Yamuna Expressway Authority is said to have cancelled many housing projects in its area after the concerned builders failed to clear the objections raised by it regarding the building plans. Sadly, this has not happened for the first time. The recent incidents of cancellation of lots of housing projects in Delhi-NCR as well as some other parts of the country have again proved how unscrupulous developers fleece homebuyers and how are the buyers made to pay for no fault of theirs.
Thankfully, RERA is going to be implemented soon, which is expected to give a helping hand to the innocent buyers. However, how effective RERA will ultimately be in putting a curb on builder malpractices, is too early to say. No need to mention why you need to be extra careful while buying your dream home, the biggest investment of your lifetime, from developers.
“Homebuyers should always invest after ascertaining all the project details and go with developers having a verifiable track record along with necessary approvals from the authority,” says Avnish Yadav, Deputy General Manager, Residential Services, Colliers International India.
The following are some of the key parameters that homebuyers should keep in mind before investing in a project:
1. Legal and Prior Approvals
The government is now making efforts to ensure developers are launching projects only when they have all the required approvals before marketing their project(s) to the homebuyers. “On the other hand, the buyer should also ensure the necessary approvals are in place before zeroing in on the property. One should not get attracted by the sample flat shown by the developer to market the project and should ask the necessary questions pertaining to the legal documents related to the property/project,” says Yadav.
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2. Builder Reputation/Past History
The first-time homebuyers need to be extra cautious while investing in a piece of property. One should check the market credibility of the developer, other business or joint ventures undertaken by the developer, credit history, management, details about the township/project, and choose projects of the developer where real estate is the core business and backed by big fund houses.
One should also be aware of the projects delivered in the past by the developer, quality of the project, and promises fulfilled in the past project w.r.t. to completion and good track record of delivering projects on time. One should also evaluate developer based on project delivery and size of commitments. The buyer needs to be aware of developer’s cash flow and debt levels. One should check the track record of the developer in terms of executing the projects as per the specified standards and ability to deliver the project within schedule.
3. Project detailing
One should conduct an in-depth research prior to investing in a property. He/she should have all the necessary information such as master plan of the project, which highlights all the new developments related to the project, surrounding neighborhood, club area, any new launches in the project, facilities, amenities, and any further development in construction of new flats which are a part of the project. This helps the buyer to ascertain future development plan and calculate future valuation of the project.
4. Involvement of Financial Institutions:
All financial institutions conduct legal and technical checks before funding a project. The primary reason is their stake in the project which is as high as 80 percent. “Many of the institutions not only perform numerous legal checks but also conduct extensive due diligence in terms of financial health on the sustainability of the project in the long term. One should also find out the leading banks and housing finance companies that have approved the project keeping in mind the credibility of the developer and should invest in such projects after doing extensive research about the developer and its commitment to execute the project as per the timelines defined in the project plan,” informs Yadav.
5. Approval of Land
Some recent instances of project cancellations have again raised the concern of land approvals. It is very important, therefore, to check whether the developer has got sufficient rights to develop a project or anything is missing. “As a buyer, you must check the title deed of the land that tells about the complete right of the owner of land. Also, a quick visit to the local authority can give more clarification about the land title,” says Suresh Garg, Secretary, CREDAI Western UP & CMD, Nirala Estate.
6. Land Use
Local development authorities can provide details of the land use also. The master plan of the city can explain whether the land is allotted for residential, commercial, mixed land, industrial, institutional or some other use. Any mismatch in the land use and construction can be a reason of dispute and also cancellation of a project, which has happened in the recent case.
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7. Encumbrance Certificate
Recent property frauds have made it a must for the buyer to check that the land or property is free from all legal issues. Encumbrance certificate can help you get an idea about this. “If a buyer is looking for resale property, then it becomes more important. To be more confident about a resale purchase, a buyer can check the resale certificate from the concerned bank. That is a proof about the loan taken and repaid by the earlier buyer. Also, you may ask for property tax slips and other bills to get a clean property,” says Garg.
8. Site Visits
Instead of just seeing and following the brochure provided by the developer, buyers should visit the land site and check the proposed construction, amenities and facilities. For ready-to-move-in and resale property, site visits are a must since buyers can check each and everything. In case of under-construction projects, this becomes a little difficult because the construction remains in process. However, in this case making a visit to the delivered flats may make many things clear.
9. Size of Project/ Plot/ Apartment
Buyers must know about the size of project land before investing in it. “It has been recently observed that small or limited-size projects have been more successful in timely construction and delivery, while large projects often face multiple issues. In fact, there should be clear understanding about the plot size and apartment size. Since there is huge manipulation in carpet and saleable areas, a buyer should be well informed about what he or she is getting,” says Pooja Kundu, MD, PropCurve Solutions Pvt Ltd.
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10. Checking with Property Consultants
A final check can be done with property consultants too, who can guide about each and every aspects of a project, developer, approvals, legal issues, financing, documentation and can also give further assistance as and when required. “A well-know property consultant can give insight of the developer and advise you to invest in a sound project rather than following promotion and promises,” says Kundu.