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News: Preferential Location Charges And Property Price-19.08.2017

Preferential location charges and property price

As a prospective buyer, one often comes across terms, such as ‘front park / pool facing’, or ‘rear park facing’, or ‘road facing’, or ‘corner facing’. The rate for a house may vary, according to these and are billed under ‘preferential location charges’ (PLCs). Development firms have a say, when it comes to deciding these charges. Some builders have made it a significant part of the overall property’s value. The charges may range, from Rs 50 per sq ft to as high as Rs 2000 per sq ft, depending on the location and the preference.

A PLC is an additional cost that a buyer pays, for choosing a better location in an apartment complex. Hence, for example, to own an apartment that overlooks a park or is a corner plot, the buyer pays extra. PLC is charged on a per sq ft basis, on the super built-up area of the apartment. Typically, each floor has a different PLC.

However, there is no regulatory framework in the country that governs PLCs, since it it is not possible to regulate what the developer wants to charge for the project. If it is a good project, then they can very well charge a higher amount, and be well within their rights to do so. Consequently, the amount varies across different projects and developers. Usually, luxury projects that are located in prime areas like the heart of the city have a higher PLC.

If you are buying an apartment, you cannot generally escape paying for the PLC. For example, a corner apartment facing the park, will attract two PLCs – a PLC based on the floor chosen and a PLC for the park. A third PLC – for the corner location of the flat – may also be applicable. Usually, the developer will charge you two PLCs, but will choose the one that is higher.

Developers keep changing the pattern of charging PLCs. For instance, developers of landscaped, luxury projects are now charging higher PLC even for the top floor. A project that boasts of a luxurious view, will definitely have higher PLC for its top-most floor.

A consumer who is buying a flat for self-use, should opt for one that has a good view and good location and not worry about PLCs. Moreover, PLCs are not applicable when buying a house in the secondary market once it is fully mature and fully occupied. A person, who is buying a property for investment and looking to profit from its subsequent resale, should look at the location of the project, instead of the location of the apartment and PLCs. The buyer’s profit, will depend on the project’s specification and location, rather than PLCs.

In cases where PLCs are applicable, buyers should factor it in their budget. Compare the price of apartments across different floors. If you are not particular about the floor on which the apartment is, choose one that commands a lower PLC. It is best to opt for middle floors, where PLCs are between the two extremes.

Different developers charge different PLCs. Some might charge a lower basic price and have substantial PLCs on every apartment, or could have a higher basic price and lower or no PLCs on the apartment.

Whether the developer charges a separate PLC or includes it in the basic price, that's the perogative of the builder. Do not get confused about high/low PLCs as this is just a method to distinguish between the apartments that are better located or have a better view as compared to the others in the same project.

Look at the overall cost only for the particular apartment, since eventually that's what you are going to be paying, irrespective of how it is going to be broken down into various sections.

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