CLP Full Form in Real Estate: Meaning & Benefits
When you buy an under-construction property you do not have to pay the complete property price at once. The payment plan is usually separated into different stages according to the construction. This is known as CLP in real estate.
CLP full form in real estate is Construction Linked Payment Plan. This plan divides the project construction into different stages and payment has to be done after a particular stage is completed. For example, you may need to pay the 1st time when the foundation work is completed, the 2nd time when the structure is done and 3rd at last when the construction is finished.
Now you might be thinking what are the benefits of CLP, how does it even work etc. Well don’t worry we are here to give you the answers to all your queries. In this blog we will cover the CLP full form in real estate, its benefits, its working and even the risks and disadvantages.
What Is the CLP in Real Estate?
CLP full form in real estate is Construction Linked Payment Plan. This is a way of paying for an under-construction property where the payment is divided into different stages. Instead of paying a major part of the property cost at the beginning, the buyer pays as the work moves forward.
For example, the payment schedule may have one installment linked to the foundation, another to the completion of the structure, and later payments for finishing and possession. The exact stages and payment percentage are not the same for every project. They are usually mentioned in the Agreement for Sale or the payment schedule shared by the developer.
So, if a particular construction stage is completed, the developer raises a payment demand for that stage. If the buyer has taken a home loan, the bank may release the required amount in parts, based on its process and project progress. In simple words, a Construction Linked Payment Plan connects your property payments with the actual progress of construction.
Benefits of a Construction-Linked Payment Plan
A CLP payment plan links the development in property construction with your payment plans. This makes the complete payment process a lot more structured, especially if you are buying an under-construction property. These are a list of benefits a CLP offers:
1. Lower Upfront Payment
You don’t have to pay a huge sum of money at the start of the deal, instead the total amount is divided into installments. This means that as a buyer you can easily pay for the property over a period of time instead of needing to pay a major amount at the beginning.
2. Payments Based on Construction Progress
In a Construction Linked Plan, installments are linked to milestones in the construction process that are included in the payment schedule, such as the foundation, structure, or finishing. This gives buyers a better understanding of the property construction and payments.
3. Easier Cash Flow Planning
Since the payment is split into different stages, buyers can adjust their spending based on the installment due date, and check the agreed payment schedule in advance, before making one big payment.
4. Staged Home Loan Disbursement
Lenders can distribute the loan in stages for under-construction properties to buyers who want a home loan to finance their purchase. This means that the complete loan amount that needs to be given does not have to be released at once in a CLP home loan.
What Are the Construction Milestones in a CLP?
CLP construction milestones mean that the total property cost is divided into different installments, and each of the payment installment is connected to a construction stage. Below is an example of what the Construction Linked Payment Plan may be like:
NOTE: The exact milestones and percentages can be different for all projects. So you must check the payment schedule that is there in the Agreement for Sale to know the precise details.
| Construction Milestone | Percentage of Total | What it Means |
| Booking / Initial Payment | 10% | The property is booked and the initial payment is made. |
| Agreement / Early Stage | 10% | The Agreement for Sale is completed and the next payment becomes due as per the agreed schedule. |
| Foundation | 10% | Foundation work is completed |
| Structural / Slab Work | 30% | Payment is made as the main structure and slabs are completed. |
| Superstructure Completion | 10% | The main structure of the building is completed. |
| Brickwork / Plastering | 10% | Wall work and plastering progress to the agreed stage. |
| Flooring / Finishing | 10% | Flooring, electrical, plumbing, fixtures and other finishing work progresses. |
| Possession | 10% | The final amount becomes payable according to the agreed possession-related terms. |
CLP Payment Schedule: How Are Payments Calculated?
In a CLP payment plan, the cost of a property is paid out in installments that are connected to a particular stage of construction. The amount you pay at each stage depends on the percentage stated in the project’s payment schedule.
For example, if your property costs 60 lakh, and 10% of the cost is due on completion of the foundation, you would have to pay 6 lakh at that stage, and another 15% of the cost is due next stage, then 9 lakh.
The exact percentage may vary for each project as some may have more slab-wise payments, while others may have several construction stages. Buyers should read the Agreement for Sale and payment schedule for the amount due at each stage.
Remember that the property price is not the only amount you will need to budget for. Taxes and other fees are due depending on the project and the rules governing these projects.
CLP Vs PLP: What are the Differences?
CLP full form in real estate is Construction Linked Plan and PLP stands for Possession Linked Plan. There are a lot of differences in CLP vs possession linked plan apart from their full forms.
| Pointer | CLP | PLP |
| Payment is linked to | Construction stages | Possession of the property |
| How payment works | Payment is made as construction reaches different stages | A major part of payment is made closer to possession |
| Payment | Payments are made at different stages | Payments during construction are usually lower |
| Home loan | Loan amount may be released in stages as per lender terms | Loan disbursement depends on the loan terms and payment schedule |
| Main thing to check | Construction milestones and payment schedule | Possession terms and final payment schedule |
| Suitable for | Buyers who are comfortable making payments as construction moves ahead | Buyers who want to keep a larger payment closer to possession |
Final Thoughts
Understanding the CLP full form in real estate is crucial before buying an under-construction property. A Construction Linked Plan connects all your payments to the construction progress. This means that you have to pay at different construction stages completion instead of giving the complete amount at once.
But remember that all projects will have different payment schedules. So before you choose a Construction Linked Payment Plan in real estate you must read the Agreement for Sale, CLP construction milestones, payment amounts, loan terms and other charges.
FAQs
What does CLP stand for in real estate?
CLP full form in real estate is Construction Linked Payment Plan.
What is CLP in pricing?
A CLP is a Construction Linked Payment plan which combines the payment installments to the construction milestones of a property.
What does CLP stand for?
CLP stands for Construction Linked Payment Plan in real estate. It is a type of payment plan connected to the under construction properties.
What is a CLP plan?
A Construction Linked Payment Plan (CLP) means you pay for your property in parts as the construction progresses.
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