The Difference Between Real Estate Pre-Launch and Soft-Launch; Carpet Area and Super Area

by Vinaya HS on January 2, 2007

in General Stuff

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With the housing boom continuing unabated, here’s a timely article from the January 01, 2007 edition of The Economic Times – ET in the Classroom:

What is realty pre-launch vs. 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 between pre-launch and soft-launch?

While both are meant to attract investments before a project is actually ready, in the case of pre-launch, 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 pre-launch 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 area & 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 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 fulfil their commitments.

What if a developer does not deliver property on time?

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




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{ 2 comments… read them below or add one }

Anil Sharma January 7, 2007 at 1:59 AM

What is the difference between pre-launch and soft-launch?

While both are meant to attract investments before a project is actually ready, in the case of pre-launch, 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.

I personally feel that you are wrong in defining, Soft-Launch is an stage when developer ask investor’s to invest with him at the stage of buying land banks or entering into land agreements.

Whereas in the name of Pre-Launch he is asking investors to start reserving property whose approvals are in process. Few Developers has started reservation of properties without land banks which is highly objectionable in is purely illegal. Ban on prelaunch offers shall be initiated at the earliest.

Vinaya HS January 7, 2007 at 9:33 AM

Thanks for the clarification Anil.

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