Owning a flat or a building requires a lot of information and knowledge related to real-estate laws and terms. It is very important to know all these terms and laws to avoid any conflict regarding the property they are buying. And as there are numerous real-estate terms available today we will be explaining to you a very important real-estate term that you must know about is “Occupancy Certificate” (OC).
Occupancy Certificate is a document that you require to have before shifting to a flat or a building. One must always check Occupancy Certificate with the owner before buying a flat or a building. And to get the OC one need to get Building Completion Certificate. So, let’s start with building completion certificate, then we’ll get to OC as well. Here, have a look!
Building Completion Certificate : When a building is completely constructed, the builder can apply for a ‘building completion certificate’ to local authorities. And if the building is constructed as per the approval plan approved by the authorities, then only the builder will get the building completion certificate plan. There can be flaws like distance from the road, the height of the building etc, and if these common things are not constructed as the approved plan then local authorities will not provide building completion certificate. And as possession certificate is followed by building completion certificate, one cannot get possession certificate as well.
Commonly asked questions about building completion certificate
Question 1 – Who can apply for Building completion certificate?
Answer 1 – Builder of the constructed building.
Question 2 – Who will issue Building completion certificate?
Answer 2 – Local civic bodies will issue building completion certificate
Occupancy Certificate: Occupancy certificate is the certificate that we can apply after the complete construction of the building. It can be applied by the builder or the owner of the building to local civic bodies.
A Occupancy certificate is a proof that clarifies that the property is constructed according to the plan. OC can only be obtained once after the construction of the building. Thus, one has to keep it secure. Though, the process of obtaining OC includes one more step that is obtaining building completion certificate. As per the state laws, one cannot legally move into the constructed building unless the owner gets OC from the local civic bodies. Also, the municipality can ask the building owner to leave the building and will consider it illegally occupied or will impose heavy penalties.
Commonly asked questions about OC
Question 1 – Who can apply for OC?
Answer 1 – The builder of the constructed building has to apply, but a building owner can also apply for the same. And if you have already started living in the building, then you can contact to Local Corporation and apply for OC. And if the building is constructed according to the approval plan and you have got building completion certificate then you can easily get the OC.
Question 2 – Who will issue Occupancy Certificate?
Answer 2 – Local administrative and civic bodies will issue Occupancy Certificate. The local civic bodies will not issue the certificate if they find the building is illegally constructed.
Question 3 – How to get Occupancy Certificate?
Answer 3 – To get OC you need the documents given below:
- Copy of building plan approval
- Building Commencement Certificate.
- Copy of Building Completion Certificate.
- Latest Property Tax receipt
- Built and section plan
- NOC for fire and pollution
- Copy of solar panels and rain harvesting
- Copies of No Objection Certificates
Question 4 – Is it safe to buy a building or apartment without OC?
Answer 4 – No, it is not safe as anytime the local civic bodies can ask you to leave the building as the owner may not have collected OC. It is strictly advised to buy a flat or a building that has Occupancy Certificate.
Question 5 – Can Builders issue Partial Occupancy Certificate?
Answer 5 – Yes, the builder can issue partial occupancy certificate, but it is only valid till 6 months. When the property is constructed in blocks with varying completion dates, then the builder can issue a partial OC. But, after the complete construction of entire property partial possession certificates are replaced by final land possession certificate. But if you think of getting a home loan with partial possession certificate, then it will be very problematic for you.
The most important time when you should consider possession certificate is before buying a flat, even if the builders are reputed ones. Check the completion certificate, as well as possession certificate (occupancy certificate) and demand it from the property or that building’s owner. And if these certificates and not available with the owner, then there are higher chances that the building is not constructed according to the approved plan by local civic bodies. In these cases, do not occupy the property and search for another one. And if you have already occupied the property, ask for an occupancy certificate and get one at the earliest.
Why Completion Certificate and Occupancy Certificate is Important?
- While claiming Income Tax benefits on your home loan, you may be asked to show Occupancy Certificate.
- Living in a property without OC in considered illegal and local administrative can ask you to vacate the building.
- You may face issues in getting sanitary connection, electricity or water connection.
- A home loan is only sanctioned when you have the possession certificate.
- It will be very difficult for you to sell your building or flat without possession certificate in future.
So, this is why Occupancy certificate is important for home buyers.
6 Important Points To Remember Before Investing In Real Estate
Investing in real estate is an enormous task. A prospective buyer, first time or otherwise must consider a number of factors before committing to a piece of property. However, there are some basic mistakes that a prospective buyer can avoid. This list will attempt to provide some clarity in the messy business of investing in real estate.
1. Research: This is the golden rule. The importance of research cannot be stressed upon enough. A fair amount of research can make all the difference between a good investment and a bad one. Attention should be placed to details such as
- Type of locality
- Connectivity to hospitals, schools, airport, etc.
- Reputation of the builder and developer
- Property rates as well as the rates of neighbouring properties
- Is the house located in a problematic area like a flood-zone?
- Is the home insured? Will the property require additional maintenance expenditure?
- Judging the market value of the house and find out if you are paying above the market value.
- Ask yourself questions. Assess if the house will be mainly for living purposes. If not, then can the house be rented out? Or, can it be put on the market again? If so, what will be the value of the house then? All in all, be clear about the purposes you have in mind for the house and proceed accordingly.
2. Discuss: Discuss your plans with others. Consult with family, friends, other buyers as well as sellers. Inform yourself of policies such as the RERA that protect consumer rights. If necessary, seek professional advice from consultants who know their ways around the real estate business. Discuss loan strategies and more importantly, set investment boundaries.
3. Set Investment Boundaries: It is also very important to figure out what one requires from the property they are looking at. An easy and foolproof way to tackle this would be to make a list of requirements. A list of requirements also assists in the setting of investment boundaries. If one does not set an investment boundary, chances are that they will end up paying a lot over the stipulated budget and incur heavy losses. The buyer should also evaluate other properties instead of setting their sight on one. It is often the case that sellers confuse buyers to get them to buy their property. In these cases, to avoid this confusion it is best to consider other prospective properties too.
4. Tax Benefits: Remember your tax benefits. This is a very important step as overlooking this step will guarantee heavy loss and no monetary returns. Keep track of tax benefits on existing property and any new property you might be investing in. It usually helps to have a consultation team as they will keep you informed at all times.
5. Bad Financial Decisions: This is one of the trickier areas in real estate investment. Bad financing has severe and unalterable consequences. Experts say that bad financing is one of the ways in which investors lose most of the money. First off, the buyer needs to be aware of their credit score at the bank. If they haven’t paid off earlier loans it is likely that the bank will not offer any financial assistance to make the purchase. It is advised that the buyer clears any loans they have in the bank before setting out to invest. However, this can’t provide any guarantee, because in 2008, during the credit crisis, refinancing became very difficult. Bad financial decisions can be a combination of factors such as
- High-interest rates
- High monthly payment
- High rates of borrowing
- Balloon payment
All of the above are connected to each other. Mortgages only allow borrowing of 80% of property cost. It is advisable to not borrow more than the stipulated 80% as that could endanger future assets one is borrowing against. High-interest rates combined with high monthly payment can very easily lead to a balloon payment in a short period. This is again, not advisable as selling and refinancing to combat the balloon payment is a difficult and time-consuming process.
6. Debt: This is another important aspect of real estate development. Research on how debt works and chart out the best plan for payment. Experts advise buyers to choose for debt with lower interest rates and a larger down payment. This ensures that the debt incurred is paid off at a steady pace.
Of course, it must be remembered that there is no foolproof way to success in real estate investment. However, with diligence and attention to detail, certain problems can be anticipated. This list attempts to inform prospective buyers of basic problem areas.
Disclaimer: Article has been posted by Oswal Group
Changing Dynamics Of Real Estate in India
2017 has been a one of the most challenging year for Real Estate sector in India. Indian Economy is largely dependent on this sector and it is also top most emplyoment provider. Major Reforms like Demonetisation, RERA followed by GST etc. has changed the entire face of Real Estate Sector.
Let us highlight on few points in short:
- To start with Demonetisation – the sudden announcement of banning two highest value banknotes weakened a lot of the liquidity in the Indian economy, negatively impacting the property sector. The primary aim of demonetisation was to reduce the amount of black money in the Indian economy, of which the real estate sector had been a major beneficiary, along with the legal cash flows it was accustomed to receiving.
- Pradhan Mantri Awas Yojna– Housing for all which is the ambitious project with the mission of Housing for all by 2022. This will tackle the problem of housing shortage of around 2 crore homes in India, including Economically Weaker Sections and Low Income Groups in urban areas by the year 2022 through a financial assistance.
- RERA – A landmark reform by the centre government has completely changed the landscape of the real estate sector. The Aim is to bring down irregularities in the sector. Earlier Home buyers usually faced issues regarding the late possession of the house and illegal project building by the developer. So to boost the confidence of investors and homebuyers, RERA was introduced where the developer has to register on-going project giving the complete details of the project with its completion date and also the amenities offered. The act is applicable to residential and commercial developments. Under the act, along with the Developers and their projects, the Real Estate Agents also have to be registered, thus leading to cleaning up and weeding out of fly by night operators and bring in more professionalism in the sector. This will organise real estate sector, thus infusing credibility and accountability.
- The Indian authorities have also moved to crack down on “benami” property transactions – which refers to property or land being bought in someone else’s name or under a fictitious identity, often to hide black money and stay under the radar of the taxman.
- Lastly the introduction of GST has also greatly impacted this sector. It will streamline the supply chain of developers and bring many small-time contractors and vendors into the GST net. Though the sales in under-construction properties is adversely affected, but we should see positive effects in long run.
Reputed developers believe that the policy reforms may be having a short-term negative impact but they say that ultimately the changes could benefit the sector, as the industry makes the transition to becoming more structured.
The combined effect of all these reforms should positively lead to better tomorrow and affordable real estate – relief to Common Man.
The property prices in cities, especially in metro cities keep fluctuating year by year. However, in the last couple of years, the prices in these cities have been below or stagnant. Despite of this no change in the price, home buyers are still in two minds about buying new apartments. One of the basic reasons behind these two thoughts is due to delay in the existing project, which eventually creates a lack of confidence in the minds of buyers. This is also affecting the decision of investors who may consider it as loss of investment.
Now with the GST coming into the effect, this has further affected the decision. Under GST, the tax for under-construction project has shot up to 12 per cent. The developer will be bearing the burden of GST, which will certainly pass on to the buyers.
This is the reason why home buyers are choosing ready-to-move projects that are less risky in all terms. These ready-to-move homes carry a good resale value also offering less risk compared to under-construction properties.
Let us evaluate why ready-to-move homes are the best choice than under-construction:
- Benefiting the Tax:
As per real estate experts, one must buy the first home in the early age, which would certainly help in tax deduction. There is a huge capital tax gain in ready-to-move homes. Income tax rules allow tax exemption on capital gains under sale of property help for more than 2-3 years only if the amount is reinvested in property within two years. However, if the possession is delayed further, you will end up paying high amount as capital gain tax. This is not the case when it comes to ready-to-move homes. Moreover, there is no service tax involved in ready-to-move-in property.
- Save on Rentals:
This is the primary benefit the home owner will earn by investing on ready-to- move homes. If you’re not planning to move soon and would like to wait for more years, then you can start earning by renting the home. The house rents are fixed according to the location, amenities available and how new the project is. Many home owners usually end up renting the home, especially if invested in other cities. This will also help you to repay the EMI for loan taken for the house.
- No Waiting Period:
One of the prime advantages of ready-to-move homes are there is no waiting period. With the project already completed, you just have to complete the procedures of buying a home and other things related to the purchase.
- Only EMI with no Down Payment:
The best thing about possession ready home, you have to pay only EMIs on home loan immediately, and would include no other payments. In case of under construction property, EMI usually starts after completion of construction. However, if there is any delay in the construction, then the EMI will start once the home loan gets disbursed. However, in some cases, the buyer may cancel the property due to financial strain and increasing interest rates.
- You get what you see:
Since the housing complex is in ready possession, you will find no changes in the property as seen in the booklet or images. In many cases, the under construction project design may change after completion than what you have seen in the booklet. In case of ready to move homes, you can get feedback from the residents, examine the location and learn about the residence.
If you’re planning for ready-possession property, evaluate your financial condition, documents required to purchase and about the developers. If the developer is esteemed, then banks will surely approach you to get yourself a loan. Home buying can be a risky affair, but buying after good research and considering the long term return will be fruitful.
OK, Now that you have finalised on the property that you want to go ahead and purchase, because it has matched your wish list in terms of location, layout, neighbourhood, amenities etc., it is also very important to check the property documents. Usually documents are given by the seller for verification after the token amount is paid.
Document Verification is a must to avoid unnecessary legal hassles and sleepless nights later. Insist of verifying the original documents and not the photocopies. It is advisable to hire a good lawyer and get the documents reviewed.
The laws governing the sale of property might be slightly different in different states, but there are a few common documents a seller must have if they are selling flats.
- Title Deed / Sale Deed in the present Owner’s Name
- Earlier sale deeds/sale documents if the case is of reselling.
- Share Certificate of the society.
- Bills such as of electricity, telephone etc. Latest Tax Paid receipts
- If any loan outstanding on the property, latest statement from bank
- Flat’s measurements/survey report.
- NOC from the society stating that the flat is not having any pending dues or liabilities to the society.
- Occupation Certificate of the Building.
Public notice in the newspaper on buying property in Mumbai is highly suggested. It could be one in English language and one in local language. This notice is to safeguards a buyer’s interest in case you find any problem over the purchased property.
Lifestyle Property Consultants
Stamp duty is a government tax, which is levied on legal property transactions. Stamp duty is, therefore, a tax which is evidence of any purchase or sale of a property between two or more parties.
Attached is the New Stamp Duty Rates w.e.f August 2017
In Mumbai, with the CBD shifting to BKC and Lower Parel for all practical purposes, even the most attractive parts of the city have not witnessed increased action in terms of sales, relative appreciation and leasing over the last 5-7 years.
In marked contrast to other cities, the dynamics of Luxury housing in Mumbai have changed dramatically over the last decade. Cuffe Parade, Marine Drive, Pedder Road and other premium locations in Mumbai have witnessed a slowdown in demand and price appreciation.
In Mumbai, with the CBD shifting to BKC and Lower Parel for all practical purposes, even the most attractive parts of the city have not witnessed increased action in terms of sales, relative appreciation and leasing over the last 5-7 years. With the CBD and even the Diamond Market moving to Bandra Kurla Complex (BKC), there has been a dramatic shift of preferences for luxury housing in Mumbai. South Mumbai residents now show increasing preference for moving to New Premium Residential Complexes in Mahalaxmi, Jacob Circle, Lower Parel, Worli and Prabhadevi giving up the standalone buildings they have been occupying since security and parking have become a challenge.
The shift towards Worli reflects that a desire to be close to the Sea Link for faster access to BKC is another important market trend. The Bandra-Khar-Santacruz belt and specifically BKC have become the best options for corporate employees who wish to live closer to their workplaces. Diamond traders are also shifting to these areas and to Worli for the same reason.
Few South Mumbai properties that have perennial demand are Samudra Mahal, Beaumonde, Lodha Bellissimo, Planet Godrej, Kalpataru Horizon, Raheja Vivarea, Lodha Primeo, Signature Island where resale price ranges from Rs. 45000/- psf to Rs. 1 Lac p.s.f
Mumbai’s new Luxury Locations:
A family living in South Mumbai that wants to upgrade from a 2 BHK to 3 BHK or 4 BHK usually operates with a limited additional budget after selling their existing home. After a prolonged stay in plush South Mumbai, very few locations provide comparable appeal / options.
Such families will consider options in Mahalaxmi, Parel, Lower Parel, Prabhadevi and Worli, and tend to be open to locations such as Mazgaon and Byculla as secondary options. The additional investment for exploring these alternatives is usually between Rs. 2-4 crore. Reputed developers like K Raheja Corp., Kalpataru, Lodha and others have luxury projects in these areas and are actively catering to the demand coming from erstwhile residents of South Mumbai.
South Mumbai residents who cannot stretch their budget to accommodate their new space requirement are looking at Parel, Sewri and Wadala as alternate option. With the arrival of the Eastern Freeway, Monorail, and JJ Flyover Parel, Sewri and Wadala have in fact become a hot destination. Reputed developers like L&T, Dosti and Ajmera have projects in these locations. Some of them are completed or near completion.
In the CBD area, the BKC belt has surprised most market pundits over the last decade. With the robust development in this prime location of Mumbai, many families from South Mumbai have been able to move into luxury projects there with just marginal budget additions. In the process, they have gained the advantages of additional bedrooms as well as significantly enhanced luxury living experience. The BKC luxury residential market is being serviced by developers like Sunteck, Kalpataru and Rustomjee.
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