RESALE PLOTS - Is It Good Sense to Buy One?
Buyers who want more carpet area and want to stay within the city are opting for resale properties. With property prices at an all time high, the market is seeing a slump since the past six months, and there are only 2-5 percent buyers for the luxury home segment. A recent survey shows that approximately 33,000 units across various segments are expected to come up by end of 2014 in the city.
Today, the biggest dilemma that a home buyer in Chennai faces is the decision to either go with a new under-construction flat or buy a resale flat. While the normal tendency is to opt for an underconstruction flat, as the buyer feels a sense of satisfaction of buying a new home, resale flats are not necessarily a bad idea, as they offer excellent value for money when compared to underconstruction flats. With the recent changes in government taxes, the total cost of a new under-construction flat works out to be more expensive when compared to a resale flat.
And guess what? A resale flat, which may be in perfect condition, will be at least 15-20 percent cheaper than a newlyconstructed flat, a reason valid enough to make most individuals wrestle with the choice of settling for a cheaper, old place or a brand new, expensive house. Saving 10 percent is a huge relief when the prices are astronomical and rates of interest are hovering around double digits. "Buying a resale property can be a prudent choice, provided you do your due diligence well," says Rajiv, TN- Head, Unicorn Financial Services. The biggest advantage of a resale property is that you can move in immediately. The carpet area will be bigger, and there will be a better clarity on your cash outflows. Last but not the least, you get what you see.
With an under-construction property, the end product may not be what is promised to you. There have been several instances where builders have promised to complete the project in a particular period, but have failed to stick to the deadline. Also, there have been instances where buyers have been cheated on the carpet area. Such things will certainly take a toll on your finances as well as your mental health. "There is no delay in construction, service tax or VAT in a resale property, issues which you could face while buying an under-construction property," adds Rajiv. If these factors appeal to you, you can take a serious look at a resale property.
After looking to buy a new flat to meet his requirements in Chennai's suburbs for almost a year, Arun Ramanathan finally gave up and settled for an apartment in a nine-year old building in Thiruvanmiyur. He rationalised by telling himself, "Okay, I may not have a new house, but I have a bigger carpet area in this old apartment. Also, I can negotiate and get a better price for this property." Besides, Arun could move into his flat immediately. This would not have been possible if he went in for an under-construction building where 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 occupation. Plus, there was always the chance of the developer not delivering on time. 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 Arun.
If Arun had chosen to buy an underconstruction flat, he would have had to pay an interest on the home loan, but at the same time, he would have not been 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 a resale flat where he could move in immediately, and that would allow him to claim the deduction from the current financial year itself. Even though it comes with several compromises, buying a resale property makes good sense, as you get good properties at a good price in a good locality. Moreover, you can get a loan for buying a resale property though there could be some additional legal and procedural requirements. It is important to know what procedure you will need to follow, and what aspects you should keep in mind before deciding in favour of a resale property. Meanwhile, the gap between the payment and actual possession of the house in a resale property is also another reason why many buyers are opting for it. As most of the newer housing schemes are on the outskirts, there is a segment which prefers living in the city, and this is definitely a good option for them.
Earlier, buying a new flat directly from the builder had its own advantages as the UDS (undivided share) alone had to be registered when compared to the entire flat in the case of a resale flat. This advantage has disappeared with the introduction of multiple taxes on a new construction such as service tax, VAT, and the more recent registration of construction agreement, which has been made mandatory from October 2013. The example below will show the advantage a resale flat has over a new flat. Checklist for buying a resale property
There is a stark difference in how you buy a new property and a resale property. New properties are generally sold by developers who have offices to facilitate such sales. But, to locate a resale property, you will need a real estate agent. Agents are experts in their respective areas, and will tell you the prices of recent transactions. They will also guide you on the finer aspects, like the water supply, transport system and the type of neighbourhood. Very often, the agent also helps you with the paperwork, including registration of your property and payment of stamp duty. Of course, the agent will charge you a fee once the transaction is through. The fee, which is negotiable and depends on the quality of services, is usually in the range of 1 to 1.5 percent of the transaction value. "A good lawyer and real estate agent will ensure that your paper work is in order, which is very important, especially in the case of a resale flat," says Akshay Kumar, MD, Park Lane Property Advisors.
Also, ensure that you get a clear title to your property. This is the most important aspect to be considered before buying a house. If the seller does not provide an original document, it is a serious matter. Banks insist on all documents, failing which you will not get a loan.
However, not everyone can take the resale route when it comes to buying property. Sometimes, it is the demand for the cash component that prevents the deal from being finalised. Salaried people usually do not have the 'cash', and banks are not willing to lend more than the amount mentioned in the sale deed. Besides, the elaborate legal formalities and paperwork involved in buying a resale property can be quite intimidating. Also, the title of a resale property is not always as clearly defined as that of a fresh allotment in a new project.
See more at: http://chennairealty.biz/blogs
Today, the biggest dilemma that a home buyer in Chennai faces is the decision to either go with a new under-construction flat or buy a resale flat. While the normal tendency is to opt for an underconstruction flat, as the buyer feels a sense of satisfaction of buying a new home, resale flats are not necessarily a bad idea, as they offer excellent value for money when compared to underconstruction flats. With the recent changes in government taxes, the total cost of a new under-construction flat works out to be more expensive when compared to a resale flat.
And guess what? A resale flat, which may be in perfect condition, will be at least 15-20 percent cheaper than a newlyconstructed flat, a reason valid enough to make most individuals wrestle with the choice of settling for a cheaper, old place or a brand new, expensive house. Saving 10 percent is a huge relief when the prices are astronomical and rates of interest are hovering around double digits. "Buying a resale property can be a prudent choice, provided you do your due diligence well," says Rajiv, TN- Head, Unicorn Financial Services. The biggest advantage of a resale property is that you can move in immediately. The carpet area will be bigger, and there will be a better clarity on your cash outflows. Last but not the least, you get what you see.
With an under-construction property, the end product may not be what is promised to you. There have been several instances where builders have promised to complete the project in a particular period, but have failed to stick to the deadline. Also, there have been instances where buyers have been cheated on the carpet area. Such things will certainly take a toll on your finances as well as your mental health. "There is no delay in construction, service tax or VAT in a resale property, issues which you could face while buying an under-construction property," adds Rajiv. If these factors appeal to you, you can take a serious look at a resale property.
After looking to buy a new flat to meet his requirements in Chennai's suburbs for almost a year, Arun Ramanathan finally gave up and settled for an apartment in a nine-year old building in Thiruvanmiyur. He rationalised by telling himself, "Okay, I may not have a new house, but I have a bigger carpet area in this old apartment. Also, I can negotiate and get a better price for this property." Besides, Arun could move into his flat immediately. This would not have been possible if he went in for an under-construction building where 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 occupation. Plus, there was always the chance of the developer not delivering on time. 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 Arun.
If Arun had chosen to buy an underconstruction flat, he would have had to pay an interest on the home loan, but at the same time, he would have not been 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 a resale flat where he could move in immediately, and that would allow him to claim the deduction from the current financial year itself. Even though it comes with several compromises, buying a resale property makes good sense, as you get good properties at a good price in a good locality. Moreover, you can get a loan for buying a resale property though there could be some additional legal and procedural requirements. It is important to know what procedure you will need to follow, and what aspects you should keep in mind before deciding in favour of a resale property. Meanwhile, the gap between the payment and actual possession of the house in a resale property is also another reason why many buyers are opting for it. As most of the newer housing schemes are on the outskirts, there is a segment which prefers living in the city, and this is definitely a good option for them.
Earlier, buying a new flat directly from the builder had its own advantages as the UDS (undivided share) alone had to be registered when compared to the entire flat in the case of a resale flat. This advantage has disappeared with the introduction of multiple taxes on a new construction such as service tax, VAT, and the more recent registration of construction agreement, which has been made mandatory from October 2013. The example below will show the advantage a resale flat has over a new flat. Checklist for buying a resale property
There is a stark difference in how you buy a new property and a resale property. New properties are generally sold by developers who have offices to facilitate such sales. But, to locate a resale property, you will need a real estate agent. Agents are experts in their respective areas, and will tell you the prices of recent transactions. They will also guide you on the finer aspects, like the water supply, transport system and the type of neighbourhood. Very often, the agent also helps you with the paperwork, including registration of your property and payment of stamp duty. Of course, the agent will charge you a fee once the transaction is through. The fee, which is negotiable and depends on the quality of services, is usually in the range of 1 to 1.5 percent of the transaction value. "A good lawyer and real estate agent will ensure that your paper work is in order, which is very important, especially in the case of a resale flat," says Akshay Kumar, MD, Park Lane Property Advisors.
Also, ensure that you get a clear title to your property. This is the most important aspect to be considered before buying a house. If the seller does not provide an original document, it is a serious matter. Banks insist on all documents, failing which you will not get a loan.
However, not everyone can take the resale route when it comes to buying property. Sometimes, it is the demand for the cash component that prevents the deal from being finalised. Salaried people usually do not have the 'cash', and banks are not willing to lend more than the amount mentioned in the sale deed. Besides, the elaborate legal formalities and paperwork involved in buying a resale property can be quite intimidating. Also, the title of a resale property is not always as clearly defined as that of a fresh allotment in a new project.
See more at: http://chennairealty.biz/blogs
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