Redevelopment of Property

photo by RedAgenda

In recent times builders have been offering residents of old buildings a handsome amount to get a refurbished flat with additional space.

Who will not grab such a tempting deal? The flat seller not only gets the cash, but also gets a monthly rent for his temporary accommodation. Once the new property is ready, he gets a refurbished, newly-constructed flat, in place of his old one.

Builders do so to redevelop the property and add additional floors to a particular building. They earn money by selling the additional flats. The money paid by the builder to the existing residents depends on whether he asks the resident to shift temporarily or permanently.

If temporary – the builder would give money for the alternate accommodation, until reconstruction is completed. Sometimes builders also issue post-dated cheques only if the money provided in advance is sufficient for a minimum of 18 months of the rent. Calculate whether the sum provided would suffice until you enter the refurbished home.

If permanent – the builder would provide a larger sum, which depends on the valuation of the property. Make sure the amount, minus the tax payable, is sufficient for you to buy another flat.

To avoid being cheated, ask for a bank guarantee. This is an amount deposited by the builder with the bank, which would be provided to the resident if the builder fails to complete the project within the time frame promised. No builder can, however, redevelop a building or a society unless 100% of the residents agree for the same.

But, before handing over your home keys to a builder, make sure your future needs are met. One should know how to cut a redevelopment contract according to one’s need. In redevelopment deals, the resident decides the terms and conditions.

But, to do so, the flat owners or the housing society need the professional guidance of a lawyer as well as an architect. The lawyer would ensure that legal issues – present and future – are dealt with in a transparent way. He would help formulate the deal papers in accordance with the law.

Also, an architect would help the residents determine how much the property is worth, popularly known as valuation of property.

The valuation would be an important criterion in bargaining the amount offered by the builder. The architect would act as a watchdog in the later reconstruction period. The architect would ensure that the builder doesn’t use sub-standard material for construction.

But, before handing over the project, check the track record of the builder. May be you can take the help of the architect appointed to know whether the selected builder has completed his earlier projects within the promised time and has paid the amount he assured in the contract.

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