12 November 2012
A close relative intends to purchase a flat in a building which has been developed on a property whose lessor is the Municipal Corporation(Mumbai).My queries are: 1) Is it safe to buy a flat in such a building, if the intention is for investment? 2) Is it a wise investment proposal, if the property rate is lower than that in similar flats which are "free-hold"? 3) What basic precautions should one take while purchasing a flat in a "lease-hold" land of which the Municipal Corporation is the lessor?
12 November 2012
Lease is for a fixed period,say 50yrs or 100 yrs. After the expiry of lease period you may loose your apartment,because the land will be handed over back to the owner. .....MJK
13 November 2012
The original lease period was 30 years. Balance period of lease is about 26 years. All this information was withheld by the broker/agent when he was discussing the deal and I came to know about the lease-hold status of the land only after I went through the sale agreement of the previous flat owner!
13 November 2012
The point may be well negotiated for a lower amount of DEAL. The history suggests that after the LEASE period, the lessor is compelled to renew the lease.
13 November 2012
It happens so very often.But, buying a house/flat on bought out land is better than the one constructed on a leased land. Here there should be an advantage as builder's land and development cost is not almost nil. Hence the prices of flats built on such land should be less by over 40% then those made on purchased land. Most of the times, such flats will be at the heart of a city/town.......MJK
13 November 2012
Dear Sirs, I am grateful for your guidance. I understand as follows: 1) Buying a flat on land bought out by the private builder is safer than buying a flat on a lease-hold land(in my case, lessor is Mumbai Municipal Corporation). 2) Buying a flat in a free-hold land gives full ownership of title and full freedom. 3) Free-hold land is generally sold by private builders and not by Govt. or Govt.-promoted organisations. 4) Flats in lease-hold land should be significantly cheaper than those in free-hold land(maybe, up to 40% cheaper). 5) Finally, if "peace of mind" is the main criterion, I should buy a flat in a free-hold land. Here, my ownership and rights will not be questioned. However, such a flat will be costlier than a similar flat in a lease-hold land.
CAclubindia
