Preferential location charges: How it impacts the price of your property


In the absence of regulation, developers fix preferential location charges (PLCs) at any given rate

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 500 per sq ft, depending on the location and the preference.

 

Definition

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. “While, in Mumbai, people pay higher PLCs to stay on the top floor, people in Delhi pay higher PLCs for apartments in the ground floor,” says Abhishek Singh Goyat, chairman of the Antriksh Group.

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.

See also: Should location be the only price determining factor?

 

No regulation

However, there is no regulatory framework in the country that governs PLCs. 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 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, explains Manish Gupta, a South Delhi-based property consultant.

 

Why it might be unethical

Owing to the lack of regulation, developers keep changing the pattern of charging PLCs. For instance, in Delhi, 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, says Goyat. “PLCs usually depend on the project and the builder, now,” he admits.

 

What should buyers do?

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, feels Rajesh Prajapati, MD of the Prajapati Group. Moreover, PLCs are not applicable when buying a house in the secondary market. “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,” he points out.

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,” advises a Gurgaon-based real estate consultant, who deals with projects along the Dwarka Expressway. Buyers should also try and bargain, for greater discounts on the base value of the apartment.

 

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