5 Real Estate Rules All Homebuyers Should Know About
Property purchase involves a complex set of laws, a task which a common homebuyer would find cumbersome. This is why it is ideal to seek assistance of a legal expert in carrying out the purchase. However, it would certainly not be enough if you do not do some leg work yourself and make yourself aware of some basic rules. In this article, we talk of some basic rules, everyone even remotely interested in India’s real estate must know about.
Also Read: Your Step-By-Step Guide To Buying A Home
Purchase: If you are buying an under-construction property, rules laid under the Real Estate (Regulation & Development) Act, 2016, come into play. The same is not true if you are buying a ready-to-move-in property. In case of a dispute with the developer, the buyer has to approach the state Real Estate Regulatory Authority (RERA) if the property is under-construction. In case it is a ready-to-move-in flat, they have the option to approach the district-level consumer dispute redressal tribunals. As a buyer you have certain duties, too, which you have to diligently follow, failing which you may have to pay a penalty, depending on the nature of offence. According to the Act, a homebuyer, who fails to comply with the orders of the RERA, will have to pay a penalty for each day of the period of non-compliance. The penalty may “extend up to five per cent of the property cost”.
Registration: Till the property is not registered following the due procedure, the buyer does not become the legal owner of the property. Rules related to property registration are laid in the Indian Stamps Act, 1899. Apart from paying one per cent of the property value as registration charge, the buyer has to pay stamp duty ranging from 4-10 per cent in India. Do note here that stamp duty evasion may invite a penalty leading to 10 times of the stamp duty amount. While it rarely happens, some type of offences may also land you in jail for six months.
Renting: While archaic laws are still in practice, the Draft Model Tenancy Act was launched in 2015 to change the way function in this housing segment. While the asset remains his, a landlord cannot enter the premises, says the Act, without giving the tenant a written notice 24 hours. Landlords have to follow the same process if they want to carry out any renovation work.
Transfer: In matters of transfer, provisions of the Transfer of Property Act, 1882, apply. According to the Act, "property of any kind may be transferred" by a person "competent to contract and entitled to transferable property, or authorised to dispose of transferable property not his own". This could be done via sale, gift and relinquishment. However, the law states that you can never make a contract to gift a property which you are hoping to own in future.
Also read: Can You Transfer All Your Property?
Sale: Income tax laws apply when you earn a property on sale of your property. Consequently, you will have to pay short term or long-term capital gains tax on the profit. To save on taxes, the sale proceeds must be invested in another immovable property or some government-formulated schemes.