Frequently aske questions,

1. Buying property
2. Selling property
3. Renting property
4. Vaastu guidance
5. Housing loans
6. Tax related matters

1. Buying property

Question: Which documents are to be verified before purchase of a Flat ?
Answer: Before you purchase a flat, you have to have a title and document search conducted by a competent advocate. You cannot do it yourself. You have to use the services of a competent advocate. It is a professional job to be done with professional assistance.

Question: What is the difference between built up area, super built up area, and carpet area?
Answer: Carpet Area:This is the area of the apartment/building which does not include the area of the walls. Built up Area: This includes the area of the walls also Super Built up Area: This includes the built up area alongwith the area under common spaces such as the lobby, lifts, stairs, etc. This term is therefore only applicable in the case of multi-dwelling units.

Question: What are all the important documents one should check before buying any property?
Answer: If you want to purchase a property, you have to look at the approved layout plan, approved building plan, ownership documents, carryout search, etc. Contact an advocate before you purchase a property so that he can advise you.

Question: Who is liable to pay Stamp Duty-the buyer or the seller?
Answer: The liability of paying stamp duty is that of the buyer unless there is an agreement to the contrary. Section 30, of Bombay Stamp Act, 1958 states the liability for payment of stamp duty.

Question: In whose name are the stamps required to be purchased ?
Answer: The stamps are required to be purchased in the name of any one of the executors to the Instrument.

Question: What is meant by the market value of the property and is Stamp Duty payable on the market value of the property or on consideration as stated in the agreement ?
Answer: Market value means the price at which a property could be bought in the open market on the date of execution of such instrument. The Stamp Duty is payable on the agreement value of the property or the market value which ever is higher.

Question: Which are the instruments that attract the payment of Stamp Duty?
Answer: The instruments like Agreement to Sell, Conveyance Deed, Exchange of property, Gift Deed, Partition Deed, Power of Attorney, settlement and Deed and Transfer of lease attract Stamp Duty on market value of the property.

Question: Who is the appropriate authority for knowing the market value of the property?
Answer: The Sub-Registrar of the area, in whose jurisdiction the property is located, is the appropriate authority for knowing the market value of the property.

Question: What are the risks associated in buying a flat on Power Of Attorney (POA) basis?
Answer: Purchasing a flat on a POA basis is not permitted under the law of the land.

Question: Is a POA revocable?
Answer: Yes, a POA can be either revocable or irrevocable, depending on what sort of a POA one has made.


Question: What exactly do we mean by a Free Hold flat? What are the advantages and disadvantages, if any ?
Answer: A freehold property (plot or a flat) is one where there is a whole and sole owner(s), ownership is full and unconditional (within the provisions of the laws of the land) and there is no lessor / lessee involved.

Question: How to convert a POA flat into a Free Hold one ?
Answer: POA cannot be converted into anything. Leasehold properties of DDA in Delhi can be converted to freehold, as per provisions.

Question: How to verify the authenticity of the various documents submitted by the seller of the house, particularly with regard to the possibility that the house has not been sold earlier to a third party ?
Answer: Regarding authenticity of documents, again, you have to take the help of an advocate to verify.

Question: Do we have any agency in Delhi which can provide a comprehensive service under one roof for hassle free purchase of society flats for its customers?
Answer: Comprehensive services in the real estate sector are provided by several brokers in various cities of India. In the directory of services on our portal www.indiaproperties.com you can find a list of them and you can contact them directly.

Question: A flat in a Co-op Hsg. Society is to be gifted. What are the legal formalities? What about stamp duty ?
Answer: Gift of an immovable property is considered as a 'transfer' under the provisions of the TOP Act and you have to have the transaction registered through a Gift Deed and pay stamp duty as per provisions of the relevant stamp act depending in which state the property is situated.

Question: Upon buying a flat from a builder in a building under construction, what are the permissions and papers that one should check with the builder, so as to ascertain the genunity of the builder ?
Answer: When you are buying a flat from a builder in a building under construction, you have to check the following:
Approved plan of the building along with the number of floors.

Ensure that the floor that you are buying is approved.

Check if the land on which the builder is building is his or he has undertaken an agreement with a landlord. If so, check the title of the land ownership with the help of an advocate.

Check the building byelaws as applicable in that area and ensure that the builder is building without any violation of front setback, side setbacks, height, etc.

Check specifications given in the agreement to sell of the sale brochure. Is he providing the same actually on the ground or not?

Check the reputation of the builder.

Ensure that urban land ceiling NOC (if applicable) has been obtained or not.

NOC from water and electricity authorities also have to be obtained.

NOC from lift authorities.

2. Selling properties

Question: What is the difference between built up area, super built up area, and carpet area ?
Answer: Carpet Area: This is the area of the apartment/building which does not include the area of the walls. Built up Area: This includes the area of the walls also. Super Built up Area: This includes the built up area alongwith the area under common spaces such as the lobby, lifts, stairs, etc. This term is therefore only applicable in the case of multi-dwelling units.

Question: Who is liable to pay Stamp Duty - the buyer or the seller ?
Answer: The liability of paying stamp duty is that of the buyer unless there is an agreement to the contrary. Section 30, of Bombay Stamp Act, 1958 states the liability for payment of stamp duty.

Question: In whose name are the stamps required to be purchased ?
Answer: The stamps are required to be purchased in the name of any one of the executors to the Instrument.

Question: What is meant by the market value of the property and is Stamp Duty payable on the market value of the property or on consideration as stated in the agreement ?
Answer: Market value means the price at which a property could be bought in the open market on the date of execution of such instrument. The Stamp Duty is payable on the agreement value of the property or the market value which ever is higher.

Question: Which are the instruments that attract the payment of Stamp Duty ?
Answer: The instruments like Agreement to sell, Conveyance Deed, Exchange of property, Gift Deed, Partition Deed, Power of Attorney, settlement and Deed and Transfer of lease attract Stamp Duty on market value of the property.

Question: Who is the appropriate authority for knowing the market value of the property?
Answer: The Sub-Registrar of the area in whose jurisdiction the property is located is the appropriate authority for knowing the market value of the property.

3. Renting properties

Question: If I am a tenant (old rental) of a property in Mumbai in a good area like Andheri, can I transfer my tenancy ? If yes, what amount of money can I demand from the Landlord for transfer of tenancy ?
Answer: Yes, you can transfer the tenancy, with the permission of the landlord. The rate is that which is prevailing in the market, the norm being that the landlord shall be entitled to 1/3 share.

Question: Now that the Maharashtra Rent Control Bill has come into force and the Pugree has been legalised, what is the percentage of sharing between the landlords and the tenants ?
Answer: No fixed percentage is prescribed by the Act, but the norm is 1/3 share goes to the landlo

Question: Is there a provision by which a landlord is bound to spend a certain percentage towards the maintenance of his property?
Answer: No

Question: Where does one register new tenancies in Mumbai ?
Answer: With the Registrar of Sub Assurances located at Old Custom House, Shahid Bhagat Singh Road, Fort, Mumbai-400001 and at Bandra Kurla Complex, Bandra.

Question: Is one required to register existing tenancies as well ?
Answer: No.

Question: If a property is kept vacant for a period of one year, can it be let out at market rent ?
Answer: Yes.

Question: How does one determine the market rent ?
Answer: There is no prescribed manner but it can be easily found out by approaching such people as the brokers, registration authority, and appropriate authorities etc.

Question: How many months rent can the landlord take as deposit ?
Answer: Three months.

Question: In case a tenant is not protected by the Rent Act, what is the procedure to ask him to vacate and what is the notice period required to be given ?
Answer: Normal procedure is to send a notice to the tenant, failing which a court case may be filed which usually takes 10 to 20 years to reach a verdict.

Question: This is with reference to the Bombay Rent Act. We are tenants of an old building, which was repaired, by all the tenants in the year 1995-96. We are 32 tenants and would like to form a Co-operative Housing Society without the landlord's permission. Can we form the society ?
Answer: Yes.

Question: 70% of the tenants are ready to form a society. Is there any new provision in the new rent act for forming a society ?
Answer: There is no new provision in the new Rent Act regarding the prescribed percentage of tenants willing to form a society.

Question: Please suggest any way to form a society without the landlord's permission.
Answer: Approach the registrar of Co-operative society and file the various relevant documents.

Question: I had a lease agreement for 6 years for a shop with a built in escalation clause @ 20% after 3 years. My lease expired on 31.3.2000 and my landlord has sent a written letter asking to pay rent at an enhanced rate. Is this sufficient to continue my lease or should I enter into another lease ? If I continue on the strength of this letter, are my rights affected ?
Answer: Yes. It is sufficient but not full proof. The rights won't be affected as long as enhanced rent is paid. It also depends on the period/tenure prescribed in the letter. It is always advisable to make a new agreement with the landlord.

Question: I am a landlord of a building. I purchased the property in May, 2000 (at 'x' amount). Mr. 'A' was staying there since many years and the rent receipt is in his name. He expired 12 years before, he and four sons, namely B, C, D & E. Now B has 2 daughters. 'C' has 2 daughters. 'D' has no children. 'E' has 1 son, named "F". "F" is staying since 30 years. 'F' wants to surrender his tenancy rights. B, C and D have left the flat since the last 30 years and have been staying elsewhere - what should I do as a landlord?
Answer: Transfer the rent receipt in favour of Mr. 'F'.

Question: Do B's and C's daughters have any right over the property ?
Answer: No.

Question: What type of agreement do I have to make with the new tenant, considering the new Rent Act?
Answer: No, new agreement is required.

Question: If "F" gives a notice in writing, to the landlord, to transfer the tenancy right in his name since he is staying in the flat for 30 years and at the time of expiry of his grand- father, he and his father 'E' were staying there, is it admissible to transfer the tenancy in 'F's name and then transfer to the new buyer ?
Answer: Yes.

Question: If I take an indemnity bond from 'F' that there are no legal heirs, or if he indemnifies me, then is it possible for 'B, C, D' to take some legal action against me ?
Answer: No.

Question: Would the transfer fee that I get, be my capital gain or my income?
Answer: The transfer fee will be treated as income not capital gain.

Question: 'M' purchased a flat in June 96 from a bank employee. The bank employee has not discharged the loan till date. For the purpose of flat registration and society transfer, M requires a NOC from bank. M paid stamp duty (under amnesty scheme). The bank employee has not paid the maintenance charges of the flat before June-96 also. Can society ask 'M' to pay the maintenance charges prior to the June 96? What is the procedure to get NOC from the Bank? Is 'M' the legal owner of the above flat ? Can 'M' sell the flat again?
Answer: Yes, if 'M' has not obtained NOC from the society at the time of possession. You can get NOC by repaying the outstanding loan amount. M is not the legal owner till NOC from the bank is obtained. Yes. Provided 'M' obtains the NOC from the bank and Society.

4. Vaastu

Question: What is Vastu Shastra ?
Answer: Vastu Shastra is the ancient art and science of building.

Question: Which are the traditional texts which discuss Vaastu Shastra?
Answer: There are many age old books on Vaastu Shastra. Some of them are Samarangana Sutradhara, Mayamata, Manasara, Matsya Purana, Brihat Samhita, etc.

Question: Are there any modern books on Vaastu Shastra?
Answer: In the last few years a large number of modern authors have written on Vaastu Shastra and there is a wide spread proliferation of literature on Vastu today.

Question: What is meant by Vastu Purusha?
Answer: Vastu Purusha is the deity ruling the plot of land. Legend has it that when Lord Shiva was fighting the demon Andhaka, His perspiration fell on the ground, out of which was born the Vastu Purusha. This hungry being started devouring all that came in the way. When the Gods in the heaven took up this matter to Lord Brahma, the creator, He ordained them to hold the Purusha face down with the help of 45 deities. Lord Brahma blessed the Vastu Purusha to be the deity of plots of land and that all owners would pray and give offerings to him, in return for which, he would protect the owners/inmates. That is how the Vastu Purusha Puja came into being.

Question: Is there any relationship between Vastu and Astrology ?
Answer: There is a close relationship between Vastu and Astrology. In astrology, the fourth house has been attributed to immovable property, amongst other things. If the lord of the fourth house, the planets in the fourth house, the aspects to the fourth house, etc. are all good, then the person will enjoy property. Otherwise, the results will be negative. There are also many special conditions or ‘yogas’ such as Ayatna Griha Prapti Yoga, Vichitra Prakara Soudha Yoga, etc. which destine a person to different conditions of property holding. Further, one has also to see the planetary configurations at a given point of time, in conjunction with one’s nakshatra in order to fix a muhurta or an auspicious time for starting various stages of construction work as well as the griha pravesh.

Question: Is Vastu applicable only to residences or to other types of buildings also?
Answer: Vastu is applicable to all types of buildings. For example, we have vastu for temples (prasada), palaces (rajagruha), sala (residence), etc.

Question: Is Vastu applicable to the building of towns also ?
Answer: Yes, it is called nagara vastu.

Question: What is the role of geographic directions in designing buildings ?
Answer: Geographic directions such as North, South, East and West are very important in Vastu. In fact, all buildings are supposed to exactly face each of these cardinal directions and not at an angle.

Question: What are the prescriptions for the size of a dwelling ?
Answer: The size of a plot and the building are to be worked out in accordance to certain formulae called the Ayadi Shadvarga. Based on these, one can arrive at the correct size.

Question: What should be the shape of a plot ?
Answer: Vastu prescribes a square or a rectangular shape for the plot of land as well as the dwelling unit.

Question: Which direction should the plot face ?
Answer: The plot can face any of the four cardinal directions. Based on which side it faces, the position of the main entrance is decided.

Question: In which direction should the plot of land slope ?
Answer: It is required for the plot to slope either to the east or to the north.

Question: Where should the well or water sump be located?
Answer: It should be located in the north east corner of the plot.

Question: Where should the tap in the garden be located?
Answer: It should be located in the north east corner of the plot.

Question: Where should the main entrance of the building be located ?
Answer: The house, in the form of a square or a rectangle, is superimposed with a grid of nine by nine divisions. Based on the direction, either north, south, east or west, the division in which the main entrance is to be located is determined.

Question: What is brahmastahna ?
Answer: This is the centre of the plot/dwelling which is attributed to lord Brahma. This place is to be kept empty.

Question: Where should the master bed room be?
Answer: The master bedroom should be located in the south west part of the house.

Question: Where should the kitchen be?
Answer: The kitchen should be located in the south east part of the house.

Question: Where should the puja room be ?
Answer: The puja room should be in the north east corner of the house.

Question: Where should the guest room be?
Answer: The guest room should be in the north west of the house.

5. Housing Loans

Question: How much housing loan can one get?
Answer: Housing loan will be sanctioned depending upon your repayment capacity and according to your income. Your spouse's income can be included, if you want to increase the amount of your loan. The maximum loan that can be sanctioned varies with housing finance companies and ranges from Rs.10 lakh to Rs.1 crore.

Question: What are the tax benefits that are available if one avails of housing loan?
Answer: Tax benefits are available on both the principal and interest components of the loan as per the income tax act. The upper limit of the amount of deduction of interest repayment allowed from your gross total income is now Rs. 75,000 p.a.. Besides, Sec. 88 offers you tax benefits for principal repayments. The principal repayment amount included in the overall limit of Rs 60,000 offered by this section is Rs 10,000.

Question: What is reducing balance ?
Answer: Reducing balance is the method of reducing the principal amount already paid, from the outstanding loan amount. Every time you make a payment,you pay interest on that part of the original principal sum that has remained un-repaid till then.

Question: Which loan is cheaper the monthly reducing balance or the annual reducing balance?
Answer: The best way is to compare the EMIs and the tenures of the two home loans. The loan carrying the lower EMI for the same tenure is the cheaper option.

Question: What is a fixed rate home loan?
Answer: A fixed rate home loan, is a loan where the interest rate is constant over the entire tenure of the loan tenure.

Question: What is a floating interest rate?
Answer: A floating interest rate loan, is a loan where the interest rate payable is linked to the market rate like the bank lending rate. As the bank rate varies, the interest rate payable by you will also rise and fall. Hence you will have to bear the risk of interest rate fluctuations, the floating interest rates offered are slightly lower than the fixed interest rates.

Question: What is a home Extension Loan ?
Answer: A home extension loan is a loan which helps you to meet the expenses of any alteration like extension/expansion or modification of your home. You can avail of a home extension loan, after obtaining the requisite approvals from the municipal corporation.

Question: What is home Improvement Loan ?
Answer: A home improvement loan is one that is made available for you to do certain external work like structural repairs, waterproofing or internal work like tiling and flooring, plumbing, electrical work, painting, etc.

6. Tax related

Question: Is it necessary to obtain any permission, from the Income Tax authorities if I want to purchase any immovable property?
Answer: There is restriction on transfer of immovable property under Section 269UC of the Income Tax act.

Question: Does the Indian Income Tax Act offers any special incentive for purchase of residential property by obtaining finance either from banks or other financial institutions?
Answer: Under Section 88 of the income tax you can claim benefit for the principle repayment, interest on loan is deductible u/s 24 from income from House Property.

Question: Whether the benefits attached to a residential property are also available to a commercial property ?
Answer: No such benefits are not available for commercial Properties.

Question: What are the formalities specified under the Indian Income Tax Law, if any, that one has to complete before or after selling any house property, commercial or residential ?
Answer: You have to obtain Permission u/s 230A of the Income Tax Act if the value of the property to be sold is more than 5 lakh.

Question: What are the tax implications of sale of any house property, commercial or residential?
Answer: You are liable to pay Tax on profit arising from sale of a house property under the head Capital Gain.

Question: Whether incidental charges like brokerage, registration fees, stamp duty and other charges arising out of sale of house property deductable from profit arising on sale?
Answer: These expenses are allowable expenses from the full value of consideration of the sale of house property.

Question: Is there any way by which I can claim exemption from tax on capital gain?
Answer: The Income Tax act has made provision u/s 54 & 54A--G of the act whereby you can claim exemption from tax on capital gains.
Sec. 54: Purchase or construct another residential house worth the amount of capital gains. Sec. 54 protects capital gains arising out of sale (or transfer) of a residential house whether self-occupied or not, provided the assessee has purchased within 1 year before or 2 years after the date of sale of the original asset or has constructed within 3 years after that date, a residential house. The only condition is that the newly-acquired property should not be sold within 3 years from the date of its purchase or construction. If this condition is not satisfied, the cost of the new asset is to be reduced by the amount of long-term capital gains exempted from tax on the original asset and the difference between its sale price and the reduced cost will be chargeable as short-term (yes, short-term!) capital gain earned during the year in which the new asset is sold. This condition is unfair. One of my readers, Capt. Shelar, had sold a house situated in a main city and purchased a more spacious house in the suburbs. After moving in he found that one of the neighbours is a goonda and another is running a brothel. He desired to shift in a hurry but alas! He found himself trapped. Sec. 54EA & 54EB: Invest within 6 months the amount of capital gains in avenues covered by Sec. 54EB which locks in the funds for 7 years or invest the of sale proceeds in avenues covered by Sec. 54EA which locks in the funds for 3 years. Sometimes the same avenue also attracts tax rebate u/s 88. However, if the assessee has availed of the Sec. 54EA/EB exemption from capital gains by contributing a certain amount, the rebate u/s 88 will not be allowed on the same amount and vice versa.