Be cautious while buying pre-launch properties
It has been seen that buyers are tempted to buy a house at a price 20-30 percent lower than the market price that is why buyers book houses projects that are sold even before all clearances are in place.
There are cases where builders accept bookings, when given profligate delay in getting these, before they have secured all the essential approvals. Sometimes these properties suffer from problems like delay in completion, or a rise in construction cost or the entire project getting cancelled owing to clearances not coming through.
As per Anuj Puri, chairman and country head at Jones Lang LaSalle (JLL) India, there has been developers who are amongst non-listed players accepting bookings without clearances. “There have been cases in cities of India, majorly in rising marginal areas, where small developers have an affinity to capture small plots, develop projects and sell these off as quick as possible to render profit and pull-up demand. As of now there has been a unique case in Mumbai where the project clearance is has been considerably difficult on the account of new development norms.”
A project requires different kinds of approvals and sanctions from various civic agencies and government departments, including the city development authority, land department, Airports Authority of India, the National Monuments Authority, defence ministry, power and water departments and so on. There are approximately 40-50 clearances.
Royal Institution of Chartered Surveyors (RICS), South Asia
“Before getting all clearances for a project a developer is not allowed to take any sum from potential home buyers, as per law. But it has been seen more oftenly that money is collected from a potential buyer via channel of brokers and investors. This practice is seen usually in northern India. By licensing the brokers and dealers and introducing amendments within the Apartment Acts Haryana and Punjab have already put a ban on this practice,” stated by Sachin Sandhir, managing director, Royal Institution of Chartered Surveyors (RICS), South Asia.
RICS covers all aspects of property, construction and associated environmental issues.
As per Anuj Nangpal, managing director (investor services) at DTZ International Property Advisers the major reason for this is the lack of of an operational real estate regulatory authority. “As per the existing policy, a builder can accept booking amount even before the start of the construction of a project. But before the start the developer is mandated to obtain the necessary approvals and clearances from the respective authorities.”
Authorities can object on the construction when the developer has begun construction without obtaining necessary clearances. Sometimes, the developer may also be required to pay a penalty for starting a construction without clearances. As stated by Nangpal, these can result in delayed completion of a project.
Source: Business Standard
Apartment Acts Haryana and Punjab, Brokers, Builders, buying pre-launch properties, City development authority, Civic agencies, clearances, Defence Ministry, delay in completion, Developer, DTZ International Property, Environmental issues, Government Department, home buyers, Investors, Jones Lang LaSalle (JLL) India, Land department, Mumbai, National Monuments Authority, Northern India, Penalty, Power and water departments, Real Estate Regulatory Authority, Royal Institution of Chartered Surveyors, Sachin Sandhir, South Asia
