After looking to buy a new flat in Mumbai suburbs for almost a year, Manish Agarwal, finally gave up, and settled for an old apartment in a nine-year old building.
He rationalised by telling himself: “Okay, I may not have a new house, but I can have a higher carpet area in this old apartment. Also, I can negotiate a lot harder and get a better price on this property.”
Also, Agarwal could move in immediately into this flat. This would not have been possible if he went in for an under-construction building. He would have had to wait for at least two years before the builder got his dream home ready. In the meanwhile he would have to continue paying rent on his current flat.
Plus there was always the chance of the developer over-promising and then not delivering. Typically, every new project has a swimming pool and a club house built into the design at the launch stage, and gradually such things disappear when the time to deliver nears. An old flat does not have any of these risks. “What you see is what you get,” says Agarwal.
Over and above this, Agarwal could not claim a tax deduction on the interest he paid on his home loan until he took possession of the flat. So, if he chose to buy an under-construction flat he would have had to pay an interest on the home loan that he would have taken, but at the same time he would not be able to claim it as a tax deduction until he got the possession of the flat from the builder.
On the contrary, there would be no such problem if he settled for an old flat where he could move in immediately, and that would allow him to claim the deduction from the current financial year itself.
So, even though it comes with several compromises, there are times when buying an old flat makes sense. But there are several rules of thumb that buyers should keep in mind before signing on the dotted line:
Hire A Good Lawyer & Real Estate Agent : To locate an old flat, you first need a real estate agent. Besides connecting you with prospective sellers in a locality, a real estate agent will also tell you the prices at which recent transactions have taken place in the locality. They will also tell you about finer things like the type of individuals who reside in that property. “Individuals should take the services of a good lawyer and estate agent, as between the two they will ensure that things are clear,” says Akshaya Kumar, MD, Park Lane Property Advisors.
Ensure A Clear Title : This is the most important aspect to be considered before buying a house. If you are buying a house on a leasehold land or land owned by government, do check for the non-objection certificate from competent authorities. To get such a certificate, you may have to pay prescribed fees which will further inflate the consideration for the property.
The other most important thing is the entire history of agreements pertaining to that property. “The entire chain of agreements should be made available to the buyer,” says Vishal Dhawan, a Mumbai-based financial planner.
Always insist on the ‘chain of documents’ — all the agreements effecting ‘buying and selling of property’ till date since it was constructed.
If the buyer does not provide an original document, it is a serious matter. If you are taking a home loan, the bank will insist on all the documents, failing which it will not give you the loan. So, if you are going for a loan from a bank, before paying the token amount, do ask for all documents.But, what if the old owner does not have the documents?
“One should conduct search for the title of the immovable property for 30 years to ensure a clear marketable title. In case of purchase of land, the search needs to be carried at the office of registrar and the office of land revenue authorities,” says advocate Abhishek Khare of Khare Legal Chambers. This is especially important in case you are buying a resale bungalow or a row house which is not part of a co-operative housing society.
Check The Housing Society: If the building is old and the society is collecting extra funds for maintenance purposes, then you ought to factor that in while making your purchasing decision. “It would be wise to meet an office bearer of the society to understand what the exact implications could be,” adds Dhawan.
An illegal construction could be troublesome and you will need to spend a lot of money as well as time to address the problem. For example, a flat on the ground floor with an extended balcony, could make life tough, if you are asked to regularise it later.
Also, you need to check if the seller has all his dues clear with the society. “You right” alt=”property resale” height=”218″ src=”http://www.investmentkit.com/articles/wp-content/uploads/200_Property.jpg” width=”200″ />need a no-objection certificate (NOC) from the society, which will be given only when all dues are clear,” says Gulam Zia, national director, Research and Advisory Services, Knight Frank. In addition, you must check if the electricity bills, phone bills and all other utility bills have been paid till the time you have taken possession of the property.
Check For Parking Space: Today, in metro cities, parking adds to the costs in a major way. Many a times, sellers make loose statements, saying that parking is not a problem. However, when you move in, you may find things to be otherwise. You may be forced to buy a parking space or get no space to park your vehicle. Check out things like the plumbing and the quality of wiring in the flat. If you need to rewire the house again, that might drill a big hole in your pocket.
So, if you want to save on money and consider moving to your dream house fast, do consider a resale property . For all you know, it may just turn out to be a dream come true.
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December 31, 2010