Is it sensible to buy resale flats?

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The immediate possession can provide tax benefit from the first EMI itself. Reuters The immediate possession can provide tax benefit from the first EMI itself. Reuters
SummaryThe resale flats are an affordable solution to the accommodation needs of the salaried individuals.

Rahul was tired of shifting flats due to the ever increasing rental rates in Delhi until he decided to invest his money in purchasing a resale flat. In addition to a hefty discount, the flat came readymade with an instant-shift tag. Rahul can now spend the saved money on the interior décor and can flaunt his cheap yet elegant home to his colleagues.

Rather than waiting endlessly for the real estate prices to fall or falling in the sugar coated trap of the developers, a money conscious person looks for options that offer a good solution. The resale flats might be as good as new and can be obtained at a discount of no less than 10% of the price of a novel construction. However, does the cost saving alone make the resale flats an economical alternative to the new bed-sitters?

How Price Varies?

The prices vary depending upon a number of factors like city, locality, brand name of the construction company, age of the flat and many others.

City/ Locality/ New Flats (Per Sq. Ft.)/ Resale Flats (Per Sq. Ft.)/ Discount

Mumbai/ Kurla West/ Rs. 14500-17000/ Rs. 13500-16100/5-7%

Bangalore/ Sarjapur Road/ Rs. 5950/ Rs. 5300/ 11-13%

Noida/ Sec-77/ Sec-78/ Rs. 5000 /Rs. 4200-4500/ 10-16%

Gurgaon/Sec-85/ Rs. 5000/ Rs. 4100-4300/ 14-18%

Chennai/Porur/Rs. 5800/ Rs. 4600-4800/ 14-16%

Typical Issues with Resale Flats

The resale flats are an affordable solution to the accommodation needs of the salaried individuals. However, these come with certain unintentional repercussions as well.

Being dealt at the hands of individuals, purchasing a resale flat often requires paying at least 20% down payment that may be in cash, which is higher than that asked by the construction companies.

Resale might require dealing with some mandatory expenses like registration fees, stamp charges, transfer fees, utility transfer fees and real-estate agent fees among many others.

Sometimes, the previous owner may not have cleared the dues with the society or building management, which would need to be doled out by the new owners.

The other corollaries might include minor expenses allotted towards home makeover, parking/security charges, society membership fees and a couple of other overheads.

Direct Benefits

Getting your hands on a resale property is beneficial in several ways. Whether it is a newly constructed, ready-to-move-in flat, an older flat or an under construction one, every kind of resale apartments has its unique benefits:

In times when the snowballing property prices evade the reach of an income-conscious individual, the resale market provides a ray of hope by offering flats at a cheaper rate.

Purchasing a resale and ready-to-shift flat helps save a good amount of money that would otherwise have been expended in paying rent or EMI and rent both, in case of under-construction dwellings.

There are no cloaked or honey-dipped features for this market. Everything that is in front of your eyes is yours once you own the property.

The immediate possession can provide tax benefit from the first EMI itself.

Some Grey Areas and Pitfalls

There are some areas that need attention when purchasing a flat from the resale market.

Checking the documentation carefully is the foremost thing that demands due consideration.

It is essential to check whether the seller is the true owner of the property.

It is also vital to ensure that the seller doesn’t have any dues to the society, building or against the house that you may have to pay later.

It is imperative to check the physical condition of the flat before investing your hard earned money into it.

What if the Flat is mortgaged?

If the flat is mortgaged with a bank, the owner needs to procure a document from the bank affirming that it agrees to give the documents to the buyer upon the full payment of the loan. As soon as you transfer the money to the seller’s account, whether in cash or through home loan, the bank will release the original documents immediately, along with a no-dues certificate.

How to Choose?

There are certain essentials that make the selection process an easy and productive one.

The age of the property should ideally range between 1 to 5 years to a maximum of 10 years.

Know about the reputation of the builder and the quality factor associated with his past developments.

Understanding the reason behind the sale will help in uncovering the problems and issues with the property, if any.

Considering the surround environment, proximity to important areas and amenities available in the vicinity also affects the final decision of purchasing a resale flat.

Actual Profitability

Nothing can be more profitable than purchasing a flat at a price much lesser than the market rate. Moreover, the resale flats are fully constructed and come with a ready-to-move-in tag. One of the biggest benefits that the resale apartments provide is the tax benefit after gaining possession. A deduction of Rs. 1 Lakh on the principal of EMI under 80C and a tax exemption of not more than Rs. 1.5 Lakh of home loan interest under 24B make the resale all the more profitable.

Hence, if all the other factors work in your favour, it might be a good idea to invest in a resale flat. It helps save a good amount of money, while saving time otherwise spent in waiting endlessly for a new project to complete.

BankBazaar.com

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