Checklist for buying a property in India

Published: September 16, 2008

Here are some useful questions to ask yourself before buying a property in India.

The issues such as price of the property are pretty obvious, and you would surely consider them. But there are a lot of intricacies that are not so obvious in first look.

If it’s a resale property -

  1. What is the cash component? - The seller of the property might want some component of the selling price to be paid in cash, and also carry out the agreement on the amount that you pay in check, and not the whole amount. In such a case, you won’t get a home loan on the full price you are paying. See if you can afford to do that.
  2. Is the property registered? - There are always properties that get sold on Power Of Attorney. Check if the property is included in the government registry. If not, it should be cheaper.
  3. What is the construction date? - Properties older than say 10 years would definitely need a detailed look at construction quality. You definitely don’t want to end up in huge repair bills, or worse, a complete collapse only a few years after you have purchased it.
  4. Is the property free from debts? - What is the mortgage (home loan) status of the property? Is it still mortgaged to the bank? Are all the bills like electricity and phone duly paid?
  5. Is the property free from disputes? - Are there any law suits going on about the property? This is particularly important if you are considering purchase of a land. Lands typically do have some or the other court cases, legal hassles going on in the families.

If it’s a property in a new project -

  1. What is the possession date? - The later the possession date, the costlier the deal is for you. Roughly, calculate the rent yield of the property (roughly 5-6% of the cost per anum), and use that factor to compare prices of two projects.
    For example, a ready possession property of 20 lacs is cheaper than a similar property priced 19 lacs to be handed over after an year, given that the rent yield per anum is more than 1 lac.
  2. What if there are delays? - The case where possession date promised by the developer is not followed is very common in India. You can ask the developer company, to show you the registration agreement in advance, and get it reviewed from a good lawyer. It would be great, if there are strict clauses against delay of possession, without any ‘fine print’.
  3. How is the super-built up area calculated? - Super built up area is a marketing trick, widely deployed in India. Typically, it will be 20% to 40% more than the actual carpet area of your property. As there is no standardization, compare properties on basis of carpet area, and calculate the ‘real’ price per sqft of carpet area.
  4. What are the extra charges? - In most of the cases, the price that is advertised, is not the MRP you will pay for the property. Numerous amenities need to be paid for. They typically include car parking, society formation charges, maintenance charges, power backup, higher floor premium, modular kitchen, PoP work, wooden flooring, electrical connections etc. Check out what is included and what is not in the basic advertised cost.
  5. Are all legal approvals taken? - You can ask the developer company to provide all the legal documents, such as architect certificate, municipal approvals, completion certificate draft, agreement draft etc. It is very important to understand that Indian market doesn’t have a government regulator unlike some of the developed countries, so being vigilant is the only savior for a buyer.
  6. What is developer’s reputation? - This is the simplest and the most important question to ask yourself, as the legal documents are always designed for their needs. If the company is reputed, and they have done a good job in their previous projects, there is a good chance that they will want to keep their reputation, and wouldn’t take you for a ride. Paying a premium of say 10-15% for the builder reputation might be worth it in the longer term.

If it is your second home (as investment) -

  1. What is the rent yield? - Typically, you would want to rent the property out. So, a property that is near some important commercial center (IT park, SEZ, commercial hub) would typically yield good rental income. Apartments generally give you easier renting out option than individual houses. Vicinity to colleges would also help because of availability of large pool of bachelor tenants.
  2. Income tax & Wealth tax - You would incur income tax (for the rental income) as well as wealth tax for a property that is not your self-occupied home.
  3. Growth prospects of the area (ROI)? - The issue of Return On Investment is particularly important if you are purchasing the property as an investment, and would want to sell it out after a few years.

Zamanzar offers legal advice services, property brokerage services and original bookings on new projects. We guarantee you of professionalism and ethics. We don’t charge any commission from the buyer for purchase of a new project property from developer. We can help you to sort of most of these issues. So, you can consider availing our services as well. :) Visit our real estate site, see if you like some property, or just let us know your requirements, and we’ll get back ASAP.

Relevant links at Zamanzar: New Delhi Real Estate for Sale, New projects in New Delhi

Posted under categories: Buying Property, Indian Real Estate
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About Zamanzar

Zamanzar Advisory Pvt. Ltd. is a real estate advisory firm located in New Delhi, India. We offer online property search tools and offline services to help complete the transaction. Our services cater to real estate buyers, renters, and sellers. Visit Zamanzar to find out more!

5 Comments so far

  1. Khushi Jain June 19, 2009 7:02 am

    i’m currently looking for buying an investment property in india preciously in mumbai or pune…wanting to invest 40-45 lakhs only as its my first step in the property market…
    Can you please revert with some really good deals for me which will give me good rents as well as capital growth

  2. jayesh June 22, 2009 9:30 am

    Guys, I need some help. I have bought a property in Mira rd. The agreement was signed in last week of January 09. I applied for a loan in Jan and paid the 15% of agreement amount in a months time. Unfortunately it took me 3.5 months to pay the 85% of amount as they were some problems in property docs. My loan was rejected from LICHFL and i had to apply in HDFC which worked fine. Now the seller of the property has given me the possession but he is refusing to sign he society transfer documents and is asking for compensation as there was a delay. Please let me know the best way to tackle this problem as per Indian law.

  3. Krishna August 28, 2009 11:06 pm

    We need some advise.We have bought few shops at Anant Raj Galleria developed by Anant Raj Group in New Delhi.We have paid half of the amount by june 2008 and rest of the amount had been financed by Banks.Now banks are not financing the commercial Properties and developer has no completion certificate yet.What next step should we take now?Is it ok to get registered that shops without Completion Certificate or We should wait to get Completion Certificate first.They promised us to give possession by june,2008.But we didn`t get possession yet and not being financed by any financial Institution.Our agreement between Developer and We has been expired already to pay the whole amount off.Neither they are asking money nor giving the possession.Pls let me advise to come the situation out.

  4. Malti September 15, 2009 12:21 pm

    Hi guys, I am looking out for property investment (Residential apartments / Residential plots)in Vashi, ie from Jui Nagar to Panvel.Any property in and around this area is welcom. My budget is around 15 lacs. Can you guys help me by sending me property details. I am planning to invest at the earliest.

  5. Tanna Goulbourne September 24, 2011 1:53 am

    You need to take part in a contest for top-of-the-line blogs on the web. I’ll advocate this site!

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