Things to check before building your house

You are likely to face legal problems and cost escalation, if these issues aren’t nipped in the bud.

Bangalore resident Priya Kumar had always planned to build a house. The thought of being able to build a house in line with her fantasies and requirement, being able to sit with an architect and give inputs or decide on the interiors always excited her.

Hence, she did not prefer a flat. But the experience was not as simple as she had thought. Despite meticulous planning, a lot of painstaking work had to be done at each stage of construction.

“The only saving grace was that I did not have to start from buying a plot. My father had gifted one to me,” says Kumar.

However, for those starting from scratch, building your dream home requires due diligence and exhaustive careful planning on both —acquiring a piece of land and building the house. And, to be careful about legal issues in the first stage and cost issues in the second stage.

...

Buying a plot

You need to begin by looking for a good locality to acquire a plot. While finding the right locality is not easy , finding a plot with clear documentation is tougher. When buying a  plot, you first need to ensure it does not come in agricultural area; one cannot construct there.

Says A S Sivaramakrishnan, head, residential services, at CBRE South Asia: “One needs to be careful before confirming the land piece. The issues around land purchase vary across cities and states. One of the main issues is the legal status. A buyer should thoroughly examine all the parent documents, including confirmation of the seller's name in the sale deed, his rights to sell the property and conveyance of the deed. One needs to look at how the conveyance of the deed has moved in the last three transactions, to get a continuity.”

Another important aspect is checking the encumbrance certificate (EC). The EC can be verified for the past 13 or 30 years, to understand how the conveyance of the property title has moved. It’s a clear indicator of title. The possession certificate needs to be in the seller’s name.

...

Access to the site is an important aspect before you confirm. It’s important that an intending buyer visits and ensures all aspects, speaks to neighbours to understand the veracity of the seller and the access to the site.

“Property tax receipts or house receipts from government agencies is another indicator that the property belongs to the seller. Tax and related receipts help ascertain whether any notices or requisitions relate to the property,” explains Sivaramakrishnan.

Measuring the land is also important. There are instances where the area varies from the deed to the actuals. It’s imperative the buyer measures the land physically and makes sure the area conveyed is in line with the documents.

How to ensure there is no legal dispute? “If the plot is marketed as a developed one by a reputed developer, there is very little stress involved in establishing the legal veracity. If being bought directly from individual owners, an advocate experienced in property matters should do a title check. It is not advisable for a lay person to attempt to do the due-diligence without professional assistance,” says Arvind Jain, managing director of the Pride Group, Pune.

...

Building the house

While the thought of being able to build your own house can be exciting, you need to be ready for escalating costs. Costs vary with the specifications you’re planning and the intended height. It varies from city to city mainly because of the labour costs. 

Hence, begin with maximum research. The cost of building a house will vary widely, depending on locality, raw materials, structure and design. Labour availability varies by season; typically, during the festive season, most labourers take leave. 

Says Fali Poncha, director, land, at Knight Frank India, “The cost of construction of a house is dependent on a variety of factors; cost, including estimated escalation, the stamp duty payable upon purchase, local availability of materials and skilled labour, and timely completion of construction. Approval costs from local and other planning authorities also need to be considered, the cost of an electricity connection and the fees of the architect and/or contractor.”

...

It is advisable to track the prices of raw materials, labour, and design artefacts till your house gets completed. These fluctuate, as this is a function of the economy and availability of labour. A difference of 10-15 per cent can weigh heavily on your pocket. These costs have increased a lot in recent times.

Be careful about the regulations around the Floor Space Index (FSI) usage. It primarily depends on the governing authority of the locations or city. “FSI norms for urban areas are inflexible. However, many semi-urban and rural areas are not bound by regulations with regard to mandatory parking and open space provision, rules pertaining to structural safety or construction regulations such as FSI,” says Jain.

Find the fair price of building a house or the market value of a property. Poncha says it can vary dramatically, depending on design, materials used and the workmanship. A rough indication for a two-storey house would be Rs 1,000-1,500 a sq ft. If you overpay Rs 200 a sq ft, you could be spending Rs 6 lakh more for a 3,000-sq ft house.

Be careful when selecting a contractor. Compare quotations from others, their past record, structures built by them, material quality supplied and  so on. Try and get the construction complete on time.

ALWAYS REMEMBER

• Buy non-agricultural land for construction 
• Examine sale deed, seller's rights to sell the property 
• Check how the conveyance of the deed has moved in the past three transactions
• Verify encumbrance certificate for the last 30 years, it's a clear indicator of property title
• Check the property tax receipts to verify if the property belongs to the seller