it theater. So when you play movie, it will become amphitheater, otherwise use it as community hall. There is no problem in this arrangement, but it was not what we understood it at time of booking. So make sure you know the details in beginning and take a informed decision.
Friday, April 10, 2009
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