What the ‘preference charge’ pitch means4 min read . Updated: 13 Aug 2012, 09:44 PM IST
What the ‘preference charge’ pitch means
What the ‘preference charge’ pitch means
With inventories building up and slowdown in the country affecting offtake of projects, builders are devising new ways to push sales. One of the ways is to change the way the preferential location charges (PLCs) are levied. Some builders have made this into a strong sales pitch. We take a look at what this means and how seriously you should take it.
What is PLC?
As the name suggests, a PLC is an additional cost that you pay for preferring to book a unit with a better location within the same apartment complex. So for the privilege of owning an apartment that, say, faces the park or is a corner plot, you pay extra.
It depends on the size, location and alignment and construction quality. Typically, each floor has a different PLC and floors closer to ground have the highest PLCs.
As there is no regulatory framework on PLCs, there are no standard rules that govern the laws relating to PLCs. The amount of PLC charged varies across different developers and projects. Usually, luxury projects situated in the heart of the city have a higher PLC on each unit.
Penthouses built on top of a tower may command the highest PLC in a tower. An independent villa with personal parking space, park and swimming pool will also command high PLC.
Climate and the topography also play a vital role in deciding the PLC in a group housing society. For instance, because of humid climate, high-rise apartments in Mumbai that are more airy are priced high and have higher PLCs. On the contrary, buyers in Delhi and north India prefer low-rise apartments and villas. Therefore, the PLC here is higher if your apartment is closer to the ground level. “In some cases, however, it has been observed that developers based in north, too, are charging higher PLC for uppermost floors," says Sanjay Sharma, managing director, Qubrex.com, a Gurgaon-based real estate consultant firm that also has a real estate portal.
Another thing you need to know about PLCs is that if your apartment attracts more than two PLCs, you will have to pay for only two. For example, if it is a ground floor apartment facing the park and the road, it will attract two PLCs and not three. Says Gaurav Gupta, director, SG Estates Ltd, a Ghaziabad-based developer: “Developers charge only two PLCs so as to ease the buyer. But he will probably add the two PLCs having higher value among the three."
Structure of PLC: Though it’s not a national trend, some developers are changing the way they have been charging PLCs.
While earlier developers used to charge PLC for only ground, first and second floors, they eventually moved on to charging different PLCs for different sets of floors. For example, the first to fifth floors would have a different PLC than that for the sixth to ninth floors. Recently, they have moved on to keeping the PLCs uniform above a certain level of floors. “Earlier PLC was applicable only for ground, first and second but with emergence of the Mumbai’s real estate market, each floor started having a PLC," says Sharma.
PLC for all: In some of the projects, you would be forced to pay a PLC for any unit that you book. These are designed in a way that each unit either faces the park, or the road, or are open from two sides.
“The new trend is to design projects in a manner that each apartment and floor has some kind of PLC. Maximum of them are aligned towards the central park. The remaining flats are placed towards the corner or are two-side open," says Ankit Agarwal, director, Avlon Group, a New Delhi-based developer firm having projects in Bhiwadi and Dharuhera. The firm’s housing project coming up in Bhiwadi is designed in such a manner that 80% of the flats are park facing.
What it means for you
Uniform PLC rates can affect buyers in two ways—some may find a cheaper deal, while for others the deal may become expensive.
Let us understand this with an example of a mid-housing project with 24 floors. Let’s say, the developer has fixed the ground floor PLC at 200 per sq. ft, 175 per sq. ft for the first floor, 150 per sq. ft for the second, third, fourth and fifth floors, 120 from the sixth to ninth floor, 100 for 10th to 15th floor, 50 for 16th to 18th floor and finally 25 for 19th to 24th floor. Now suppose the developer fixes a charge of 80 per sq. ft from the ninth floor onwards.
While those who book into any of the apartments between the 9th and 15th floors would stand to gain, those in the floors above will be at a disadvantage.
Plus, if one takes into account the fact that each flat in the project has some PLC, it is your developer who gets the final benefit.
What is the way out?
There is no way you can escape from paying the PLC. Often timing plays a crucial role while buying a property. Says Anil Sharma, chairman and managing director, Amrapali Group, a Noida-based real estate firm, “It is best if a buyer plans to invest at the time of the launch. There is always an initial discount that the developer gives to generate his operational cash. Here even if you are paying for PLC, the discount compensates for that amount."
What you can do is add the PLC comparison to your comparison list when you set out to look for your house.