Frequently asked questionsAs you buy a new home, these questions will answer all common queries about buying and owing a property in India. Use this guide to acquaint yourself with rules, laws and important information.
What is the difference between Carpet Area, Built-up Area, Super Built-Up Area?
Carpet Area : This is the area of the apartment that does not include the area of the walls i.e. the area of the apartment that a carpet can cover. Built-Up Area : This is the area of the apartment that includes the area covered by the walls. Super Built-Up Area : This includes the built-up areas such as the lobby, lifts, stairs etc. This term is therefore only applicable for multi-dwelling units, such as flat complexes.
What is the difference between the Lease and the Leave and the License agreement?
A Lease, defined under Section 105 of The Transfer of Property Act, 1882, is a transfer of the right to enjoy the concerned property for a pre-defined time period or in perpetuity. The lessor (owner of the property) gives the lessee (the one leasing the property) such consideration periodically, usually at the beginning or end of a lease agreement. License is defined in Section 52 of the Indian Easements Act,1882. License does not allow any interest in the premises on the licensee’s part. It merely gives the licensee the right to use and occupy the premises for a limited duration. A lease deed needs to be stamped and registered. The amount payable towards the lease deed’s stamp duty is more than that payable towards the Leave and License’s. For a period exceeding three years, the stamp duty is same for both agreements.
What are the implications of entering into a lease agreement?
There are various implications of entering into a lease agreement such as you have to pay the stamp duty, the lease agreement has to be registered etc.
Does a foreing citizen of non-indian origin require permission from from the Reserve Bank Of India(RBI) for acquisition of immovable property?
Yes. The RBI may grant permission to a foreign citizen of non-Indian origin/foreign companies if the property is purchased for residential use and the consideration is paid by way of foreign exchange.
Why is it considered necessary to register a property?What is the purpose of registration?
By registering the transaction of an immovable property, it becomes permanent public record. Title or interest can be acquired only if the deed is registered.
I have a flat which i want to sell and buy a new flat bigger in area.what are my tax implications with regard to capital gains?
If you purchase a new flat within two years of the date of sale of the original flat and invest the entire amount of capital gained into the new flat, you will not have to pay any capital gains tax.
With refernce to Bombay Rent Act,is there a prescribed percentage of tenants willing to form a society? Are there any new provisions?
For instance, 70 per cent tenants out of a total of 32 tenants are ready to form a co-operative housing society. There is no new provision in the new Rent Act regarding the prescribed percentage of tenants willing to form a society.
Who does a group of tenants of an old building approach to be able to form a society without the concerned landlord's permission?
Approach the Registrar of Co-Operative Societies and file the various relevant documents.
Incase a tenant is not protected by the Rent Act,what is the procedure to ask him to vacate and what is the notice period that is required to be given?
A notice is sent to the tenant, failing which a court case may be filed. It usually takes 10 to 20 years to reach a verdict.
With refernce to the Bombay Rent Act,can tenant of an old building that was repaired by all the year 1995-96 form a co-operative Housing Society without the landlord's permission?
Yes, tenants of an old, repaired building can form a co-operative housing society without the landlord’s permission. Assume there is a lease agreement for 6 years for a shop with a built-in escalation clause at the rate of 20 per cent after 3 years. The lease expires on a specified date say, March 31, 2000 and the concerned landlord has sent a written letter. It is always advisable to make a new agreement with the landlord.
How is the market rent determined?
There is no prescribed norm for determining the market rent rate though it can be easily found out by approaching individuals such as brokers, registration authority, etc.
From where can I get home loans?
There are several Housing Finance Institutes who are currently providing Home Loans, like
- HDFC Ltd.
- ICICI Bank
- LIC Housing Finance
- CITI Bank
- IDBI Bank
- Axis Bank
- and many more…
How much loan can one get?
You can get a Home Loan of up to 80% of the Total Consideration Value, or, your eligibility whichever is lower.
Can a Home Loan be Pre-approved?
Yes, you can avail for a pre approval from any financial institution.However all pre approvals has a validity period, which may be checked out with the concerned Financial institution.
Can I have Co-Ownership in the Property?
Yes you can have your wife, son/daughter, father/mother as a Co-Borrower. However you are again requested to check with the Financial Institution regarding their permissible ownership grid.
Who can be a co-applicant for the loan?
The spouse of the applicant can be included as a co-applicant for the home loan and his/her income shall be included to enhance the loan amount. Further, in case there are any other co-owners, they also need to be co-applicants.
Is Co-Applicant/Local P.O.A mandatory for applying for Home Loans, even if I don't have a Co-Borrower in the property?
Certain Financial Institution has made it mandatory for a Co-Applicant to join in the Loan (irrespective of his/her being/not being a Co-Owner in the property, with a Local Power of Attorney Holder in India. This may further be clarified with the Financial Institution.
What is the repayment period of the loan?
You can select the payment period you are comfortable with up to 15 years or Retirement age whichever is earlier.
What is the Process for Application?
Application needs to be made in the prescribed Application Form of the Financial Institution, along with relevant documents and Processing Fees to the concerned Financial Institution. On Approval/ Sanction of the Application the Financial Institution forwards a Approval/Sanction Letter to the Applicant & Co-Applicant. On Receipt of the approval Letter, the property can be selected/ if selected the disbursement process can be initiated.
What documents are required to get the loan sanctioned?
An indicative list is given below. Representatives of the concerned financial Institution will give you the details.
How is the loan disbursed?
The loan will be disbursed on:
- The identification and selection of the property.
- Submission of legal documents.
- Legal and technical clearance of the selected property.
- On satisfactory completion of the above and on the investment of the owners’ contribution, the loan amount (as warranted at the stage of construction) will be disbursed.
How are home loans repaid?
The home loan repayment is by Equated Monthly Installments (EMIs) comprising of interest and principal amount calculated on monthly rests through Post Dated Cheques or ECS mode. In case of part disbursement of the loan, monthly interest is payable only on the disbursed amount. This interest is called Pre-EMI interest and is payable monthly till the final disbursement is made, after which the EMIs would commence.
What is the security provided for the loan?
The Property being financed is mortgaged with the Financial Institution as the Primary security. However other Co-Lateral security can be asked for based on the Applicants Financial Profile/ Others, which are solely determined by the financial Institutions.
What tax benefits do I enjoy?
Tax benefits are available on the principal and interest components of a loan as per the Income Tax Act, 1961. As the benefits could vary from year to year, it is advisable to check the current benefits available, with your Tax Consultant or with the Income Tax Dept. of India (www.incometaxindia.gov.in)