What is PLC in Real Estate?

Beyond the base property price, property buyers in India encounter various additional costs. Stamp duty, registration fees, and GST are standard taxes. Additionally, developers often charge charges like PLC for desirable features, something that can significantly impact the final price, pushing the cost higher. Understanding and negotiating these charges is crucial for informed real estate decisions in India. In this L&T Realty blog, we explore what is PLC in real estate as well as PLC full form in real estate, giving you a clearer idea of the importance of this concept in India’s property landscape.

PLC Meaning in Real Estate

Preferential Location Charges (PLC), is an additional cost levied by developers for units with desirable locations within a project. This can include higher floors for superior views, corner units for extra space and light, or proximity to specific amenities. However, the concept of PLC has evolved over time. Corner units, proximity to specific amenities like swimming pools or parks, and even specific floors considered auspicious within certain cultures have been incorporated into the equation. Today, the calculation of PLC varies depending on the developer, ranging from a fixed amount to a percentage of the base price, often based on the super built-up area.
Understanding PLC is crucial for any prospective buyer in the Indian real estate market. Its impact can be substantial, sometimes adding multiple lakhs of rupees to the base cost. Neglecting this charge can lead to unexpected budget discrepancies and miscalculations. More importantly, awareness of PLC empowers buyers to participate effectively in price negotiations, ensuring they make informed and well-rounded decisions while navigating the complex web of real estate costs in India.

What Determines PLC?

While a fixed price might exist for some projects, the cost of PLC in India is typically influenced by a combination of factors. Understanding these factors empowers buyers to estimate potential PLC costs before engaging with a developer. This allows for informed budget planning and enables effective negotiation during the purchase process.

Unit Location

The primary driver is the perceived “desirability” of the unit’s location. Higher floors offering panoramic views or additional privacy typically command a higher PLC than lower floors. Similarly, corner units with more space and natural light often incur a premium compared to standard apartments. Proximity to desirable amenities like swimming pools, parks, or gyms can also contribute to a higher PLC.

Market Dynamics

Beyond location-specific factors, the developer’s strategy and market dynamics play a role. Developers might set a fixed PLC amount or calculate it as a percentage of the base price, often based on the super built-up area. Additionally, the overall demand for the project and specific unit types can influence PLC costs. In high-demand projects with limited desirable units, developers might be less flexible on PLC negotiations.

How are PLC Charges Calculated?

Preferential Location Charges (PLC) add an additional layer of complexity to the buying process. Understanding how these charges are calculated is crucial for informed decision-making.
As mentioned earlier, the primary factor influencing PLC is the “desirability” of the unit’s location. This can encompass several features:

• Higher floors: Offering panoramic views, additional privacy, and potentially more natural light, these come with a premium PLC compared to lower floors.
• Corner units: Providing extra space, ventilation, and sometimes better views, they typically incur a higher PLC compared to standard apartments.
• Specific facing: Units facing parks, courtyards, or water bodies can attract a higher PLC due to the perceived benefits like tranquility or scenic views. In coastal regions, sea-facing units command a significant premium due to their exclusive appeal.
• Proximity to amenities: Units closer to swimming pools, playgrounds, or fitness centers may have a higher PLC compared to those farther away.

Calculation Methods

Developers employ two main methods for calculating PLC:

1. Fixed Rate

This method involves a predetermined and fixed amount added to the base price, regardless of the unit’s size. This method is often used for specific amenities like a club membership or parking space.

2. Percentage of Base Price

This method calculates the PLC as a percentage of the base price, typically based on the super built-up area of the unit. The percentage varies depending on the developer’s strategy, market dynamics, and the “desirability” of the location.

Understanding Specific Charges

Floor Rise Charges

This refers to the additional cost associated with higher floors within a building. Developers typically charge a progressive rate as the floor increases, reflecting the perceived benefits like enhanced views, privacy, and potentially more natural light. The charge can be a fixed amount per floor or a percentage increase on the base price.

View Premium

This charge applies to units with desirable views, often encompassing scenic landscapes, cityscapes, parks, or water bodies like the sea. The premium varies significantly depending on the exclusivity and perceived value of the view. Sea-facing units in coastal regions often command a significantly higher premium compared to units overlooking a park in an urban setting.

Proximity to Amenities

Units located closer to desirable amenities like swimming pools, playgrounds, fitness centers, or clubhouses can attract a higher PLC due to their perceived convenience and added value. The charge typically comes as a percentage increase on the base price and can vary based on the specific amenity’s popularity and its distance from the unit. For example, a unit directly facing a swimming pool might have a higher PLC compared to one overlooking a distant playground.

Is there a Legal Framework for PLC in India?

While Preferential Location Charges (PLC) are commonplace in the Indian real estate market, their implementation lacks specific legal guidelines or regulations. This creates a grey area for both buyers and developers. Unlike taxes and registration fees, PLC falls outside the ambit of specific legal frameworks, granting developers considerable freedom in setting charges. This includes the method of calculation (fixed rate or percentage), specific locations attracting charges, and the associated amounts. This has certainly made it a bit more challenging for buyers to compare prices across projects and understand the justification for varying PLC charges within a single development.
While no direct laws govern PLC in India, buyers do have some recourse. The Real Estate (Regulation and Development) Act (RERA) promotes transparency and accountability, requiring developers to disclose all charges upfront. Buyers can also scrutinize the builder-buyer agreement for detailed PLC terms. Additionally, since PLC impacts the final price, consumer courts can be approached in cases of excessive or unjustified charges that could be considered unfair trade practices.

Comparing PLC with Other Real Estate Charges

PLC is distinct from other charges in Indian real estate like maintenance fees and parking charges. It’s a one-time, premium charge levied due to the desirable location of a unit within a project, like higher floors or proximity to amenities. Maintenance fees, on the other hand, are recurring charges used to cover the upkeep of common areas and amenities, while parking charges are often separate costs associated with securing a parking space within the project. Knowing the difference is crucial for understanding the total cost of ownership and avoiding financial surprises.

Pros and Cons of Paying for PLC

The Pros

• Enhanced living: Higher floors or proximity to amenities like pools or parks can offer improved views, privacy, or convenience.
• Potential High Resale Value: Units with desirable locations often command higher resale value due to increased buyer demand.
• Investment Potential: In some cases, properties with PLC might have greater rental potential due to their desirable features.

The Cons

• Increased financial burden: PLC adds a significant upfront cost to the base price, potentially impacting affordability and straining budgets.
• Limited flexibility: PLC charges can be non-negotiable in some cases, restricting your ability to customize the final price.
• Potential overvaluation: Not all PLC charges may be justified, leading to the possibility of paying extra for features with limited actual value or future resale benefit.

PLC in Commercial vs Residential Real Estate

PLC finds application in both commercial and residential sectors in India, but its implementation and impact certainly differ.

Residential

PLC typically focuses on desirable features like higher floors, corner units, or proximity to amenities, aiming to enhance living experience or potentially increase resale value. Its impact is primarily on comfort and perceived value.

Commercial

PLC often targets units with strategic advantages like visibility, accessibility, or proximity to specific facilities, aiming to maximize business performance and attract higher rents. Its impact is primarily on business efficiency and potential revenue generation.

FAQ’s

Is PLC negotiable?

PLC in India can be negotiable, but it depends. While not directly regulated, developers often set PLC. However, scrutinize the agreement, research market rates, and negotiate politely to potentially lower the cost.

How does PLC affect property resale value?

PLC can positively affect resale value in India. Units with desirable locations (higher floors, corner units, etc.) often attract higher demand, potentially commanding a premium price during resale. However, PLC does not necessarily translate to more preferable resale value, especially so if the PLC charge is very high.

Can PLC charges change after purchase?

No, typically PLC charges in India are fixed after the purchase agreement is signed and cannot be changed. They are considered part of the final property price.

Conclusion

It’s clear to see that grasping PLC is crucial for various actors in the Indian real estate market. Buyers need PLC knowledge to accurately budget, compare projects, and potentially negotiate charges. Investors can utilize PLC insights to evaluate potential returns based on location-driven resale value and rental income. Additionally, stakeholders, including realtors and developers, benefit from understanding PLC to effectively communicate its impact on property value and provide informed guidance to buyers and investors.

Disclaimer: Stock image used for representational purpose only.