Buying a new property in Chennai - need advice - Indian Real Estate Forum

gone_mad · 03-09-08

Thanks people for keeping the forum informative and interesting.

Well, I am really new here, and I am in to get some suggestions/ideas about my 'dream home' plans. To brief about me and my earning power, I am 25, living in Chennai with my parents, working for an IT major and, earning around 50-55K rupees pm.

I want/wishfully think

to buy a property in Chennai, not as an R2I but for my own residential usage. After seeing, analyzing the property rates, cost of living, proximity to places, I have decided to stick to the southern part of Chennai, particularly Madipakkam (Northern part - Sadhasivam nagar, Ram nagar north etc). The reasons are - The locality is quite good, close proximity to Velachery MRTS and Vijayanagar bus depot, closer to OMR, rates are kind of affordable*.

*Affordable - Here is my plan / definition
- There are CMDA approved lands available for approximately 55L to 60L per ground whose guideline value stands upto 45L to 46L per ground.
- I along with 3 friends of mine are planning to buy around 2700 sqft of land, register it sharing equally (SBI gives out 80% loan for the total land + construction)
and the repayment would be approximately 22 to 25K pm for my salary
- The plan is to build two 3BHKs in the first floor, and car parking + 2 2BHKs in the ground floor

I am in the process of seeing lands now. I checked with a legal advisor of a builder about how this is workable and got some very high level inputs from him - the abstract is that this is doable legally. From the perspective of the banker, also this is doable, and I might get a loan for 80% of the total cost involved. I am yet to check with the architect/designer on this.

I thought it would be nice to get some advice from experts, advaced RE investor people around - Kindly advice me on
1. Is this plan totally workable? Are there any major, legal or other vital points that I have missed out?
2. Is this the right period to do this? Since this is for my (same with the case of other friends involved) own usage, should I wait in to see the speculated downfall of the RE market?
3. Market rate for a flat in those areas is 3800 to 4000 Rs per sq. ft.
If I work out this way, I will have to spend 16L (64L land price + registration / 4) + 15L for construction (lets keep 1100 sqft for 1300 rs per sq ft) - total 31L Rupees for a 1100 sqft flat with 700 sqft of land in my name.
By this way, I will end up saving approximately 10L rupees with a larger land share.
4. Am I overlooking things anywhere?
5. What could be the potential problems in doing so - at this stage, or in the future?
5. Any suggestions / advice on how, what to do and what not do do is appreciated.

*Cheers*
Newbie

krishnamurthy mahalingam · 04-10-08

The calculations are broadly excepting the following:-

1. For approvals it might cost you Rs.200-400/- a sq.ft including the sanction of plan, issuing of completion certificate, without which the future resale of the project becomes difficult.

2.The road width decides the Floor Space Index (FSI) supposing on a 2400sq.ft. land if it 30' road you may get 1.5 i.e. you can construct 3600sq.ft. depending on the frontage of minimum 50' (set back on both sides would be 7' and front and back would 10-15' minimum.

3.Escalation cost on construction should be considered anywhere between 15-20% during the time of construction. You have taken the least of the cost and it should be considered anywhere between Rs.1600/- to Rs.1800/- per sq.ft. this is for quality construction.

4.Builder and the timeline he takes for construction is between 12 - 18 months and interest part for those period should also be considered.

4.Most of the roads are narrow in Madipakkam excepting one or two broad roads. Providing Septic Tank is big hassle as Drainage system is yet to operational for the entire madipakkam.

Taking into consideration all this factor and also the ground cost of Rs.55- 60 lacs and between Rs.65 lacs - Rs.70 in Ramnagar (madipakkam) little outer pheripheral of madipakkam and near to Velachery overbridge the cost should be fine.

ks2071746 · 23-03-09

Dear friend,

Thank you for an informative and useful post here.

ks2071746

23-03-09

Quote:

Originally Posted by krishnamurthy mahalingam

The calculations are broadly excepting the following:-

1. For approvals it might cost you Rs.200-400/- a sq.ft including the sanction of plan, issuing of completion certificate, without which the future resale of the project becomes difficult.

2.The road width decides the Floor Space Index (FSI) supposing on a 2400sq.ft. land if it 30' road you may get 1.5 i.e. you can construct 3600sq.ft. depending on the frontage of minimum 50' (set back on both sides would be 7' and front and back would 10-15' minimum.

3.Escalation cost on construction should be considered anywhere between 15-20% during the time of construction. You have taken the least of the cost and it should be considered anywhere between Rs.1600/- to Rs.1800/- per sq.ft. this is for quality construction.

4.Builder and the timeline he takes for construction is between 12 - 18 months and interest part for those period should also be considered.

4.Most of the roads are narrow in Madipakkam excepting one or two broad roads. Providing Septic Tank is big hassle as Drainage system is yet to operational for the entire madipakkam.

Taking into consideration all this factor and also the ground cost of Rs.55- 60 lacs and between Rs.65 lacs - Rs.70 in Ramnagar (madipakkam) little outer pheripheral of madipakkam and near to Velachery overbridge the cost should be fine.

Are you a builder? Somehow your opinion seems to state that!! How can a quality construction jump to 1600psft from 1100psft?

23-03-09

Quote:

Originally Posted by Malathy

Here are some GUIDELINES ON PURCHASE OF PROPERTY (FLAT) in Chennai

FOR SPECIFIC DOUBTS/ PROBLEMS, YOU CAN CONTACT ME AT malathyvishalassociates.net

While negotiating the price and obligations, one should keep the following thing clear

The builder shall provide the minimum requirement of facilities, like electrical fittings, plumbing arrangements, etc. While executing the agreement, we may accept and agree to pay extra for additional requirement. When the building comes to a shape, we may find that the provided/ proposed facilities are inadequate. If we approach/ ask him to provide the same, he shall charge abnormal and exorbitant cost for it. Because, if he completes the building with inadequate facilities, we cannot provide the same on later date and no one electricians or plumbers shall come forward to do the additional work alone, when the building is incomplete. The builder also shall not allow any body to do the same.

Hence, it is advised to forecast and calculate the right requirement required for next 20 years and to ask the builder to provide the additional requirement in the initial stage itself.

All the buildings should be constructed after getting necessary permits from local administrative body or the competent authority. The authority shall allow the area of building (on the floor) less than the area of the land. The ratio between the area of building (on the floor) and that of the land is called floor space index, shortly and popularly known as FSI. The FSI varies from 0.6 and depends upon the location of the site.

Some builders construct a house, which may deviate from the approved plan or permit. The construction agreement may be cleverly prepared such that the purchaser shall be responsible for all the deviations. Some times, the builders may violate the rule or any section or provision of the related Acts. If the agreement is not fully understood by the purchaser, the builder is not at all responsible for any deviation or violation of the building. On later days, the penal charges levied by the government bodies or the demolition proceedings shall be borne by the purchaser only.
Hence, it is advised to ask the builder to produce the approved plan of the building and if convinced, to make the plan as part of the agreement. It is also advised to get assistance of a property consultant.

If you are going to purchase a flat, you must keen on common area. The open area around the building shall be the part of common area. All the owners of the flats own each and every square millimeter of the common area available in the building. All the owners are called as co-owners of the property.

Some of the small-scale builders may convert the common open area as car park, allot it to purchaser and even sell it to the purchaser.

In other words, the builder sells the Common area to the purchaser. It means that the builder sell the area to the purchaser that is already owned by him, along with the other co-owners. It is against the law.
Hence, it is advised to ask the builder to produce the approved plan of the building with reference to the boundary of the land and to attach the plan of the building and the car park as parts of the agreement

If you are going to buy a flat or an individual or semi-independent house from a builder or property developer. Make your own arrangement for housing loan, etc. In some cases, the builder may suggest you that he has known loan agents/ representatives. He may advocate that the legal vetting has already been completed and hence getting of housing loan shall be easy.

If you accept it, you have to be careful on signing the loan documents. Generally, banks shall disburse the loan amount to the builder directly in 2 to 3 installments after getting your consent. In some specific cases, if the borrower, i.e., yourself, agrees, the bank shall credit the entire loan amount into the builder’s account.

Here, the builder may get such letter from you. Without knowing the fact, you sign in these papers. After getting the entire amount, you will not in a position to extract work from the builder. You may not get the good flat/ house of your taste and expectation and it shall be beneficial and profitable to the builder.
But in some cases, the builder may run away from the site when the building is incomplete. You will not get the property but have to re-pay the loan amount.

Hence, it is advised to make your own arrangements for housing loan. If the builder arranges it, go through housing finance documents thoroughly before signing it. You may get a consultant’s opinion that may help you.

Generally, the water requirement for a family is about 400 ~ 500 liters per day. Hence, we may have to provide a water storage [over head tank] of capacity 500L The builder or the property developer may not provide the tank of adequate capacity

This may lead to frequent emptying of tank and needs frequent refilling. If only one motor is available and it is maintained and controlled by one person or by the association it will lead to quarrel between occupants.

It is hereby advised to discuss the capacity of water tank in advance and to enter the same in agreement.

Before buying the plot, be sure that it is saleable. Ensure that land is not a 'Porampoke' one and affected by any provision of ULC Act

Please consult a learned property counsel who will guide you on this aspect you can these details from Taluk office too.

Before buying the plot, be sure that it is saleable and the so called vendor has all the right to sell it. Then find how he got the right. To find the clear title and rights you may have to get EC.

To ensure that the vendor has absolute right and clear marketable title, one should carefully and minutely scrutinise all the documents right from the root of the title to the property. These documents are called as parent documents
If the person assumes title
ü By a sale deed, partition deed, settlement deed or gift deed, you may ask him to produce it and its parent documents
ü By a will you may ask him to probate it and to produce it and its parent documents

ü By intestate succession, you may ask him to establish his heirship by producing death certificate and heir certificate of the pre-owner

Before buying the plot, be ensure that it has been approved by the competent authority. Verify the approval order, see the terms and conditions laid down there.

Confirm the name of the layout, its survey number, village number, etc. Some may use the name of the approved layout to an unapproved layout.

Verify the usage of the land for which it has been approved. Some portion of layout might have been reserved for schools, park or like common usage. Some may divide the portion into small plots and sell it as residential plots. This is against law. Don’t be the prey for this.

Before buy the plot, visit the site with two good friends. Their opinion shall help you a lot.

Good writeup. Seems like a smart way to find clients!!

03-09-08	#1
gone_mad Member Join Date: Sep 2008 Posts: 101 My Mood: Thanks: 0 Thanked 0 Times in 0 Posts Rep Power: 1	Buying a new property in Chennai - need advice Thanks people for keeping the forum informative and interesting. Well, I am really new here, and I am in to get some suggestions/ideas about my 'dream home' plans. To brief about me and my earning power, I am 25, living in Chennai with my parents, working for an IT major and, earning around 50-55K rupees pm. I want/wishfully think to buy a property in Chennai, not as an R2I but for my own residential usage. After seeing, analyzing the property rates, cost of living, proximity to places, I have decided to stick to the southern part of Chennai, particularly Madipakkam (Northern part - Sadhasivam nagar, Ram nagar north etc). The reasons are - The locality is quite good, close proximity to Velachery MRTS and Vijayanagar bus depot, closer to OMR, rates are kind of affordable. Affordable - Here is my plan / definition - There are CMDA approved lands available for approximately 55L to 60L per ground whose guideline value stands upto 45L to 46L per ground. - I along with 3 friends of mine are planning to buy around 2700 sqft of land, register it sharing equally (SBI gives out 80% loan for the total land + construction) and the repayment would be approximately 22 to 25K pm for my salary - The plan is to build two 3BHKs in the first floor, and car parking + 2 2BHKs in the ground floor I am in the process of seeing lands now. I checked with a legal advisor of a builder about how this is workable and got some very high level inputs from him - the abstract is that this is doable legally. From the perspective of the banker, also this is doable, and I might get a loan for 80% of the total cost involved. I am yet to check with the architect/designer on this. I thought it would be nice to get some advice from experts, advaced RE investor people around - Kindly advice me on 1. Is this plan totally workable? Are there any major, legal or other vital points that I have missed out? 2. Is this the right period to do this? Since this is for my (same with the case of other friends involved) own usage, should I wait in to see the speculated downfall of the RE market? 3. Market rate for a flat in those areas is 3800 to 4000 Rs per sq. ft. If I work out this way, I will have to spend 16L (64L land price + registration / 4) + 15L for construction (lets keep 1100 sqft for 1300 rs per sq ft) - total 31L Rupees for a 1100 sqft flat with 700 sqft of land in my name. By this way, I will end up saving approximately 10L rupees with a larger land share. 4. Am I overlooking things anywhere? 5. What could be the potential problems in doing so - at this stage, or in the future? 5. Any suggestions / advice on how, what to do and what not do do is appreciated. Cheers Newbie

04-10-08	#2
krishnamurthy mahalingam New Member Join Date: Oct 2008 Posts: 2 Thanks: 0 Thanked 0 Times in 0 Posts Rep Power: 0	Ideas at Madipakkam Project The calculations are broadly excepting the following:- 1. For approvals it might cost you Rs.200-400/- a sq.ft including the sanction of plan, issuing of completion certificate, without which the future resale of the project becomes difficult. 2.The road width decides the Floor Space Index (FSI) supposing on a 2400sq.ft. land if it 30' road you may get 1.5 i.e. you can construct 3600sq.ft. depending on the frontage of minimum 50' (set back on both sides would be 7' and front and back would 10-15' minimum. 3.Escalation cost on construction should be considered anywhere between 15-20% during the time of construction. You have taken the least of the cost and it should be considered anywhere between Rs.1600/- to Rs.1800/- per sq.ft. this is for quality construction. 4.Builder and the timeline he takes for construction is between 12 - 18 months and interest part for those period should also be considered. 4.Most of the roads are narrow in Madipakkam excepting one or two broad roads. Providing Septic Tank is big hassle as Drainage system is yet to operational for the entire madipakkam. Taking into consideration all this factor and also the ground cost of Rs.55- 60 lacs and between Rs.65 lacs - Rs.70 in Ramnagar (madipakkam) little outer pheripheral of madipakkam and near to Velachery overbridge the cost should be fine. Last edited by IGRM; 08-10-08 at 01:19 PM. Reason: Will be banned if any more pesonal details are posted.

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23-03-09	#3
ks2071746 Senior Member Join Date: Nov 2008 Location: Tamilnadu Posts: 855 My Mood: Thanks: 0 Thanked 0 Times in 0 Posts Rep Power: 1	Dear friend, Thank you for an informative and useful post here. ks2071746