MUMBAI: If one has personal cash resources at one’s disposal and is not reliant on a home loan, it is best to buy a home in a strategic, high-demand location that has no new supply of housing, feel experts. This could result in very high return on investment (ROI) because it would mean that the project would come up for redevelopment, ensuring a tidy profit to the owner. However, it is important to note that home loans on a very old property cannot be taken for granted.
To ascertain if the location will score high on ROI, one should ask the broker to give a comparative analysis of the area and projected price. It is not necessarily true that resale properties are always cheaper. In Mumbai, new residential property supply is scarce or non-existent, in many central locations. In such areas, there would not be a question of discounts on resale properties. Discounts are more prevalent in areas where the market is more competitive. Since these resale properties are sold either by the primary owners or by investors, there is a higher possibility of flexibility in payment terms.
There are certain challenges that a buyer of a resale flat may face. This could include lack of proper chain of documentation, especially in cases where the property has changed hands more than a couple of times. If the property is over 18-20 years old, it is possible that it was never formally registered. Registering it at the current point in time would put the onus of paying the stamp duty in arrears on the buyer. All the documents that are applicable for a primary residential property sale, would be required for a clear resale flat transaction too. The seller should be able to produce all original documents.
The buyer should establish the existence of a proper society. Om Ahuja, CEO – residential services, JLL India, says, “The original sales deed and the society share certificate are most important, since the transaction cannot proceed without them. The buyer should bear in mind that in the case of a resale property, proper transfer and re-registration is necessary. The documents required for registration of residential flats, apart from the sale deed, include a letter from the society that reflects details, such as number of floors, the construction year, the apartment’s built-up area and the number of lifts in the building. Also required, is an assessment bill to the society from the municipality in question, an NOC from the collector if the building exists on collector’s land, a copy of the property card, and a receipt for the payment of registration fees.”
Ashok Kumar, principal and managing director, Cresa Partners, advises the same. “Check all the documents related to the registration of the property. You could consider taking legal help for the verification of the papers. Confirm the debt status and ensure that the property has all the required approvals. Make sure that there are no outstanding bills, for instance, property tax, water charges, society tax and electricity bills. It is also essential to check that the property does not have unauthorized extensions and any mortgage or other rights or liabilities,” says Kumar.
Vishal Wadhwani, owner of Deal4uproperties.com, further adds that “Check the legality of the property like Occupation Certificate, share certificate and last society maintenance bill. The buyer of a resale flat should ask for a clear ownership history if the residential property has changed hands before. If the seller has a chain of agreements, specifically three and more, then a search report is a must, to avoid any legal issues. It costs Rs 5,000. Closely check for any leakages especially if the paint is new, as chances are that leakages could have been hidden beneath the paint.” The local registrar will establish the authenticity of all documents. If one is buying the property via a home loan, the bank will run a routine due diligence.
According to Mohanjeet Singh, partner of New Mumbai Realty, it is best to take a small bank loan even if you are capable of investing 100 per cent in the property. “This will ensure proper due diligence of the property done by the bank, before parting away with the loan. The banks will check every aspect, all permissions and compliances by competent authorities,” says Singh.
Finally, one should bear in mind that the Indian residential property market is in a constant state of evolution.
There may also be additional expenses for repairs to masonry, plumbing, electrical wiring and fittings.