Tag Archives: Real Estate Buyers

A RERA Bench in Greater Noida?

24 Friday Nov 2017

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The Noida Extension Flat Owners Welfare Association (NEFOWA) ,a Noida based Welfare Association for homebuyers, have demanded that the Tribunal should set up a bench in Greater Noida to be more accessible to homebuyers, since the Uttar Pradesh Real Estate Regulatory Authority (UP RERA) has been functioning out of Lucknow for the last four months.

The members state that at least 30,000 complaints for various builder projects have been made from Noida and Greater Noida so far but the outreach of RERA to more buyers could only increase if the distance is bridged between the court and the buyers.

For each complaint, the hearing is being scheduled at least twice or thrice if not more. For the buyers who have complained, this entails that they visit Lucknow a many times the hearing is scheduled. Most hearings are during weekdays so people have to take leave from work to attend these. Because Noida and Greater Noida are construction heavy sites, at least a bench of the Tribunal should be located here.

RERA has been constituted to protect the interests of the buyers, so primarily it shouldn’t it be accessible? So far almost 80% RERA Complaints are being made from Noida and Greater Noida as these two cities have the highest concentration of new apartments.

Home size hike under PMAY to help clear inventory thereby revive housing demand ?

17 Friday Nov 2017

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Would the government’s decision to increase the home size for middle income group (MIG) under the credit linked subsidy scheme help in clearing unsold stock and reviving demand in the realty sector?

A day before, the Ministry of Housing and Urban Development approved  increasing the carpet area in the MIG-I category of CLSS from the existing 90 square metre to up to 120 square metre and increasing the carpet area in respect of MIG II category of CLSS from the existing 110 square metre to up to 150 square metre. The changes are effective from January 1, 2017.

According to builders’ body National Real Estate Development Council (NAREDCO), this move would bring the entire demand for affordable housing under the interest subvention scheme, accounting for almost 96% of the total demand for housing in the country.

Confederation of Real Estate Developers’ Associations of India (CREDAI), another Developer’s body feels the average middle class in smaller towns and cities would now be able to afford bigger and better quality homes than before.

The increase in threshold limit would not only enable the middle income group buyers to avail interest rate subvention under CLSS, but  also dilute the impact for the lower strata of the society with lower ticket size and that the subsidies might be more effective, if restricted to EWS/LIG segment in the interest of inclusive goal of housing for all.

Prime minister on December 31 last year had announced the CLSS under the Housing for All 2022 (Urban) for people belonging to the MIG category, valid till the end of December this year. However, the government last month extended the validity of interest subsidy benefit by 15 more months till March 2019.

According to a leading Real Estate Finance Company, the fence sitters specially, who were delaying their home purchase, would now be given a further push.

Builders, meanwhile, would not only enjoy the general uptick in the market that, but would also accelerate the sale of housing units which were earlier missing out on a sizeable portion of the Middle Income Group audience.

Would this decision of government beside helping in clearing unsold stock, also encourage developers to launch new projects?

Register projects or face stringent action?

16 Thursday Nov 2017

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The Karnataka RERA, through its chairman has cautioned the builders and developers throughout the state that they would either have to register themselves mandatorily with RERA or face stringent action.  There are approximately 1700 projects registered with the Karnataka RERA Authority, out of which 725 have been approved. The approval of  573 projects has been in progress and the remaining would get the nod after getting additional information. The Chairman also cautioned that the Authority would find out with help of other governmental agencies how many projects are to be registered and those who are unregistered would be severely penalised, to almost 10% of the project cost.  The authority has so far received 218 complaints, from the buyers, most of which has been resolved.  The authority, which is typically designed to be buyer friendly, is also willing to help the developer or the promoter in case of any issues to be sorted.  Would the Developers register themselves or “face the music”?

How much tax to pay on Real Estate?

07 Tuesday Nov 2017

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It came as a recent piece of news that the legislature was planning to churn out a legislation whereby they could bring in Real Estate under the Umbrella of GST. Have we ever wondered as to what prompted the Financial Minister to state so? According to him, the one sector in India where maximum amount of tax evasion and cash generation takes place is the real estate, which is still outside GST, therefore there is a strong case to bring real estate into GST.  How far is this feasible? So far as the realty sector is concerned, under-construction properties are taxed at 12% apart from the Stamp Duty from 4 to 8% and registration charges, and property tax (annual municipal levy) on a property. Before the advent of  GST, service tax was applicable at 4.5% on under-construction properties. However, no credit of tax paid on goods namely on VAT and excise duty was allowed to developers. For a completed property, GST is currently not applicable.  Apart from the above, the computation of revised sale price is a complex as well as time-consuming task. Developers have to depend upon their contractors to know the VAT and excise duty incidence and have to wait for the project to complete before they know how much price reduction can be done finally. While the incidence would depend upon the type of project, estimates suggest that price reduction, even if done on estimated basis, is unlikely to be sufficient to bridge the gap between GST at 12% and service tax at 4.5%. However, the buyers of under-construction properties to re-negotiate with their developers on how much less amount they will have to pay in the wake of ITC (Input Tax Credit). This means that whatever construction takes place post-GST, the developer can claim ITC which can be passed on to the consumer.  But with the imposition of GST on under constructed properties, aren’t the homebuyers reeling towards buying a ready to move in homes as compared to the under constructed ones?
From a consumer’s viewpoint, paying GST and stamp duty for an under-construction property leads to an overall tax outgo of 17-18%, however,  a ready-to-move-in project, a consumer would only have to shell out on stamp duty. The  Developers would not be able to claim input credit and it would become a cost to them. Consumers who have invested into projects that are almost complete will face the brunt of the new policy on the amount to be paid under GST. As a large part of the construction of their project is over beyond one year, their developer will not be able to claim input credit. Although the government has allowed past one-year to claim credit, a majority of them either have not maintained the requisite documents such as invoices or have incurred the taxes beyond past one year.  Wouldn’t complying with the anti-profiteering provision be a huge task? While this is a good principle that can be applied in case of tax saving, if the same is mixed with change in the procurement cost it goes into a grey area. Will it be applied on a project basis, state basis or pan-India basis? Will there be any index for reference?
There is a growing clamour from a large number of states to bring real estate fully under GST. This means that GST should be charged on the sale of completed buildings.  Shouldn’t the government either substantially reduce stamp duty or eliminate it so as to not double tax the consumer?

For more updates please visit http://www.prosperty.co/

 

Affordable Houses supply increases by 27% in January – September?

07 Tuesday Nov 2017

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A recent study report of CREDAI, the real estate Developer’s body, revealed that the supply of affordable houses has increased by 27%.  What is the factor that contributed towards this sector of housing?  The answer is that the initiatives of the government, to boost its flagship programme, has lured many developers to offer its services to lower income and middle income group.  Among the new launches, the Mumbai topped the list with a whopping 40% increase in housing supply, followed by Kolkatta and Pune. Mumbai witnessed the highest number of launches, at over 19400 new residential houses until September 2017, out of which affordable housing sector had a share of close to 10000 units registering a rise of 300%, when compared to the previous year. What is the reason for this enhanced growth rate in the affordable housing sector? The key to this is that the implementation of RERA and GST has boosted the confidence of home-buyers, who were swinging in a dilemma to buy a house. The enhanced confidence resulted in many enquiries for the right kind of properties in  which witnessed good traction during the current festive season.  So would we see more developers investing in this sector?

Who will build new sector roads in Gurugram? Developers blame acquisition block

07 Tuesday Nov 2017

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Thousands of residents living in the new sectors will continue to face connectivity issues, say developers with projects in the new sectors, if a policy intervention addressing issues delaying construction of 24m-wide roads in these sectors (58-118) isn’t taken soon.

According to Master Plan 2031, the 24m approach roads to projects are to be built by the developer/landowner in whose licensed area the road is proposed. However, in many cases, these roads never see light of day as one or more landowners refuse to part with their portions of land for roads.

Multiplicity of ownership causes a major problem in connectivity in new sectors. For instance, in Sector 62, the 24m approach road passes through projects of three developers.  Since they are still being built, the developers have not worked on the 24m road, impacting connectivity to other projects in the area.

What is delaying development of sector roads in Gurgoan? Can the developers and state authorities work together for the sake of infrastructure building which would not only  benefit those who have already bought into projects in these areas, but also attract new customers?

Tamil Nadu to acquire 450 acres of land for Coimbatore airport

06 Monday Nov 2017

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The Coimbatore district administration has initiated steps to acquire about 450 acres to expand the city airport and has proposed to give a compensation of Rs 1,500 per sq ft for residential land and Rs 900 per sq ft for agricultural land. An additional Rs 1,500 per sq ft will be provided for buildings. The acquisition would spread across regions like Uppilipalayam, Chinniyammalpalayam and Singanallur and would be completed by December end.

Land owners were urged to cooperate with the administration to speed up the acquisition process for expansion of the international airport to facilitate operation of bigger aircraft.

This is the first major land acquisition taking place for an infrastructure project in the state after the new land acquisition legislation was passed in 2013. While the norms prescribe two times the market value of land in urban areas -which is the case with Coimbatore airport -what is being offered by the administration as compensation to land owners is not even half of the market value. The guideline value of agricultural land in the region is just Rs 35,000 per cent and for residential land it is Rs 65,000 per cent. However, the market values are Rs 8 lakh and Rs14 lakh per cent respectively, say sources in the realty sector. The state government has been trying for acquisition of additional land for the past 10 years, but has not been able to make any headway.

The district administration has fixed the acquisition price after a recent interaction with residents, industrialists and farmers of the area.  The price fixed for residential land was far too low and not acceptable.

How could people accept Rs 1,500 per sq ft for a house when the cost of construction is more than Rs 2,000 per sq ft? Also, who would bear the rent for about two years that a person would take to construct a new house?

The additional land will help extension of the existing runway, facilitating landing of larger aircraft like Boeing 787. The present area of the airport is 300 acres. The present runway is 2,970 metres long and it is likely to be extended to 3,800 metres. Moreover, new taxiway will be laid.At present, there are three international flights operating out of Coimbatore Interna tional Airport. Another important criterion for international carriers to land in an airport is availability of 75 m space on either side of the runway. Smaller cities like Madurai and Trichy are also expanding their airports.While Madurai has 615 acres, Trichy has 750 acres at present. In comparison, Chennai airport has close to 1,500 acres and is in the process of acquiring another 200 acres.

With the announcement of Air India Express’ new flight to Singapore from Delhi via Coimbatore, the number of operations has reached its maximum. Soon, a private airline is expected to operate an additional flight from Coimbatore to Bengaluru while Air India will begin its operations from the city to Bengaluru in December.

 

Is a buyer empowered to contest a Builder in consumer courts?

05 Sunday Nov 2017

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Is a consumer empowered with contesting the builder in consumer courts?  What are the provisions for the same?  Is he empowered to prove the deficiency in the house and the developer has not addressed the issue, despite the requests made?  Here are the answers to the same in seraitim

The first step is to identify the jurisdiction of the forum where the complaint is to be filed. This issue needs to be identified from two angles of jurisdiction Territorial and Pecuniary. The complaint can be filed with the district forum for property value upto Rs 20 lakh; state commission can be approached for Rs 20 lakhs to Rs 1 crore; and national commission for the amount exceeding Rs 1 crore.  The complainant has to pay a prescribed fee along with the complaint before the district forum, state commission and the national commission as the case may be.  The Act provides for a limitation period of two years from the date of cause of action, i.e possession of the house. In case there is a delay in filing the complaint, one has to explain the delay that can be condoned by the tribunal.

The next step involves that the complaint draft must narrate facts necessary to establish a cause of action. At the end of the complaint, one has to put signatures and in case any other person is authorised to file the complaint, then the complaint has to be accompanied with an authorisation letter. The complaint draft must mention the name, description and address of the complainant.  Along with the complaint, a buyer is also required to file an affidavit mentioning that facts stated in the complaint are true and correct.  Copies of all the documents supporting the allegations have to be attached, including the Builder-Buyer Agreement and repeated requests made to rectify the defect or fault.  The complainant must ask for compensation costs, which should be specifically alleged in the complaint. Besides compensation, a home-buyer can also ask for the refunds, damages, litigation costs and interest amount.One should submit the breakup of amount claimed under different heads but do remember to claim the compensation or other relief as per the pecuniary value of the forums.

Once, all the aforesaid is done, the Consumer Forum would pass its orders and the Buyer can get his refund, if the case is proved.

Is the time ripe and right?

04 Saturday Nov 2017

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Buying a house is much beyond being just an investment. From the convenience of living in one’s own property to feeling a sense of stability, owning a home could mean more than one thing.  It can be a tad difficult for buyers to make this choice, considering the sheer number of options in the market. Adding to the confusion are things like pricing, choosing builders, location and financing the big dream.  How would it be, if the buyers are given an option to choose the right house, particularly when the sentiment in the real estate sector has been positive, particularly in the last quarter? Many Developers have to now register themselves in RERA, which makes it easier for the buyer to browse through the entire details of the project, which would be available in the portal.  The initial hiccups caused due to the RERA and GST have now diminished.  The market is moving upward. People are serious about buying, and are not merely window shopping and browsing through options.  Apartments, villas and plots are some of the options available to the customers. Is this the positive time for investment in realty sector?

Is 2 BHK apartment gaining more popularity?

04 Saturday Nov 2017

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The smaller 2-Bed room House and Kitchen apartments are getting popular among home-buyers and tenants alike as they are affordable and also fulfil their need for privacy.  Isn’t is a proud moment for any individual to own a house, and that feeling is amplified when it is a 2-BHK? Does it matter even if it is 350-400 sq ft with an additional room? Keeping this in view, several developers have been building compact size homes with all the amenities of a 2-BHK?  For the last few years, there has been a deliberate effort in the realty sector of resizing residential units to offer them at affordable prices. And the reduced 2-BHK is one of its products targeting middle-class buyers. Compact homes are definitely a huge trend now and a 400 sq ft 2-BHK apartment usually fits the bill. Developers are now gaining traction for this segment and have thus, started developing smaller homes. They are economical and affordable and also, the average family size that is between two and six people, can easily accommodate in this size.

While developers have traditionally preferred to focus on large luxurious projects due to higher margins, the new trend is to provide a more attractive product in terms of specifications, size and price but capitalise on volumes, thereby catering to the huge unmet demand for smaller apartments. The 2-BHK configurations are currently the most sought-after. It suits the family’s requirement perfectly as it provides rooms for both, the parents and children. Young buyers are not taking chances with large home loans and prefer to buy homes that are compact but affordable.

One of the important factors driving demand for compact homes is the need for privacy that is usually unmet in a 1-BHK apartment. Thus, having an extra room, regardless of the size, is the key deciding factor.These flats have greatly benefited bachelor tenants who live with a group of friends as they get an additional room at the same renting cost of 1-BHK. It is often observed in the big houses that a lot of space is wasted; however, in compact homes, space is utilised optimally. 1-BHK flat is certainly not enough for growing families. Space is not the issue, but  because there is just one bedroom, privacy is restricted. Hence, isn’t a small sized 2-BHK is definitely a good option for the middle class buyers? With the increasing availability of these compact apartments, the dream, of property buyers of owning a 2-BHK is now being fulfilled.