These days I see many advertisements regarding the sale and so called the real estate price correction. Even now, it is not so very cheap as most of us think. I thought that the prices of the apartments are cheap but the truth is, it is not so. Nothing is cheap, everything is costly. A couple of years back when the real estate was in boom, the prices of the apartments were around 25 to 30 Lakhs. A few premium builders had their price which was only for the privileged high class people. It was generally in Crores. The budding builders and the enthusiast in this real estate who wanted their share of pie were giving the flats at reasonable price only.
Now as you have seen in the papers and ads that the price of a 2 bedroom flat starts from 15.36 Lakhs. This price will be the least in the entire apartment. This price will generally be the least in the area wise. These are not inclusive of all the amenities. The price that generally appears on the ads is the basic price and when you enquire about the house, the price that the builder quotes inclusive of everything is really shocking. I had enquired with couple of builders and both had used the same gimmick. I think everyone uses the same gimmick. The rate that comes out in ads is just the basic price that does not include registration, vat and other charges.
Let me give you a break up of how the builders charge you. The builders quote the basic price of the flat in their advertisements. Whatever the builder quotes, is for the built up area or super built up area. Built up area is the area of your flat, super built up area includes the common pathway and stairs/lift area. Carpet area is the actual area which will be used. It will be generally 80% of the built up area. As builder quotes his price only for the super built up or built up area and others are not included so the price looks very less. The car parking area costs around 1 – 1.5 Lakh. Then comes the deposits generally for KEB and BSWB, this is close to 1 Lakh. Generally the apartment will have a generator and that will cost around 50k to 1 Lakh depending on the size of the apartment, generally they give a 100 watt back up and for the lifts and common way.
In Karnataka, the VAT is 4%. If your basic apartment cost is say 17 Lakh then the VAT is 68000. Registration charges vary from place to place and generally it is more than 6% and in Karnataka it is around 7.2% as on this date. For 17 Lakh it is 122400. Now the total cost of the apartment is 17 Lakh (Basic Cost) + 1.5 Lakh (Car parking area) + 1 Lakh (deposits) + 50k (Generator) + 68k + 1.22 Lakh that amounts to a total of 22.9 Lakh.
The ad says just 17 Lakh but the actual cost of the apartment is close to 23 Lakh. We can’t live without the furniture, assuming it might cost close to 2 Lakh then the total cost of the apartment is 25 Lakh. The ad just gives one third of the price the other third is hidden. If you are making a purchase of an apartment then think over all these matter and then decide. The cheapest apartment right now will cost around 25 Lakh.
Ads are always misleading and it does not convey the right message across. Be cautious when u read such advertisements.
Engineer's Finance 