Check the APF number before buying a home
27 Jan 2016
Do you cross check whether the properties you are buying have the Approved Project Financial (APF) number? Are the property projects genuine? Are you sure the builder has actually got all the necessary approvals?
These are some important points a buyer needs to verify before jumping to make a property investment.
What is approved project financial?
The APF is a code or number issued by the bankers or financing companies dealing with real estate development and who provide home loans. The APF number is provided for a particular housing project.
The APF number denotes the satisfaction of the bank regarding the project, the paperwork, proposal, documentation, loan sanctions and others. In fact, if a builder wants an additional loan, the bank can just check the APF number and sanction the loan easily. Actually, such codes help the housing companies or banks to sanction loan without cross checking or monitoring the legality of the projects. The number indicates that a certain project has been fully scrutinised and has received the necessary approvals.
A senior official from a Public Sector Utility (PSU) bank says, "Before our bank ties up with the builder or approves a builder project, the bank scrutinizes the necessary license and documents associated with KYC of the builder. Property documents such as title of the property, building plan approval and necessary clearances from different authorities like pollution, environment, forest, fire, height and state electricity board.“ board."
As per him, the builder or whosoever is applying for the approval should have minimum five years of experience in the line of activity or should be a member of any state chamber of the housing industry such as CREDAI. They should have ISO certification and minimum three running and completed projects.
Will earn goodwill?
Moreover, the bankers or housing finance companies feel confident to lend money only to such projects that have a future. An APF code signifies clearly that the real estate project has been well-scrutinised, which minimises the risk of repayment.
"Banks like SBI usually provide a unique identification number for such approved projects. This unique number is called Approved Project Financial number, which can be crossed checked through the bank's website," explains the official.
He further adds that every project is a new project and goes through all necessary checks as mentioned even though the builder is the same. The only thing which is carried is the goodwill that the builder has earned from his previous projects.
AS Sivaramakrishnan, head Residential Services India, CBRE, says, "Usually, these days projects are given approval and then they are taken ahead for completion. There is no project that has not got an approval. All projects are well approved. Before a project is launched, the builder approaches both the public and private banks for funds."
"The banks ensure that the title of land is clear and a no objection certificate (NOC) is provided from the relevant authorities. Actually, the housing finance companies check both the legal and technical aspects before providing capital to the builders".
For instance, the building that has an APF number literally means that the project has been duly authorized by one or more housing finance companies. However, for a home buyer, an APF number is a good indicator that this particular space has gone through the proper legal process of project approval and registration. In case a building does not have an APF number, there are chances that people may want to re-check and know the reason behind not having an APF number.