Real Estate Guide
Understanding Real Estate in India
Your comprehensive guide to property buying, legal requirements, financing options, and everything you need to know before investing in real estate in India.
Types of Properties
Residential Properties
- Apartments/Flats: Multi-storey buildings with individual units. Most common in urban areas.
- Independent Houses: Standalone homes with own land, offering more privacy and space.
- Villas: Premium independent homes, often in gated communities with amenities.
- Row Houses: Attached homes sharing walls with neighbors, with individual entrances.
- Plots/Land: Vacant land for custom construction as per your needs.
Commercial Properties
- Office Spaces: Dedicated workspaces in commercial complexes.
- Retail Shops: Ground-floor units for businesses and stores.
- Warehouses: Large storage facilities for goods and inventory.
- Industrial Land: Designated zones for manufacturing units.
Freehold vs Leasehold
Freehold Property
You own the property and land permanently. Full ownership rights with no time limit. Can be inherited, sold, or transferred freely.
Leasehold Property
You own the building but not the land. Ownership is for a fixed period (usually 99 years). Land belongs to government or authority.
Area Measurements
- Carpet Area: Actual usable floor area inside the walls. This is what you can actually use.
- Built-up Area: Carpet area + wall thickness + balcony. Usually 10-15% more than carpet area.
- Super Built-up Area: Built-up area + share of common areas (lobby, stairs, etc.). Usually 25-30% more than carpet area.
Always ask for carpet area when comparing properties. RERA mandates pricing based on carpet area.
Understanding RERA
What is RERA?
Real Estate (Regulation and Development) Act, 2016 is a landmark legislation to protect home buyers and ensure transparency in real estate transactions. It mandates registration of all real estate projects and agents with the regulatory authority.
Key Benefits for Buyers
- Mandatory project registration before sales
- 70% of funds kept in escrow account
- Standardized carpet area definition
- Penalty for project delays
- 5-year defect liability period
- Single-window complaint redressal
- No changes without buyer consent
How to Verify RERA Registration
- Visit your state's RERA website (e.g., MahaRERA for Maharashtra)
- Search by project name, promoter name, or RERA number
- Check project status, completion date, and approvals
- Verify the agent's registration if applicable
- Review quarterly progress reports
Always verify the RERA number mentioned in advertisements and agreements.
Essential Documents
Documents to Verify Before Buying
- Title Deed: Proves the seller's ownership rights over the property.
- Encumbrance Certificate (EC): Shows the property is free from legal dues and mortgages.
- Approved Building Plan: Sanctioned layout from municipal authorities.
- Commencement Certificate: Permission to start construction.
- Occupancy Certificate (OC): Certifies building is fit for occupation per approved plans.
- Completion Certificate (CC): Confirms construction is complete as per approved plans.
- NOCs: No Objection Certificates from fire, water, electricity departments.
Documents for Property Registration
- Sale Deed (most important legal document)
- Property tax receipts
- Identity proof of buyer and seller
- Address proof of both parties
- Passport-size photographs
- PAN card of both parties
- Power of Attorney (if applicable)
- Society NOC (for resale properties)
Red Flags to Watch Out For
- Property without clear title or disputed ownership
- Missing or expired approvals and certificates
- Developer not registered with RERA
- Undisclosed pending litigation
- Unregistered sale agreement
- Pressure to pay in cash without receipts
- Significant deviation from approved plans
Home Loans in India
Types of Home Loans
- Home Purchase Loan: For buying ready or under-construction property.
- Home Construction Loan: For building a house on owned land.
- Home Extension Loan: For adding more space to existing property.
- Home Renovation Loan: For repairs and improvements.
- Land Purchase Loan: For buying a plot (usually lower LTV ratio).
- Balance Transfer: To move existing loan to another bank for better rates.
Eligibility Factors
- Age (21-65 years typically)
- Monthly income and job stability
- Credit score (750+ is ideal)
- Existing EMI obligations
- Property value and location
- Employment type (salaried/self-employed)
Banks typically approve EMI up to 45-50% of your net monthly income.
Important Terms to Know
- LTV Ratio: Loan-to-Value ratio. Banks finance 75-90% of property value.
- EMI: Equated Monthly Installment - fixed monthly payment.
- Interest Types: Fixed rate stays same; Floating rate varies with market.
- Processing Fee: Usually 0.25-1% of loan amount.
- Prepayment: Paying extra to reduce loan tenure or EMI.
Tax Benefits on Home Loans
- Section 80C: Deduction up to ₹1.5 lakh on principal repayment.
- Section 24(b): Deduction up to ₹2 lakh on interest payment (self-occupied).
- Section 80EEA: Additional ₹1.5 lakh for first-time buyers (conditions apply).
Joint home loans with spouse can help claim higher total deductions.
Hidden Costs in Property Buying
Stamp Duty & Registration
Stamp Duty varies by state (typically 4-8% for males, sometimes lower for females). Registration charges are usually 1% of property value or a fixed amount.
Example: In Maharashtra, stamp duty is 5% (4% for females in urban areas) + 1% registration + LBT where applicable.
Builder & Society Charges
- GST: 5% on under-construction (1% for affordable housing). Not applicable on OC-received properties.
- Preferred Location Charge (PLC): Extra for corner units, garden-facing, etc.
- Parking Charges: ₹2-10 lakh for covered parking.
- Club/Amenity Charges: One-time fee for access to facilities.
- Maintenance Deposit: Usually 12-24 months advance.
Ongoing Costs
- Property Tax: Annual tax to municipal corporation.
- Maintenance: Monthly society maintenance (₹2-15 per sq ft).
- Home Insurance: Recommended annual premium.
- Utility Bills: Electricity, water, gas, internet.
Budget Planning Rule
10-15%Keep aside this much of property value for additional costs beyond the base price.
For a ₹50 lakh property, budget ₹5-7.5 lakh extra for stamp duty, registration, GST, society charges, and moving costs.
Legal Aspects
Due Diligence Checklist
- Verify seller's identity and ownership
- Check for clear, marketable title
- Get 30+ years of ownership chain
- Verify all approvals and NOCs
- Check for pending charges or mortgages
- Confirm no litigation on property
- Verify property tax payments are current
- Check if property matches approved plan
Key Legal Documents
- Sale Deed: Final transfer document registered at Sub-Registrar office.
- Agreement to Sale: Preliminary contract outlining terms.
- Power of Attorney: Authorization to act on behalf of owner.
- Mother Deed: Original deed tracing property ownership.
- Khata Certificate: Property registered in owner's name in municipal records.
When to Hire Professionals
Property Lawyer
For title verification, document review, and legal due diligence. Essential for high-value or complex transactions.
Chartered Accountant
For tax planning, capital gains calculation, and optimizing deductions on home loan.
Property Valuer
For fair market value assessment, especially for resale properties or loan purposes.
Ready to Start Your Property Search?
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