Realty Pre-Launch

What is realty pre-launch v/s soft launch?

Pre-launch, a highly-debated issues in real estate, means raising money from the public for projects which are yet to get regulatory approval in the form of licence and clearances. In short, it is like selling a house which has not even had its foundation stone laid. Soft launch is legally permissible, but it is different. When investing, an individual needs to understand between the two.

What is the difference?

While both are meant to attract investments before a project is actually ready, in the case of prelaunch, a builder seeks investments even before seeking regulatory approvals are in place. In case of soft launch, the move follows after receiving all the necessary approvals.

How can an investor understand the difference?

One can make it out by the mode of payment asked for. Since pre-launch is an illegal practice, a builder will insist on cash payment. An investor should understand that only the amount one pays in cheque is the actual and official valuation of the property that he is investing in.

Why then are there takers for pre-launch?

Investors are often lured by the significantly low prices on offer. On an average, a property’s prelaunch price is less than one-third the price after actual launch. But since the entire transaction is through a benami deal, the investor often does not have an enforceable right.

What is the area that should be considered while buying a flat?

There is no regulation pertaining to this issue, and investors are often at the mercy of whims and fancies of the developers. However, the government has emphasised that carpet area, and not super area, should be the basis of all transactions. A regulation pertaining to this is expected to be introduced in Parliament soon.

What’s the difference between carpet & super area?

Carpet area is the actual built-up area of a property. Super area also includes the value-add spaces. The difference is particularly striking in case of apartments, where super area includes space taken up by facilities such as lift, parking and
open space.

Do we have a regulator?

The ministry is planning to set up a real estate regulator to bring about more transparency in the sector. The proposed regulator will make sure that developers stick to guidelines. It will also be mandated to ensure that consumers fulfill their commitments.

What if a developer does not deliver property on time?

Regulations pertaining to developers’ adherence to a timeframe are not clear as yet. However, if the proposed for realty regulator is instituted, deadlines will become legally binding.

Source: ET Intelligence