“I recently bought a low-cost flat in which the purchase agreement has a clause that reads “Builder can pass on any increase in costs”. This seems to be an open clause carrying a lot of risks for the buyer. Please advise on he risks.”
Most developers have launched low-cost houses. Execution of these projects is like walking on a tight rope, as developers are forced to adopt all possible measures to reduce costs. Generally pricing of any real estate has 4 costs.
- Land
- Construction
- Government Charges
- Developer Margins
Generally, construction constitute up to 40-50% of the Total Selling price. Any increase in the same may be passes to you which may increase your cost. Additionally, any increase in other charges, say government charges, will also be recovered from customer. Hence you may have to take into account these risks in cost escalation.
0 comments:
Post a Comment