This is the second blog of the series “Top things to know before purchasing a property”. You can read the first one here. In this blog, we explore what one should keep in mind while purchasing a Flat.
Like any other property investment, one should also exercise a lot of caution and restraint before buying a Flat. Although, purchasing a flat comes with its own set of advantages such as no worries about lengthy land agreements, No tension about choosing the right contractors and coordinating with them and No hassles of material purchasing, etc. But, it is extremely necessary to be mindful of a few things. Let’s explore them in details:
Type of Flat:
The first and the most important step to buying a flat is to consider what type of flat you require i.e., How many: rooms, bathrooms, balcony, utility you require. This is very important to get right because any investment in property is a once in a lifetime decision for most people.
To make an informed decision, one should think about how many family members are to be accommodated in the flat e.g., if you are a nuclear family and are just two persons currently, then you should also take into account that you might want to have kids in the future and they will need a room for themselves once they grow up; also, if your parents or in-laws come to visit they will need a separate room during their stay.
So, If there are 6 people in a family then ideally one should go for a 3 Bedroom and 2 (or 3) Bathroom flat.
Consider the number of members in your family at least 20 years down the line and then decide the type of flat.
Area of the Flat:
The area of the flat comes next as this will help you finalize (tentatively at least) your budget. This is the figure which you will commonly hear the elders in our family or your veteran colleagues speak about while purchasing a flat/house. We have written a detailed article on what are the standard sizes of the different rooms in a spacious modern (design) flat nowadays. So, I strongly suggest that you read this piece.
Let us assume that we are going for a 3 Bedroom, 3 Bathroom compact flat. I will list down the approximate standard areas of the different rooms (Values are taken from this article) so that you can have a rough idea as to how much Carpet area you should look for while trying to finalize the area of your flat.
Bedroom: Master Bedroom- 160 sqft., Bedroom- 120 sft., Kids’ room- 100 sqft.
Bathroom: 40 sqft. each.
Kitchen: 80 sqft. Make sure that there is enough room to accommodate a big refrigerator in the kitchen or just outside the kitchen.
Verandah (Balcony): The number of verandahs can vary in a flat. In a 3 Bedroom flat, 2 Verandahs are sufficient where one verandah can be used as a utility area as well. A utility room is a place where one can install a washing machine or other such equipment that is not used on a day to day basis. This space can be used to dry clothes as well and store other non-regularly used items but occupies a lot of space viz., soap, detergent, boxes, buckets, pipes, etc.
So, let’s consider 40 sqft. for each of the 2 balconies.
Drawing cum Dining room: These two spaces are combined because of space constraints in buildings. Let’s consider 300 sqft. for this space.
So, to conclude, A 3 Bedroom, 2 Bathroom, 1 kitchen, 2 verandahs (1 verandah and 1 utility), 1 Drawing cum Dining room will occupy around-
3 Bedroom- (160+120+100) sqft.= 380 sqft.
3 Bathroom- (40+40+40) sqft.= 120 sqft.
1 Kitchen- 80 sqft.
2 Verandah- (40+40) sqft.= 80 sqft.
1 Living room cum Dining room- 300 sqft.
Total Area= 960 sqft. So, adding another 40 sqft. to this area for corridors and passages, about 1000 sqft. is the rough usable area (carpet area) of a 3 Bedroom flat.
All Builders or Developers in Indore or any other part of the country sell flats on the Super Built-up area(or Saleable area) which includes the Carpet area as shown above and the proportionate share of the common areas (for which they tend to add about 35% of the carpet area). So, ideally, the Super Built-up area or the Saleable area of the 3 Bedroom flat discussed above will be about 1350 sqft. more or less.
After you have decided on the type of flat and the area of flat you require, it is now imperative to decide the budget.
Generally, you will come across the per square feet rate (Rs/sqft.) of a particular area. This rate is charged on the Saleable/Super Built-up area (As discussed above). Over and above this, other additional charges such as covered parking, lift and fire fighting charges, preferential location charges (i.e., flats on higher floors, flats with a view, etc.) are added as well. It is essential that you consider these aspects as well since these prices vary from area to area.
Home Loan: Unless you are paying the entire unit cost out of your pocket, you have to avail home loan to finance your home. Statistics say that in India more than 95% of people avail home loans while purchasing properties. So, let us proceed by assuming that you will avail home loan while purchasing your flat. Now generally, to avail a home loan, one has to pay out of their pocket, at least 20% of the entire property value as down-payment along with the loan processing amount (which is up to 2% of the entire loan amount); This is a great yardstick to gauge your total budget.
So, for example, if you have Rs 10 lacs which you are willing to spend as down-payment and the loan processing fee of the flat, then you can avail home loan of Rs 40 lacs. So, this will give you a total budget of Rs 50 lacs.
Taxes: Sq. footage rates of under-construction flats are lower than a ready-to-move-in flat. But, an under-construction flat will attract a GST of either 1%(in case the flat comes under affordable housing scheme) or 5%(in case the flat comes under non-affordable housing scheme) whereas no GST is chargeable on a ready-to-move-in flat (i.e., the project has received its Completion and Occupancy certificate issued by the urban local body). You can read in detail about the new GST rules for Real Estate here.
Stamp Duty and Registration charges: To take ownership of a property it is necessary to execute the registration of the flat. Stamp Duty and Registry charges rates vary from state to state. The stamp duty charges are calculated on the Circle rates of the area where you are purchasing the flat. The circle rates are generally lower than the market rate of the flats.Typically, the stamp duty is around 8-12% of the unit cost. This is a considerable expenditure, so we must set aside this figure while deciding the budget of the unit.
Once the budget and the type, area of the flat are finalized then you can shortlist the location. Deciding the location of a flat reflects the personal aspiration of a person. Apart from personal preferences, criteria like proximity of good schools, Main roads, Distance to the city centre, Shopping complexes, Entertainment centres, Hospitals, places of worship, Accessibility of Railways station, Airport, Bus depot, etc influences the choice of a location.
Mr. Gupta is a Banking executive and earns 50k per month and has a savings of around 5 lacs. He wants to buy a flat to accommodate his homemaker wife, and his father, who is a widower. He wants to spend around 4 lacs as down-payment. So, he can avail a loan of 16 lacs which gives a combined budget of around 20 lacs for the flat. Mr. Gupta doesn’t want to start a family anytime soon but wants to be close to a good hospital where he can take his father to if need be so.
Based on Mr. Gupta’s area requirements he should go for a 2 BHK flat of around 800-850 sqft. Super Built-up area and 600-630 sqft. Carpet area. Based on his combined budget and area requirements Mr. Gupta can narrow down the location of the flat in Indore at Ujjain road, specifically near Aurobindo Medical College to purchase a flat.
Although Mr.Gupta will have to travel 10km in each direction for his office, the rates in the area will certainly fit his budget and his area requirements.
Choosing the right builder/developer:
After you have had an idea about the type, area, budget, and location of the flat, the next most important criteria is to select projects which fit your criteria. After you have shortlisted the projects through thorough research, identify the Builders who are developing these projects.
Since all of your life saving goes into buying a property, it is extremely important that you choose the right Developers/Builder. Experienced, Qualified builders with a proven record of project delivery must be chosen. This does not necessarily mean the builders who advertise the most or who advertise with superstar brand ambassadors but the ones who are reliable and have handed over several good projects in the past.
If all of the above points are considered and kept in mind, then you will be successful in choosing the right flat.
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