Blogs

What is Mivan Technology – Its Advantages and Disadvantages

Posted on by HomeCapital Team

The Indian real estate industry has been facing a housing deficit due to the very high construction costs involved in raising residential structures. To solve this problem, real estate developers are using Mivan technology which allows them to build structures at low costs while still maintaining high-quality standards in construction materials and workmanship.

One of the most important aspects of any construction project is to ensure that it’s fast-track. The real estate developers and homebuyers might be wary of adopting the mivan technology, however, as delays and lack of skilled workforce continue problems in this sector, it may be time for them to embrace mivan construction.

What is Mivan shuttering?

Mivan shuttering is a kind of aluminum formwork that has been used across the globe to construct buildings. It’s an economical variant when compared with traditional construction, as it requires less labor and time-taking processes for its completion. This technology can be applied in large-scale projects like skyscrapers where the usage of bricks is completely removed while all the other components like beams, staircases, slabs, walls, etc are made of concrete. With the help of mivan technology, construction has become easier and faster.

How does it work?

Mivan formwork is much like any other type of construction. First, the wall reinforcing steel is used to mold the structure and comes pre-casted from the factory and ready for installation. The parts of any structure made with this method are specially tailored to match each individual house‘s dimensions, giving it an elegant look without compromising on strength or durability. Since mivan formwork is assembled, it is possible to dismantle it as well. The next step in the process is to pour concrete on top of this formwork, which will strengthen its shape. Over time it becomes strong enough for the removal of the formwork.

Benefits

Mivan technology can help to reduce the time, cost, and labor needed for construction. It provides a smooth finish that is quicker than traditional methods of building. Another great benefit of using Mivan construction is that it can be reused. Up to 250 times, in fact! This means less spending on maintenance for real estate developers or homeowners with concrete formwork.

Drawbacks

Aluminum formwork is expensive and on smaller scales, this material isn’t always desirable because of its high price tag. Thus, Mivan construction can be a cost-effective option only for large projects with uniform layouts. Also, the process requires an experienced workforce who are able to pour concrete properly and in time, which makes it favorable only when considering these aspects at first glance.

Mivan technology formwork components

The Mivan formwork components are divided into four types:

  1. Formwork for wall components and parts like wall panels, kickers, rockers, and stubs pin.
  2. Formwork for deck components includes soffit length, deck panels, and deck prop and prop length.
  3. Formwork for beam components include beam side panel and prop head and panel for soffit beam.
  4. Formwork for other components excluding the above 3 mentioned components.

Comparison between Mivan formwork and conventional formwork

ParameterMivan FormworkConventional Formwork
Speed of development7 days/floorMinimum 21 days/floor
Quality of surface finishExcellentPutting is required
Pre-planning of formwork systemRequiredNot required
Type of constructionCast-in-situ cellular constructionSimple RCC
WastageVery littleComparatively higher
Accuracy in constructionAccurateAccuracy lesser than modern systems
Coordination between officesEssentialNot required
Seismic resistanceGood resistanceComparatively lesser
Dismantling floor piece frames without expelling propsPossibleImpossible

The real estate sector sees a boost in sales in Kerala

Posted on by HomeCapital Team

The real estate sector in Kerela is showing signs of recovery, according to the data from Kerala’s Real Estate Regulatory Authority (RERA).

An upward trend in 2022

The real estate sector in Kerala saw a major boost in registration of new projects over the last year with more than 50% growth in the first three months of 2022 as compared to what was recorded last year in the same time frame. Last year, there were 27 registered developments on record from January to March while as per this year’s data, there are already records of 39 project registrations this year.

The real estate sector in Kerala has been on an increase with the recent launch of many projects. These include apartment complexes and villas located primarily around Kochi City as well as nearby municipalities such Maradu, Kalamassery, etc. The Kakkanad region is also witnessing a sudden boost due to this development.

The massive growth in the IT department is making Kerala the perfect place to be. Hence millennials are moving closer to the south thus boosting the growth of the real estate sector. Interestingly, Kerala’s employment opportunities rate in 2020 was 21%. More and more people are moving to Kerala for a better style of living. Hence, in this scenario of more and more people, the need for houses will be broadening. Since the real estate in Kerala has been developing with an increasing number of developers investing in the land of Kerala cities. One of the major investors of the property in Kerala is international buyers and NRIs. Thus, the real estate options should match the standard of their expectations.

As a society, Indians are used to living with other people as a community and when that opportunity arises to have that society with like-minded education, we grab that opportunity especially when it is coming with a dream house.

Impact of RERA on Kerala real estate

The initiative to set up a real estate regulatory authority in 2020 has resulted in more than 50 completed projects and 233 new ones in Kerala. As rental buildings do not fall under this jurisdiction, the number of commercial properties being registered is going down.

The Kerala real estate sector has seen a lot of new projects in recent years. Many groups are starting out and building housing complexes with 20-25 apartments at first, but after the pandemic, only those who have enough financial backing can afford such an enterprise successfully–this means about 20 to 30% working capital for starters!

As per Kerala RERA records, around 724 projects and 232 real estate agents have registered with the authority. As many 1,147 cases were registered with Kerala RERA regarding various issues related to the real estate projects out of which 651 have been settled.

Home Valuation: What is it and how does it work?

Posted on by HomeCapital Team

In India, the real estate sector is recording a surge and hence home valuation is gradually gaining importance. Home is a property that works like a fixed asset and a long-term investment that allows you to add diversification to your securities and assets. It acts like financial security, especially during the time of an emergency. Home is a long-term investment and has value. It is extremely important to keep a track of the home valuation cost in order to understand the worth as per the current market scenario.

What is home valuation?

As the name suggests, home valuation is the process of estimating the cost of the home as per the market standards. The process involves the identification of the cost after analyzing various factors like its location, size, conditions, regulations, neighborhood, and features. 

Home valuation tends to change from time to time due to continuous infrastructural development. It hence becomes extremely important to evaluate the price of the home eventually. The home valuation report can come extremely handy when you are willing to give your home for rent or are wanting to sell it.

How does it work?

A home valuation can be carried out by a surveyor or a contractor. There are various methods that can be used to determine the home valuation. These methods are designed to determine the value of the house based on various factors like quality of the raw materials used during the construction, the location, and locality, the safety measures taken to build the property, the maintenance of the property, and more. A home located near the posh areas will tend to value more as compared to areas located near railway stations or in the outskirts of a city. 

In India, the below-mentioned methods are used more frequently to conduct the process of home valuation.

Comparison method

The comparison method is one of the aptest methods for finding out the value of the home. In this method, the probable rate of the property is determined based on the values of comparison. This method is extremely recommended to check the valuation of the property for occupying it as compared to giving it on rent. Lists of recently sold property, the location, and neighborhood of the property, the age and construction style of the property, and various amenities present inside the property – there are a few factors that are acknowledged in detail while finding the valuation using the comparison method.

Contractors’ method

This home valuation method works in conjunction with comparative pay between two similar properties in different locations. While location and locality become the second factor that affects this method, it mainly focuses on the amenities and the facilities that the two properties have to offer. Based on how modern the construction of these properties is, the valuation is carried out.

Belting method

In India, if the building or the house is located on the main roads, their prices are relatively higher as compared to the properties that are located in the interior lanes. With the help of the belting method, the entire area covered by the property is divided into three different belts and every single belt is valued differently after assessing various factors. While the first belt is considered to be marked at the highest value, the second belt is priced at the two-thirds amount of the first belt and on the contrary, the third belt is rated at half the value of the first belt.

Investment method

Investment method as the name suggests is a valuation method used to check home valuation when it is clearly brought as an investment. This process is based on directly considering the conversion of income through the property (rent) as capital. Discounted cash flow method is largely followed for this calculation. The cash flows expected to be earned by the investor in the property are taken into account to project the valuation.

Conclusion

Whenever it comes to home, there are a lot of questions that any individual is bound to have, especially during buying or selling of the home. The above-mentioned methods are broadly utilized in India in order to carry out a home valuation. You can choose the method that best suits you based on your requirement and the purpose of finding out the valuation rates. 

PropTech trends for 2022 that are changing the industry

Posted on by HomeCapital Team

While the rest of the world has become digitized, the real estate industry is a little late to the party. It is now making its presence felt in the online market and integrating various modern technologies to boost its functioning. A huge digital transformation is changing the face of the real estate industry, thus giving rise to the PropTech phenomenon. The technology being adopted in the Proptech world falls into two categories. The first deals with the best ways to enrich the relationship between the tenant and the client. The second sheds light and helps you make the best investments and select the perfect properties, along with handling its management. While these technologies have still not taken over in full force, there are several substantial changes being made to incorporate them into the real estate market. The future is bright for PropTech.

Now that you have a good idea of what PropTech is and how it will influence the future, let us take a look at some of the biggest PropTech trends of 2022 so that you can benefit from them while navigating the real estate market.

1. Artificial intelligence

There are several Artificial Intelligence focused services that are introduced to the real estate market as the latest PropTech trend taking center stage in 2022. These tools provide near-perfect forecasts of the real estate market. So, if the technology can make reliable predictions of the changes in prices of the houses in various areas, it could prove to be an extremely important tool. It can help you make decisions about real estate such as finding the best place to invest and the duration you should lease for. The most powerful real estate companies put artificial intelligence to use to identify the perfect spaces keeping you, the customers, in mind and ensuring budget-friendly prices. It makes the whole process much easier for everybody involved.

2. Virtual reality

Since we belong to a generation that lives in a world of cutting-edge technology, we expect the same in every sector of our lives including real estate. So just photos and panoramic shots of the property do not suffice. It can prove to be off-putting and fail to make a good impression. Plus, if the tech is outdated, it brings into question the modernity of the real estate that is being provided as well. So, it is crucial to opt for one that has employed modern technology and PropTech helps us to do just that.

In a world plagued with a pandemic, a 3D virtual tour is a perfect way for you to get an in-depth view of the property without leaving your homes. Since there are not merely still images, you get a live view of the property which is reliable. You can easily get a good feel of the property and plan to live in it only if you are entirely sure of it. In addition to this, you can get a good view of the surroundings as well. While it is not entirely new, this PropTech trend has picked up due to the pandemic.

3. Digital twins

With a huge amount of real estate information available online, if you are looking to become a homeowner you can find all the knowledge that you want by browsing the internet. Certain PropTech makes it easier it would be to choose a property if you can see multiple 3D models of each available real estate without wasting the time, money, and energy to actually travel to each location. You can also access other crucial data about the property and the area to find out if it is prone to any natural calamities like earthquakes, tsunamis, etc. You can also understand the condition of the structure and compare them to other potential properties. 

Digital twins have great advantages while the building of the property as well, so that the developer can assess the safety of the location. It helps take huge leaps in constructing secure structures that are safe from adversity as well.

4. Direct digital engagements

There are several virtual technologies that help you simplify the entire process and speed it up. Digital interaction makes in-person interactions redundant, while the automatic digital aspect of real estate engagement takes over. This PropTech is also a much safer option in these times of a raging pandemic. It decreases your need to travel and your exposure to unnecessary perils. The end result is the same as you can view the property in minute detail. Hence, technology that brings all of the real estate markets to your home is a PropTrend trend that is embraced wholeheartedly in 2022.

Conclusion

There are several PropTech trends that have picked up in 2022 to compensate for being confined to our houses. The need to own a house, however, does not just vanish. Buildings are still being built, developers still need to sell them, and potential buyers are still looking to invest. In these perilous times, PropTech is the perfect solution to keep the real estate market afloat. Get to know the trends mentioned above in-depth, learn how to implement them to your benefit, and end up with the perfect property you are looking for.

Personal loan, credit card, or BNPL – which one to choose and why?

Posted on by llama

Planning on raising some quick finances to purchase an appliance, do some quick house repair, go on a trip or organize a family function? There is a wide array of choices available for getting some additional cash.

Using financial tools such as personal loans, credit cards, or “buy now and pay later”, isn’t just an option when you are short of cash. Most of the online shopping portals accept credit cards. It is very easy to pay with a credit card — sometimes it requires just a single click to pay for appliances and services.

Although, these days there are multiple options such as net banking, cash on delivery, and UPI payment, due to convenience and availability many prefer to use a credit card.

What are the main differences between personal loan, credit card and BNPL?

Whereas “buy now pay later” is quite self-descriptive, you may wonder what the big difference between using a personal loan and using a credit card is, because after all, even with a credit card you are using money that you don’t have (you are getting a credit). Let’s explore.

What is a personal loan?

You take a personal loan from a bank, or a financial institution, including an online lender. It is a loan in the sense that the cash comes to your bank account and then you can use the cash in whichever way you want to.

Most of the personal loans are unsecured – you don’t have to present collateral, though the interest rate is high. Unlike a housing loan or a car loan, you pay back the personal loan faster.

A personal loan must have a purpose (though in the documentation, it isn’t always necessary to mention the purpose). You may obtain a personal loan to go on an unavoidable trip to an expensive destination. You can take a personal loan for a wedding or finance a part of the education of your child or your sibling. You can pay back your personal loan in a lump sum in equal monthly installments.

What is a credit card?

A credit card is also a form of taking a personal loan, but you don’t get the cash. You spend the money on the things that you want to purchase or the payment that you want to make. For example, if you have taken a personal loan from a website and you need to pay the installment using the payment gateway on the website itself, you can use your credit card to make the payment. Then later, you can transfer the money, either in full or in small installments to repay your credit card amount.

It is a small plastic or metallic card with a magnetic stripe and EMV chip with all the necessary details pertaining to you, embedded into it. You simply swipe it on a credit card payment machine and your payment is done. It’s a kind of a wallet that eliminates the need to carry lots of cash.

A credit card can be used to make payments wherever they accept credit card payments. Depending on your credit limit, from white goods to ice cream, you can purchase anything with your credit card.

Some financial institutions may also charge an annual fee for issuing a credit card. There is also an interest rate if you don’t pay on time.

The biggest benefit of having a credit card with you is that you can instantly avail extra cash to make payments for utility bills and purchases without spending the actual cash from your pocket and then later, you can pay back in smaller installments.

Another benefit is the convenience. Simply swipe the card and make the payment.

What is “buy now pay later”?

This type of short-term financing of buying things became popular during the pandemic when many people were buying things online. How is it different from the personal loan or even the credit card that you use to buy items?

The “buy now pay later” scheme is also referred to as a “point of sale installment loan”. You are not making the entire payment immediately, as it happens in the case of a credit card payment. When you make the full payment through a credit card or even through a personal loan, you immediately start paying interest. The EMIs or lumpsum is consequently paid via bank transfer, debit card, credit card, or UPI.

With “buy now pay later”, in most of the cases, first, you don’t pay interest. The entire payment is divided into equal amounts. Simply put, let’s say you buy something that costs Rs. 20,000 and you decide to pay in 10 installments of Rs. 2000. So, instead of immediately paying 20,000, you are just paying 2000. Then every month you pay 2000 until the entire amount is paid back.

Second, you don’t need a credit card to avail of the “buy now pay later” scheme: getting a credit card can be a tedious process and many people don’t keep a credit card because they don’t want to fall into a debt trap.

The selling companies tie up with participating merchants to process such payments. The biggest draw for the sellers is that more people are eager to buy their merchandise.

Conclusion

Personal loans, credit cards, and “buy now pay later” all are various financial instruments that you can use to meet immediate or unexpected expenses. They all have their pros and cons.

Personal loans have many attractive schemes. They are easily available without collateral. The interest rate is higher, but it is not so high as to be a deterrent. Enough cash immediately becomes available, and you can meet the expenses of whatever you want to achieve.

The same holds true with a credit card. You can make all sorts of payments. Depending on how much of your available credit amount is left on your credit card, you can make purchases in real-time without worrying whether you have enough cash or not. Then later, you can either pay back the credit card company in a lump sum or in smaller installments. There is no interest levied in paying your debt in one go.

“Buy now pay later” is a recent phenomenon. Many people don’t know of such financial offerings. They are fast being popularized by merchants because they enable people to buy something they desire immediately without worrying about having to make a cash payment or incurring debt.

How to choose the best home loan tenure for you?

Posted on by HomeCapital Team

Buying a house means making one of the biggest investments in your entire life. Fortunately, it no longer takes a lifetime of savings to own a house. It has become much easier due to various provisions like home loans to achieve your dream of purchasing a home. There are different places that offer home loans such as several financial firms or banks. You can also figure out what your needs are and select the home loan that suits you best. The most important aspect is choosing a home loan tenure, which means the duration given to you by the lender to return the money you have borrowed. It is usually in the form of EMIs.

What are the things you should keep in mind while selecting your home loan tenure?

Following are the important factors that should be kept in mind while selecting a home loan tenure:

1. Current income and expense

Your income dictates the amount of money you can afford to repay every month. Hence, it is the most important factor in selecting the home loan tenure. If you can afford to pay a higher amount after all of your personal expenses, you can go for a shorter tenure. On the other hand, if you cannot afford a higher EMI, a long-term home loan tenure will prove beneficial for you. While your interest rate will be more, you don’t have to strain your budget every month to pay your EMI.

2. Selecting the longest home loan tenure

If you are on a limited budget and worried about paying a huge amount of EMIs, a long-term tenure is a perfect choice for you. The maximum home loan tenure is 30 years. So, you have several years to pay off your loan. However, you should keep in mind that you need to pay interest for that extended duration as well. So, the more years you choose for your tenure, the more interest you will be paying.

You need to have a clear understanding of how you intend on raising your loan. If you cannot afford to pay a higher amount and would rather pay the interest long-term, choosing the maximum home loan tenure is the way to go. This results in extremely low EMIs, which means you don’t have to worry about going over budget every month.

3. Age of the borrower

Age is one of the most crucial elements that lenders take into consideration while offering you a loan and deciding on the home loan tenure. The more years you have left with a steady income, the longer you will be able to pay your loan back. If you are young, with many potential years of work left before you, you can choose a longer home loan tenure up to 30 years and vice versa.

4. The property factors in your home loan tenure

It is everybody’s aim in life to afford to buy a house of their own. However, if it burdens your current budget and puts a strain on your daily life, it is not ideal. If your loan tenure is short, you might feel the strain every month. However, with long-term tenure, you will feel the burden after realizing the huge asking of interest you have paid over the years. Hence you should buy a house that you can afford to pay comfortably with the EMIs while not severely affecting your monthly budget. Pick a property that fulfills your needs but does not burn a hole in your savings. It will help you pay off your loan with a shorter home loan tenure, thus decreasing your interest.

5. Retirement

You need to consider retirement while selecting a loan and its consequent home loan tenure. Since you won’t have a steady income once you retire, your loan should be paid well before that. In fact, you should ensure that your tenure ends several years before you retire so that you get plenty of time to earn and save for your retirement.

Conclusion

If you are still wondering what the best home loan tenure is, the answer is that it depends on the individual. So the perfect tenure for one person, might not necessarily be the best one for someone else. You need to figure out your needs and choose the tenure that accommodates them. You should ensure that your EMIs should not have a detrimental effect on your daily life. So the rule of thumb is that if you can afford higher EMIs, go for a shorter tenure. If you want to pay lower EMIs, go for a longer tenure.

How does a home loan calculator help you calculate tax benefits?

Posted on by HomeCapital Team

Here is an interesting fact: you can use a home loan calculator to calculate how many tax benefits you can get if you avail of a home loan.

There are different provisions in the tax law that help you enjoy tax benefits if you get a home loan. How much tax can you save? A home loan calculator can help you gauge that.

What is a home loan calculator?

A home loan calculator solves two purposes:

  • Based on various parameters (your gross income from various sources, credit card outstanding and existing obligations) how much loan you can get.
  • What is going to be your EMI.

Every financial institution has a home loan calculator. It is not like a standard calculator that gives uniform results no matter where you use it. This calculator is used by a specific financial institution depending on how it calculates the amount of loan it is ready to give (in principle).

Most of the home loan calculators allow you to calculate your monthly EMI because ultimately, this is what most of the loan applicants are interested in. Hence, you may enter the following parameters to use the home loan calculator:

  • Loan amount: How much loan you seek.
  • Tenure: The number of years you want to return the loan with interest. Some of them ask for the number of EMI’s you are ready to pay (50 months, 60 months, and so on)
  • Interest rate: This is the amount of interest you need to pay.

Since it calculates your EMI, many also call it their home loan EMI calculator.

How to calculate tax benefits

You can primarily get tax benefits under three sections of Indian tax law: 88EE, 80C, and 24 sections of the Income Tax Act. These are specifically for those who avail of a home loan. Here are further details:

  • Under 88EE, you can get an additional Rs. 50,000 on the payable interest every year.
  • You can claim tax deductions of up to Rs. 1.5 lakh on your principal amount, under Section 80C. This also includes stamp duty and registration charges.
  • You can further avail a maximum tax reduction of Rs. 2 lakhs on the interest amount under Section 24.

This tax benefit can be doubled if you go for a joint loan – your spouse can be your co-applicant. This way you can both avail the benefits.

Are there any restrictions? Yes, there are. Your total home loan amount should exceed Rs. 35 lakhs in the property value should be under Rs. 50 lakhs.

Conclusion

Not every website has a calculator that also allows you to calculate tax benefits, but with the standard total home loan amount calculator presented by every financial institution offering home loans, you can easily calculate the tax benefits that you can avail of.

How much home loan can I get on my salary?

Posted on by HomeCapital Team

Planning to get a home loan? Wondering how much home loan you can get considering how much salary you take home? Let’s check out.

A home loan isn’t always about getting into debt. There are numerous benefits of taking a home loan. It can help you realize your dream of owning a home much before your salary or savings will allow. Besides, do you know that even those who have access to enough funds often go for a home loan?

Some advantages of getting a home loan

1. Sense of accomplishment

Buying a home is easily one of the biggest financial investments you’re going to make. It gives you an immense sense of achievement. It cradles a strong sentimental value. You can create a living environment just to your and your family’s liking without having to worry about how the landlord is going to react (in case you are a tenant).

2. Capital appreciation of your home

Capital appreciates faster when it is real estate. The Indian market has seen 15% annual growth in this segment. This is more than the interest you will be paying on your home loan. Even if you don’t plan to stay in the property, you can rent it and it can be a regular source of income.

3. Tax benefits of getting a home loan

You can get the maximum tax benefit of Rs. 2 lakhs on the interest paid and up to Rs. 1.5 lakh on the principal amount. The good thing is that both the owners (if you have co-borrowed) can enjoy tax benefits on their taxable income, individually. In fact, adding an earning family member as a co-applicant can increase your chances of getting a home loan.

4. Better credit score for more loans

Another benefit of taking a home loan is, provided you pay your EMIs regularly, your credit score improves. A credit score is used to gauge whether you are a safe bet when giving you a loan for other purposes. For example, in the future, if you want a loan for another property or for your business, if you have a good credit score due to regular payment of your EMIs, it will be easier for you to obtain the loan.

Now, coming to the main question of the blog post, how much loan can you get on your salary?

Calculating your home loan based on your salary

This is also called your home loan eligibility. You need to meet the eligibility criteria before you qualify for a loan, and this involves your salary. This is to make sure that you are able to repay the loan amount without defaulting.

Whether you get a loan or not depends on multiple factors such as your salary, your current age, your credit score, your monthly financial obligations, the property itself, and in many cases, even your overall work experience.

Your salary may consist of:

  • Basic salary
  • Medical allowance
  • House rent allowance
  • Commissions, if any
  • Travel allowance
  • Other allowance

This must be the take-home salary or the in-hand salary that comes into your bank account post all the deductions. Not all allowances are included when calculating the amount of loan you can get, but submitting a list helps financial institutions take a decision in your favor.

Financial institutions decide your eligibility on the basis of FOIR (Fixed obligation ratio) or LTV (Loan to value ratio) of property. The lower of these two ratios will be your home loan amount. In most cases, you can get a home loan that is 60 times your salary. Most financial institutions have their own dedicated calculators that calculate how much loan you can get. For example, your FOIR is 50% and LTV is 80% for a property, which amounts to Rs. 66 Lakh. In this case, you need to pay the developer 10% towards the down payment. Assuming you have no other financial liabilities, the maximum amount you can pay every month is Rs. 70,000*50% = Rs. 35,000.

Based on a tenure of 25 years, your eligible housing loan amount will be Rs. 35,000*12*25 = Rs. 1,05,00,000. But, the LTV ratio of 80% of the property value, which will be Rs. 66 lakh*80% = Rs. 52.80 lakh. So, the loan you can get on Rs. 70,000 salary is of Rs. 56.10 lakh. This may be a hypothetical amount and how much loan you eventually get depends on where you get it.

Conclusion

Please remember that the amount of home loan that you get depends on your salary as well as your monthly expenses. You can’t logically use all your salary to repay your monthly installments. Carefully consider your salary as well as your monthly expenses while applying for the amount of home loan you want to get. You may also consider getting a home loan separately for the down payment.

Should you buy a property during its “pre-launch” period?

Posted on by HomeCapital Team

When it comes to buying and selling properties, what does the “pre-launch” period mean? Is it prudent to purchase property during its “pre-launch” period? Let’s explore.

Are you considering buying a pre-launch property? This type of property has not been built yet. The property may be under construction, or it may even be in the planning stage. The developer offers you to buy the property in advance. Many developers offer pre-launch properties to raise funds even before the approvals are finalized. This way they do not need to get money from the market at a higher interest rate.

You will be surprised to know that in many instances this might be the best time to purchase a property. Yes, there might be some risks involved because the property is not constructed yet and you do not know what the final plan will turn out to be, but there are multiple benefits of purchasing a property during its pre-launch stage. Some of the benefits are listed below.

You get the pre-launch property at a lower price

This is a double-edged benefit. To attract buyers most of the developers offer the properties 10-30% cheaper than the finished projects. Attracting capital early on also saves the cost for marketing and commercial loan interest. Their investment is safe and hence, they allow this cost-benefit to trickle down to their customers to attract more early customers.

You get to choose the property

The initial buyers get this advantage that they can choose their preferred location of the property. Suppose you want an apartment where lots of sun comes. Or you want the view to the facing park from your balcony. Or you want a lower storey. You can easily make such choices when you are buying a pre-launch property because one, the properties are not assigned yet, and two, in his eagerness to sell you the property, the developer is ready to make certain accommodations.

You easily get additional features with pre-launch property purchases

Customization is easier when the construction is still going on. Raw material is available. Construction workers are still at the site. Need an extra shelf? Need some woodwork in the kitchen that may not be present in other apartments? Need an extra grill on the balcony or an additional faucet to water the plants? Want some more fittings in the storeroom? The developer will readily agree to these small adjustments once you show interest in buying the pre-launch property.

The value of the pre-launch property appreciates faster

The prices of the property are going to rise immediately after the successful completion of the complex. As mentioned above, the rates of the property may rise anywhere between 10-40% once the complex is completed and the developer begins to sell the constructed properties.

Low-cost investment opportunity with pre-launch property buying

Buying a pre-launch property is a good investment opportunity at a lower cost. Unless there is an unexpected event such as the recent pandemic, prices of residential properties normally increase. Even if you buy a shop in a marketing complex, prices are likely to rise once all the constructed shops are ready to be sold.

When you purchase a pre-launch property, prices will increase rapidly once the construction is completed and the finished apartments and houses begin to be sold to other buyers. If the demand is good, the prices will increase. If there is development in the surrounding area, the prices will increase. If there are better amenities, and if more development begins to take place around the complex, it leads to an increase in prices. This can augment the value of your investment manifold in just a few years.

What precautions must you take before buying a pre-launch period property?

Buying a property, whether you buy during the pre-launch period or at any other time, is a big decision. It is better to do your research about the project you are planning to invest in. You may refer to the Real Estate Regulatory Authority guidelines before you make your final decision. Go for a well-known developer and avoid real estate developers that may seem to be making unrealistic promises. Visit other, completed, properties by the same developer.

Do not make a purchase with your back pressed against the wall. No matter how much urgency is being created by the developer, do not rush into things. Take a few weeks, or even a couple of months to make your decision. In case there is a now-or-never situation, play on the safer side.

Conclusion

No matter what property – pre-built or pre-launch – you decide to invest in, there are always risks and opportunities associated. Buying a property during the pre-launch period certainly gives you a cost advantage. It is a great investment opportunity. Capital-wise, the scope for growth is better compared to a property that is already built or a property that is already owned by another family.

Buying a property during the pre-launch period gives you more options in terms of customization and features. The developer is more accommodating. There is also great scope for bargaining. You get a choice in terms of the location of the property or the floor on which you desire the property. All in all, provided you can trust the developer, buying a property during its pre-launch period is a good proposition.

1% Metro cess to be levied on property purchases from 1st April onwards in Maharashtra

Posted on by HomeCapital Team

The Maharashtra state government has announced that they will be imposing an additional 1% metro cess on all property purchases beginning April 1. This new measure is meant to fund construction projects for the upcoming metro systems in the cities of Mumbai, Thane, Pune, and Nagpur. The existing resolution restricting the introduction till March 31st expires this year. The government has announced that the metro cess, which was waived off for two years because of the pandemic will now be re-implemented from April 1st, 2022.

What is metro cess?

It is a transport surcharge that cities use to fund metros, bridges, and flyovers. 1% of property values go towards the construction and maintenance of these projects.

Impact of metro cess on stamp duty

Under the new tax law, property registration will cost more in Mumbai and other cities. The stamp duty in Mumbai will increase from 5% to 6% in Mumbai and from 6% to 7% in Pune, Nagpur, and Thane.

The property registration officers have been ready for the order to implement a metro cess from April 1. They mentioned that this restriction ends on March 31st, so if state authorities want it implemented quickly there is no problem with issuing them some guidance or direction as needed. Also, the state authorities were going through a financial crunch and so they are more likely to levy the metro cess from the following monetary year.

CREDAI & Citizens’ Groups seek deferment

CREDAI is considering asking the government to rethink its proposal. The cities that are seeing transactions are Pune, Mumbai, Nagpur, and Thane. Regrettably, the metro cess would be levied in these cities.

This is not a desirable situation for everyone, including the government, the developers, and the property buyers. The ruling of charging 1% will create an imbalance in the budget of the buyer. As a result, the government will not be able to meet its revenue goal if it does not review its decision to increase the stamp duty for just a few months.

The citizens’ groups have also sought a delay in the levying of the cess as homebuyers will need to pay extra money upfront.