What is GST? Impact of GST on Real Estate Sector.

What is GST?

Goods and Service Tax (GST) is the tax which amalgamates various central and state taxes into one which aims to build a common market in India, and also avoids paying tax in multiple stages.

In-detail,  GST, under one roof, includes many taxes, viz., excise duty, additional excise duty, service tax, additional customs duty, surcharges and cess, value added tax, sales tax, entertainment tax, central sales tax (levied by center and collected by state), octroi, entry tax, purchase tax, luxury tax and tax on lottery, betting and gambling.

Though the expected GST was in between 20% and 23%. The final rate is decided by the finance council and its members and is fixed to 18%.

GST on Real Estate Sector.

At present the consumers in the real estate sector who opt to take an under construction property pay sales tax, value-added tax, stamp duty and registration charges to the builders. With the introduction of the GST, it is made clear that the indirect taxes, viz., sales tax and value-added tax will be replaced by GST. Whereas the developer or builder pays various elements of non-creditable tax costs like excise duty, customs duty, CST, entry tax, etc which are inbuilt in the pricing of the units. All these tax costs add upto anywhere between 22%-25% of the price of the units. Also, for the builder while procurement of goods and services, GST would be applicable. This GST would not be creditable and the developers would have to load this in the price of the property. Hence, there are chances for the increase in the pricing of the under-construction properties. 

But post demonitisation, the things turned out different with respect to real estate prices. The unorganized sector now offers at 30% lower prices whereas the organized sector remained neutral.

 

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No price change estimated after implementation of GST

Also, for the projects which are under construction in different stages, the builder might have already purchased the raw material needed for the whole project. Which means the builder might have paid all the taxes which were supposed to be during the purchase. If the GST is implemented and if the builder is to claim the input credits, the cost of the unit might reduce to 20% of the value of the property. But, under GST, he can not get the credit of what he paid as consumer pays tax on taxes paid by the builder. Hence, the builder surely fits the price in the units. For example, if a builder wants to sell an under-construction property of Rs. 1000, the price of it is Rs. 1000 + service tax + VAT + stamp duty. With the implementation of GST, the price of it will be Rs. 1000 + GST + stamp duty. GST is beneficial in real estate sector, if the builder is benefited and if he passes on the same benefit to the customer.

If the consumer is looking out for a ready to move in apartment, the consumer need not pay the service tax or VAT, but has to pay the stamp duty which varies from state to state. So not much of price change is expected even with the implementation of GST.

So, what needs to be analysed and understood is, with the 18% replaced GST rate, how will the impact of the pricing of the under construction property will be? And how will the builder charge you at the end of the day.

The budget session clearly mentioned that the goal is affordable housing. So, even with the implementation of GST, the under construction projects’, the unorganized and organized sector real estate prices remain neutral. This gives another hope for the investors, and a big move for the real estate market after demonetisation.

What is Price Protection Policy in Real Estate Market?

You’ve finally decided to buy a home but it is plagued with uncertainties, speculation, opinions and uncalled for advice. Relatable, isn’t it? That’s because a home is possibly the biggest purchase in one’s life.

Needless to say, there’s a plethora of doubts and fears in your mind before you finalize on anything. You might take into account about the location, the market reputation of the builder, the size, and the amenities but it all boils down to 1 simple question: is your investment safe? More so in today’s financial scenario where the markets are weighed down by demonetization, slow down and the anticipation for real estate prices to fall further.

The Price Protection Policy comes in as a savior in such times; especially for those who are sitting on the fence still wondering whether to buy or not. Price Protection Policy is a solution to all your worries and has the power to instill confidence in both the buyers’ as well as the builders’ minds.

“You had my curiosity, but now have my attention”.

So what exactly is Price Protection Policy?

From the clothing industry to the automobile industry, brands use ‘cashback’ to retain their customers’ interest.

In the realty market, Price Protection Policy is that ‘cashback’ which helps us retain your confidence. It protects your investment from fluctuating prices such that, if the price of the property you’ve bought falls, the builders, refund you the difference.

price-protection-policy_loanyantra-comFor instance, if you buy a home for say, 80 lakhs, and due to market movements it drops to 75 lakhs, the builder will refund you the difference, i.e. 5 lakhs, under the Price Protection Policy, NO QUESTIONS ASKED!

Isn’t that so assuring and relieving?

But it’s important to note that the price protection window might differ from builder-to-builder. That means each builder might offer a different time frame to cover your properties under Price Protection. Usually the builder offers it till the buyer takes the possession.

How does the Price protection policy benefit the home buyer?

Price protection policy is first implemented in 2008 by a renowned builder Rohan Builders for their projects in Pune. This was done in the wake of global economic recession and real-estate crisis that crippled nations and organizations worldwide. As was mentioned in the property agreements, the difference was actually refunded to the customers.

It is a safety net for one’s life savings. In a market so volatile that even vegetable prices keep changing week-on-week, one is wary about parking lakhs or even crores of rupees in an asset like home if it’s their necessity. The Price Protection Policy alleviates that fear and instills confidence.

The realty market is betting big on this new policy. Make sure that you not  only have a verbal commitment but also make the builder mention in the document.

Be optimistic to get something tangible and legal to hold on to when you buy your dream home from your builder.  There are many known builders who follow this policy. Find out from your builder if he follows the policy. We only hope that every realtor follows for the betterment of the overall realty market.

Price protection policy followers

Pethkar Projects’ Seyona at Punawale is offering Property Rate Protection Policy from the day project was launched in 2014. Some of the followers of the price protection policy are Concord Builders, Tata Homes, Mahaveer Group, Runnal Group, Lodha Group, Oyster Living, Citrus Ventures. These developers had started implementing the policy post demonitization to bring back the boom in the realty market.

The purpose of the policy is in the interest of the home buyers not loosing their hard-earned money during the post demonetization when the realty market was going low. But with the decrease of home loan interest rates, the real estate market had become a hit again.

 

Rs.500 And Rs.1000 Notes Ban Impact The Real Estate Sector

The late night news on 8th November 2016 (8/11/16) by the Modi Government has left everybody awestruck. Though the news about the release of Rs.2000 note and the hidden strategy about the design is revealed much earlier through various channels, the ban on the Rs.500 and Rs.1000 note is a brave step by the Modi Government, to eradicate black money.

The ban on the Rs.500 and Rs.1000 notes decide whether the economy will go towards deflation or inflation. If India is really driven by white money, it is inflation, else, deflation. If, illegally earned, then the amount cannot be declared and the circulation of money reduces which causes deflation.

Impact on Real Estate Sector.

The economy is going cashless. This is a great advantage for organised builders who are already using banking as their channel. Many ongoing projects involve into triparty agreement which makes things clear w.r.t. bank, the builder and the investor.

rs-500-and-rs-1000-ban_loanyantra-comIt is the unorganized builders and the secondary market that gets affected. As the small builders depend on the cash transactions while buying the raw material from the wholesale markets. The resale property market also relies on 15 to 50% cash transactions. So, this will be a big challenging move to the small builders and the resale property market.

Rs. 500 and Rs.1000 Ban Impact on Real Estate Sector’s Price Change

Rs. 500 and Rs.1000 Ban Impact on Real Estate Sector’s price might remain constant w.r.t organized builders. They can’t hike the prices as already the real estate is going on a down trend. Also, since the movement of cash is literally low, the price hike will not help the situation in any cause.

But are there chances for a decrease of price? 

The investment capability of the buyers will surely reduce. It also varies according to the place and the nature of the investors. The investors in a place like Bangalore amount upto 80% of the IT employees and 20% of the self-employed people. So, the ban on the Rs.500 and Rs.1000 notes doesn’t really impact them. They remain purely unaffected and the investor capability too remains unaffected. But in a place like Mumbai where the investors vary from small businessmen to IT employees, the impact is strong. As the business people in Mumbai and also in many non metropolitan cities are more, the investing capability will reduce with the ban on the Rs.500 and Rs.1000 note.

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So, in such a situation, to attract the investors, and to capture the market, the real estate sector will initially reduce the prices. So, it is sure that the prices go up only after the economy attains stability and there is an organic demand for the real estate.

Tip : So people to invest in organized sectors, please go ahead with your decision and fulfill your dream home desire.

Also there are attractive interest rates coming up with the banks. So you can plan well and pay lesser EMIs for a good amount of loan.

HAPPY CASHLESS DAYS AHEAD. : ): )

Why Should You Invest In Immovable Property?

Immovable property refers to any immovable object or any item of property which can’t be removed from its place without altering or destroying the object, any property that is affixed to the ground for example, land or a building.

Acquiring Immovable Property

Acquisition of any type of immovable property by any person who is not residing in India but is of Indian origin (an NRI) or any person of Indian origin, can be an excellent form of investment as the real estate market, unlike in other places of the world, is constantly on the rise. NRIs or PIOs can only acquire commercial/residential properties and not any type of agricultural land, farm, house or plantation properties. Property can be acquired through the means of a purchase with the permission of the RBI, as an inheritance or as any gift of a piece of property. Agricultural land, farm houses or plantation property cannot be given as a gift to an NRI or POI.

Transferring Immovable Property

Transferring any immovable property can be done by a variety of methods. Transfer by sale is one of the most popular methods, where the property can be sold to any person who is residing in India with due permission from the RBI, as a gift to any resident of India and through any mortgage to a dealer or a finance institution after receiving prior approval of the RBI. If you hold any agricultural land by inheritance, you can sell it to a resident of India who is also a citizen only with prior approval of the RBI.

Why should you invest in immovable property?

Immovable property is one of the best sources of investment that you can make. It is a form of security and can be used as a nest for a rainy day since it can be sold or transferred. Since the value of real estate in India increases with time, investing in immovable property if you are a Non-residential Indian or a Person of Indian Origin or even a Indian resident can be an extremely sound investment that gives you excellent returns on your investment.

Documents required for purchasing immovable property

Buying a piece of land or any property is one of the most challenging and important decisions that you will make in your life. While there are a lot of legal notices and paperwork involved in the process, if you are able to grasp the nuances, you can reap the benefits. You will need a very clear title and paperwork that includes but is not limited to the parent deed of any piece of property which is necessary in order to trace the origins, the deeds of conveyance, records of mutation, the record of the rights of the property holder, the Survey and the Village map, the land index survey report, a Tippani, avoid certificate of tenancy and of acquisition, a valid conversion order and paid receipt of the same, Receipts for tax returns, Khatha, a copy of the approved plan for layout, the certificate order of release of site and the encumbrance certificate.

Thus, immovable property can be an asset that will increase value over the years and give great returns. With proper documentation, you can ensure that you make a solid investment that is bound to give you great returns.

Applying for Home Loan or Balance Transfer as an NRI / OCI/ PIO

Applying for Home Loan or Balance Transfer as an NRI / OCI/ PIO

Most of the times, its a dream for NRI to buy a property in his/her home town or clear existing home loan before they return India. We come across NRI/OCI/PIO buying property in India very frequently. There are a lot of doubts which seem to be repeated by most clients.

This blog would give a insight of the process so that one can avoid errors and rework.

Process for Non Residents Indian / Person of Indian origin PIO or Overseas Citizen of India  OCI for Home loan application.


NRI OCI PIO Home Loans

HOW TO APPLY ? 


First Step is to Decide the Power of Attorney (POA) Holder

The first step for any NRI/OCI/PIO is to decide who would be the POA holder. He/she has to be a blood relation residing in India preferably in a Metro or Mini Metro like Bangalore,Hyderabad, Mumbai or Mysore, Pune.

Most of the banks ask for a Co-applicant. Your blood relative in India that is your parents/spouse can be a co applicant. You also need to convey the property ownership details .

In case you are buying in joint name i.e either your spouse / parents he /she would have to be on the loan as a co applicant.

Please note the POA holder is the person who would be called in case you delay/ default on our loan.

Power of Attorney(POA)

The most crucial document you need to execute is the POA in the format of Bank that you are applying for the home loan. Each Bank has its own format for the Power of Attorney.

Do not execute a generic general power of attorney as most banks refuse to accept the same for the application. Once you have the power of attorney format of the bank that you wish to avail home loan from since you would be executing the POA outside India you need to visit the Indian Embassy and complete the process.

In case your co applicant is an NRI you would need to execute POA for him/her also. Both POAs can be given to the same relative in India.

Please get the Power of Attorney checked from your banker before notarizing it from the embassy. Any errors can be rectified.

Kindly note that the POA attracts a fee in the embassy as well as here in India. In India you need to affix a Rs 500 stamp paper and get the documents notarized.

Kindly note in case there are any errors / gaps in the POA you waste a lot of time, energy and money because the entire exercise has to be repeated.

For Property Registration

The power of attorney you have executed for the bank can also be used for the registration of the property document. However you need to get the same checked from the developer from whom you are buying property.

All the income and personal documents as per the list have to be self attested by you (signed by you/POA holder) when you despatch the same to India.

Kindly also provide your overseas address proof which can be your employer’s letter in original.

You need to provide following documents attested by Indian Embassy : PAN CARD COPY, PASSPORT COPY and Overseas Residence proof

WHAT TO SUBMIT ?

List of Documents for NRI

  • Photo of Applicant and co-applicant
  • Latest 4 months salary slip
  • Appointment letter
  • Increment letter with salary breakup
  • Address proof
  • Previous work experience letter
  • Pan card copy & Passport copy
  • Processing fees cheque from NRE account
  • Co-applicant photo ID proof and sign Proof ( Pan Card ,Passport, Driving License copy)
  • Employment contract (English copy if the contract is not in English, attested by the Embassy/Employer).
  • Latest work permit.
  • Details of previous employment.
  • Identity card issued by current employer.
  • Bank Account Statement For Salary & Saving a/c (six months).NRI,NRO A/C
  • Pages with visa stamp on the passport.
  • Power of attorney For Bank Format
  • Pan Card Copy, Address proof, Photo for POA holder
  • Detailed credit report from Equifax / Experian

Credit Report

A credit report is a mandatory document for NRI/OCI/PIO US/UK/European countries, Australia, New Zealand and South Africa.

The credit report is not required for professionals working in the Middle East

Please download a detailed credit report which would clearly state your credit score. Most of the times you would have to pay fee to download the credit report. the credit reports available free of cost do not provide detailed credit history and might not provide the score.

WHERE TO PROCESS ?

We would recommend to process with Bank or institution which is providing Online Access to monitor, manage and allow part payments online. Most of the banks provide online access. So make sure you collect all the required online access details at the end of Loan process. We, at Loanyantra as part of process checklist, make sure our customers get the required online access to your loan process.

WHOM TO APPROACH?

NRI/OCI/PIO Loans if not professionally handled it might be very cumbersome job. It is always good to be ready with all the documents before starting the Home Loan process. In case of additional documents required then it would take extra money to send , extra time it would take to receive and extra efforts by the  Power of Attorney(POA) to submit the documents. We would recommend, use services from a prompt loan professional to process it smoothly. It might come at a cost, but it would really worth the money you pay.

In a hawk’s eye, Loanyantra provides professional service at free of cost. As our process protocol, we first send entire checklist and have a professional video call before we start the process. Once the process starts you get online access on Loanyantra portal which would update the status of the Loan process and it provides a chat facility between you, Loanyantra executive appointed for your process and the Banker. We make over all experience a cake walk.

Real Estate Bill – The Salient Features.

After a lot of opposition, deliberation and several amendments, the Rajya Sabha has, on 10 March 2016, approved the Real Estate (Regulation and Development) Bill, 2016 (Bill/Act) which substantially amends the original Real Estate (Regulation and Development) Bill, 2013.

The Bill largely seeks to protect the interest of the allottees/purchasers by promoting transparency, accountability and efficiency in the construction and execution of real estate projects by promoters. It also holds the promoters accountable for not registering their projects with the Real Estate Regulatory Authority (Regulatory Authority) or for providing insufficient information regarding their project. In addition to the promoter and allottees, the Bill also brings real estate brokers who facilitate the sale and purchase of units in a project within its ambit.

Salient Features

The salient features of the Bill are the following:

  1. Real Estate Regulatory Authority
  • Under the Bill, instead of a regular forum of consumers, the purchasers of real estate units from a developer would have a specialised forum called the “Real Estate Regulatory Authority” which will be set up within one year from the date of coming into force of the Act. In the interim, the appropriate Government (i.e., the Central or State Government) shall designate any other regulatory authority or any officer preferably the Secretary of the department dealing with Housing, as the Regulatory Authority.
  1. Registration with the Regulatory Authority
  • The promoter has to register their project (residential as well as commercial) with the Regulatory Authority before booking, selling or offering apartments for sale in such projects. In case a project is to be promoted in phases, then each phase shall be considered as a standalone project, and the promoter shall obtain registration for each phase.
  • Further, in case of ongoing projects on the date of commencement of the Act which have not received a completion certificate, the promoter of such project shall make an application to the Regulatory Authority for registration of their project within a period of three months of the commencement of the Act.
  • The following types of projects shall not be required to be registered before the Regulatory Authority:
    1. Where the area of land proposed to be promoter does not exceed 500 square meters or the number of apartments to be constructed in the project does not exceed eight apartments. However, the appropriate Government (Central and State Government) may, if it considers appropriate, reduce the threshold limit below 500 square meters or eight apartments;
    2. Projects where the completion certificate has been received prior to the commencement of the Act;
    3. Projects for the purpose of renovation or repair or re-development which does not involve marketing, advertising, selling and new allotment of any apartment plot or building.
  • The application for registration must disclose the following information:
    1. Details of the promoter (such as its registered address, type of enterprise such proprietorship, societies, partnership, companies, competent authority);
    2. A brief detail of the projects launched by the promoter, in the past five years, whether already completed or being developed, as the case may be, including the current status of the projects, any delay in its completion, details of cases pending, details of type of land and payments pending;
    3. An authenticated copy of the approval and commencement certificate received from the competent authority and where the project is proposed to be developed in phases, an authenticated copy of the approval and commencement certificate of each of such phases;
    4. The sanctioned plan, layout plan and specifications of the project, plan of development works to be executed in the proposed project and the proposed facilities to be provided thereof and the locational details of the project;
    5. Proforma of the allotment letter, agreement for sale and conveyance deed proposed to be signed with the allottees;
    6. Number, type and carpet area of the apartments and the number and areas of garages for sale in the project;
    7. The names and addresses of the promoter’s real estate agents, if any, and contractors, architects, structural engineers affiliated with the project; and
    8. A declaration by the promoter supported by an affidavit stating that:     a) he has a legal title to the land, free from all encumbrances, and in case there is an encumbrance, then details of such encumbrances on the land including any right, title, interest or name of any party in or over such land along with the details;  b) the time period within which he undertakes to complete the project or the phase; and   c) 70% of the amounts realised for the real estate project from the allottees, from time to time, shall be deposited in a separate account to be maintained in a scheduled bank to cover the cost of construction and the land cost and shall be used only for that purpose.
  1. Carpet Area

Under the Bill, developers can sell units only on carpet area, which means the net usable floor area of an apartment. This excludes the area covered by the external walls, areas under services shafts, exclusive balcony or verandah area and exclusive open terrace area, but includes the area covered by the internal partition walls of the apartment.

  1. 70% of realisation from allottees in a separate bank account
  • The Act mandates that a promoter shall deposit 70% of the amount realised from the allottees, from time to time, in a separate account to be maintained in a scheduled bank. This is intended to cover the cost of construction and the land cost and the amount deposited shall be used only for the concerned project.
  • The promoter shall be entitled to withdraw the amounts from the separate account, to cover the cost of the project, in proportion to the percentage of completion of the project. However, such withdrawal can only be made after it is certified by an engineer, an architect and chartered accountant in practice that the withdrawal is in proportion to the percentage of completion of the project.
  • The promoter is also required to get his accounts audited within six months after the end of every financial year by a practicing chartered accountant. , Further, he is required to produce a statement of accounts duly certified and signed by such chartered accountant, and it shall be verified during the audit that (i) the amounts collected for a particular project have been utilised for the project; and (ii) the withdrawal has been in compliance with the proportion to the percentage of completion of the project.
  1. Acceptance or refusal of registration
  • Upon receipt of an application by the promoter, the Regulator Authority shall within a period of 30 days, grant or reject the registration.
  • Upon granting a registration, the promoter will be provided with a registration number, including a login Id and password for accessing the website of the Regulatory Authority and to create his web page and to fill in the details of the proposed project.
  • If the Regulatory Authority fails to grant or reject the application of the promoter within the period of 30 days, then the project shall be deemed to have been registered.
  • The registration, if granted, will be valid until the period of completion of the project as committed by the promoter to the Regulatory Authority. This period shall be extended by the Regulatory Authority for a period not exceeding one year in aggregate, only due to force majeure and on payment of such fee as may be specified by regulations made by the Regulatory Authority.
  1. Revocation or lapse of registration
  • The Regulatory Authority may revoke the registration granted on receipt of a complaint or suo moto or on the recommendation of the competent authority in case (i) the promoter makes a default in doing anything required under the Act or the rules or regulations made thereunder; (ii) the promoter violates any terms of the approvals granted for the project; and (iii) the promoter is involved in any kind of unfair practice of irregularities.
  • In the event the registration is revoked by the Regulatory Authority or it lapses, the Regulatory Authority shall:
    1. debar the promoter from accessing the website in relation to the project, specify his name in the list of defaulters on its website and also inform other Regulatory Authorities in other States and Union territories about such cancellation;
    2. facilitate the remaining development works to be carried out by competent authority or the association of allottees or in any other manner as may be determined by the Regulatory Authority. However, the association of allottees shall have a first right of refusal for carrying out the remaining development works; or
    3. direct the scheduled bank holding the project bank account, to freeze the account and thereafter take such further necessary actions, including consequent de-freezing of the account, for facilitating the remaining development works in the manner mentioned above.
  1. Website of the Regulatory Authority
  • The promoter shall, upon receiving his login Id and password, create his web page on the website of the Regulatory Authority and enter all details of the proposed project including:
    1. details of the registration granted by the Regulatory Authority;
    2. quarterly up-to-date list of the number and types of apartments or plots or garages, as the case may be, booked;
    3. quarterly up-to-date status of the project along with the list of approvals obtained and approvals pending subsequent to commencement certificate; and
    4. such other information and documents as may be specified by the regulations made by the Regulatory Authority.
  1. Advertisement or prospectus issued by the promoter
  • The advertisement or prospectus issued or published by the promoter should prominently mention the website address of the Regulatory Authority, where all details of the registered project have been entered and include the registration number obtained from the Regulatory Authority and other similar details.
  • Where any person makes an advance or a deposit on the basis of the information contained in the notice, advertisement or prospectus and sustains any loss or damage because of any incorrect, false statement included in these, he shall be compensated by the promoter in the manner as provided under the Act. Also, if the person affected by such incorrect, false statement contained in the notice, advertisement or prospectus, intends to withdraw from the proposed project, his entire investment (along with interest at such rate as may be prescribed and compensation in the manner provided under the Act), will be returned to him.

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  1. Limit on receipt of advance payment

A promoter shall not accept a sum more than 10% percent of the cost of the apartment, plot, or building, as the case may be, as an advance payment or an application fee, from a person without first entering into a written agreement of sale with such person and register the said agreement of sale, under any law for the time being in force.

  1. Restriction on addition and alteration in the plans
  • The promoter cannot make any addition or alteration in the approved and sanctioned plans, structural designs, specifications and amenities of the apartment, plot or building without the previous consent of the allottee.
  • The promoter also cannot make any other addition or alteration in the approved and sanctioned plans, structural designs and specifications of the building and common areas within the project without the previous written consent of at least two-thirds of the allottees, other than the promoter, who have agreed to take apartments in such a building.
  1. Structural defect

In case any structural defect or any other defect in the workmanship, quality or provision of services or any other obligations of the promoters is brought to the notice of the promoter within a period of five years by the allottee from the date of handing over possession, the promoter shall rectify such defect without any further charge, within thirty days. If the promoter fails to rectify such defect within such time, the aggrieved allottee shall be entitled to receive appropriate compensation in the manner as provided in the Act.

  1. Restriction on transfer and assignment

The promoter shall not transfer or assign his majority rights and liabilities in respect of a project to a third party without obtaining prior written consent from two-thirds of the allottees, except the promoter, and without the prior written approval of the Regulatory Authority.

Please note that the allottee, irrespective of (i) the number of apartments or plots booked by him or booked in the name of his family; or (ii) in the case of other persons such as companies/firms/any association of individuals, by whatever name called, booked in its name or booked in the name of its associated entities/related enterprises, shall be considered as one allottee only.

  1. Refund of amount in case of delay in handing over possession

In case the promoter is unable to hand over possession of the apartment, plot or building to the allottee (i) in accordance with the terms of the agreement of sale; or (ii) due to discontinuance of his business as a promoter on account of suspension; or (iii) revocation of his registration or for any other reason, then the promoter shall be liable, on demand being made by the allottee, to return the amount received by him from the allottee with interest and compensation at the rate and manner as provided under the Act. This relief will be available without prejudice to any other remedy available to the allottee.

However, where an allottee does not intend to withdraw from the project, he shall be paid interest by the promoter for every month of delay, till the handing over of the possession, at a prescribed rate.

  1. Other Relevant Provisions
  • The same rate of interest will be payable by the allottee and   the promoter in the event of their respective defaults.
  • In the absence of any local laws, an association or society or cooperative society, as the case may be, of the allottees, shall be formed within a period of three months of the majority of allottees who have booked their plot or apartment or building, as the case may be, in the project.
  • After the promoter executes an agreement for sale for any apartment, plot or building, no mortgage or charge can be created by the promoter on such apartment, plot or building. If any such mortgage or charge is created, then notwithstanding anything contained in any other law for the time being in force, it shall not affect the right and interest of the allottee who has taken or agreed to take such apartment, plot or building.
  • The promoter may cancel the allotment only in terms of the agreement for sale. However, the allottee may approach the Regulatory Authority for relief, if he is aggrieved by such cancellation and such cancellation is not in accordance with the terms of the agreement for sale, is unilateral and without any sufficient cause.
  • The promoter shall obtain insurance as may be notified by the appropriate Government, including but not limited to the title of the land and building and construction of the project. The promoter shall also be liable to pay the premium and charges in respect of the insurance.
  • The promoter shall execute a registered conveyance deed in favour of the (i) allottee in respect of the apartment, plot or building; and (ii) association of allottees of competent authority in respect of the undivided proportionate title in the common areas, and hand over possession of the same within the period as specified under the local laws. In the absence of any local law, such conveyance deed shall be carried out by the promoter within three months from date of issue of the occupancy certificate.
  • The promoter shall compensate the allottees in case of any loss caused to him due to defective title of the land in the manner as provided under the Act, and such claim for compensation shall not be barred by limitation provided under any law for the time being in force.
  • Every allottee shall take physical possession of the apartment, plot or building as the case may be, within a period of two months of the occupancy certificate issued for the said apartment, plot or buildings.
  • The Regulatory Authority shall make a recommendation to the appropriate Government on (i) creation of a single window system for ensuring time-bound project approvals and clearances for timely completion of the project; and (ii) creation of a transparent and robust grievance redressal mechanism against acts of omission and commission of competent authorities and their officials.
  1. Real Estate Appellate Tribunal
  • In addition to the establishment of the Regulatory Authority, the Bill also proposes to establish a Real Estate Appellate Tribunal (Appellate Tribunal) within one year from the date of commencement of the Act.
  • Any person aggrieved by any direction or decision made by the Regulatory Authority or by an adjudicating officer, may make an appeal before the Appellate Tribunal within a period of 60 days from the date of receipt of a copy of the order or direction.
  • The Appellate Tribunal shall deal with the appeal as expeditiously as possible and endeavour shall me made to dispose of the appeal within a period of sixty days from the date of receipt of appeal.
  • The Appellate Tribunal shall have same powers as a civil court and shall be deemed to be a civil court. An appeal against the order of the Appellate Tribunal may be filed before the jurisdictional High Court within a period of sixty days from the date of communication of the decision or order of the Appellate Tribunal.
  1. Adjudicating Officer

For adjudging the compensation to be paid by the promoter in accordance with the provisions of the Act, the Regulatory Authority shall appoint (in consultation with the appropriate Government) one or more judicial officers as deemed necessary, who is or has been a District Judge, to be an adjudicating officer for holding an inquiry in this regard. However, such an appointment will be made after giving any person concerned a reasonable opportunity of being heard.

  1. Offences and Penalty
  • Stringent penal provisions have been prescribed under the Act against the promoter in case of any contravention or non-compliance of the provisions of the Act or the orders, decisions or directions of the Regulatory Authority or the Appellate Tribunal which are the following:
    1. If promoter does not register its project with the Regulatory Authority – the penalty may be up to 10% of the estimated cost of the project as determined by the Regulatory Authority;
    2. If promoter does not comply with the aforesaid order of the Regulatory Authority –  imprisonment of up to three years and a further penalty of up to 10% of the estimated cost, or both; and
    3. In case the promoter provides any false information while making an application to the Regulatory Authority or contravenes any other provision of the Act – the penalty may be up to 5% of the estimated cost of the project or construction.

These penal provisions have also been prescribed for any contravention or violation committed by the real estate agent or the allottee.

  • If any allottee fails to comply with, or contravenes any of the orders, decisions or directions of the Regularity Authority, there may be a penalty for the period during which such default continues, which may cumulatively extend up to 5% of the cost of the plot, apartment or building, as the case may be, as determined by the Regulatory Authority. Further, if any allottee fails to comply with, or contravenes any of the orders or directions of the Appellate Tribunal, this may entail imprisonment up to one year or with fine for every day during which such default continues, which may cumulatively extend up to 10% of the cost of the plot, apartment or building, as the case may be, or with both.
  1. Overriding effect

The provisions of this Act shall have an overriding effect in case there is any inconsistency between the provisions contained in this Act and in any other law (including a state law) for the time being in force.

The Maharashtra Housing (Regulation and Development) Act 2012 has been repealed by the Central Government.

Comment

In essence, the Bill intends to increase transparency and accountability in the real estate sector, by providing mechanisms to facilitate and regulate the sale and purchase of commercial and residential units/projects and timely completion of projects by the promoters.

Now, the challenge before the Government would be to establish the Regulatory Authority (or any other authority, in the interim) within the timeline prescribed under the Act in order to start implementing the provisions of the Act.

Real estate bill 2016 – What you should know.

The real estate sector in India has always been looked upon as an unorganized sector governed by diverse state laws and particularly lacking the transparency and accountability of the promoters/developers to the buyers vis- a- vis the completion of the projects resulting in delays on committed schedules. To protect the interest of the buyers and infuse some uniformity in these diverse state enactments, the Government of India has recently passed the Real Estate Regulatory Act, 2016 (“Act“) which seeks to protect the interest of the buyers of residential and commercial real estate units by promoting transparency, accountability and efficiency in the construction and execution of real estate projects by developers/promoters. The major portions of the Act have been made effective from May 01, 2016 kick-starting the process of making rules as well as putting in place institutional infrastructure to protect the interests of the consumers.

One of the major requirements under the Act is the compulsory registration of every project by developers/promoters with Real Estate Regulatory Authority (RERA) including those that have not got completion or occupancy certificates. The Act contains several provisions to address the lacunae in the real estate sector, largely by way of establishing a disclosure framework and setting strict liabilities for promoter irregularities.

real estate bill
Real estate bill

Set out below are the major changes or introductions envisaged by the Act:

Registration with Real Estate Regulatory Authority: Registration has been made mandatory for all the real estate projects with the RERA, if the total area of land proposed to be developed exceeds 500 square meters or if more than eight apartments are proposed to be developed inclusive of all phases. Projects cannot be advertised, booked or sold in any form prior to registration and obtaining the necessary construction approvals. Real estate agents are also compulsorily required to obtain registration from RERA.  RERAs shall be established within a period of one year and till the time being the Government will be specifying the relevant authorities for the purpose of registration under the Act.

Legal & Commercial Restrictions on the Promoters/ Developers:

  • Any transfer or assignment of majority rights and liabilities by the promoter to a third party is subject to prior written consent from two-thirds of the allotees and RERA.
  • The promoter is prohibited from creating any charge or encumbrance on any apartment after executing an agreement for the same.
  • The promoter is responsible for structural defects or other deficiencies for a period of 5 years from the date of delivery of possession.
  • The promoter cannot make any addition or alteration in the approved and sanctioned plans, structural designs, specifications and amenities of the apartment, plot or building without the previous consent of the allottee and 2/3 rd of the allotees in case of common areas/amenities.
  • Prior to execution and registration of a sale agreement, a cap of 10% of the cost of the apartment, plot, or building has been imposed as an advance payment or an application fee .

Delay in Handover:  Delay in handing over the developed property and failure to achieve the committed schedules by the promoters was seen as the major problem faced by the buyers. The Act now prescribes that in case the promoter is unable to hand over possession of the apartment, plot or building to the allottee in accordance with the terms of the agreement of sale or for any other reason, then (i) the promoter will be liable, on demand, to return the amount received by him from the allottee with interest and compensation; or (ii) in case the allottee does not want to withdraw, then he will be entitled for the interest amount for the delayed period.

Change in Pricing Norms:  In order to protect the buyers from the abuse of any ambiguous sale tactics, the requirement of sale of units on the basis of carpet area criterion has been imposed. Carpet area essentially means the net usable floor area of an apartment and excludes the area covered by the external walls, areas under services shafts, exclusive balcony or veranda area and exclusive open terrace area, but includes the area covered by the internal partition walls of the apartment.

Warranties on the legal title: In an attempt to protect the buyers from any dispute or adverse claims on the authenticity of the title over the land or the project, the promoter is now required to declare and authenticate the legal title to the project land.

Legal Recourse: No civil court has a jurisdiction to entertain any suit or proceeding (including injunction proceeding) in respect of any matter which RERA or the adjudicating officer or the appellate tribunal is empowered by or under the Act. The Act provides for time bound resolution of complaints and disputes by the RERAs and the real estate appellate tribunals.

Stringent Penalties: Till now only buyers were the sufferers in case of any delay in the completion of project. But now as a deterrent measure to ensure the compliance of the Act and timely completion of all the obligations of the promoters, stringent penal provisions including penalty may be up to 10% of the estimated cost of the project in case of defaults by the promoters; up to 5% of the estimated cost of the project in case of any default in disclosures and/ imprisonment of up to three years with or without fine have been prescribed under the Act. Additionally, the penal provisions have also been prescribed for any contravention or violation committed by the real estate agent or the buyer in certain cases.

Shortcomings: Few missing aspects still need to be looked into and supplemented to the Act like (i) the adequate measures to curb the black money usage in real estate transactions and (ii) the accountability of Governmental officers in relation to delay in providing approvals and permissions.

It is required that once  implemented, the upshot of the requirement of maintaining a separate account for depositing 70% of the receivables should be closely monitored so that the same does not result in promoters opting for bank or other mode of finances and thereby ultimately raising the price!

Pointers for Purchasing Land

Investment in land is generally believed to fetch higher returns as compared to other forms of investment, however, one has to be very careful in land dealings.

Here’s a legal check list to follow, prior to the purchase of land, in India:

∙ Check preceding parental documents for last 30 years to ascertain the correct flow of title.

∙ Verify original title deed documents in the name of the present owner.

∙ Check latest patta/pahani/property card (whichever land revenue record applicable in the respective state) issued in the name of the present owner along with the land area extent so as to cross verify the mutation made in the revenue records in the name of the present owner of the land.

∙ Study the Field Map Sketch (FMB Sketch) of the land intended to be purchased.

buying a land_loanyantra.com

∙ You must check whether the land conversion order had been obtained (if applicable in that particular state and whether the land had been converted to non-agricultural/residential land).

∙ Take a look at the land use maps to know the land use pattern fixed by the concerned authorities (for example, if the land intended to be purchased has been mapped as residential use site, then it can’t be used for any commercial purposes)

∙ Checkout the layout approval. Get a copy of the layout proceedings issued by the appropriate authority along with layout plan copy with a seal of the appropriate local body, and permit issued by the appropriate authority (for layout or scheme). If possible check the details of layout approval online (if available in that respective state). Also, ensure whether the concerned authority granting the permission for layout of land actually has the real authority. In Tamil Nadu, the president of the village panchayat does not have the authority to sanction layout of land but many lands are styled and sold as panchayat approved lands in many parts of the State.

∙ Check whether all the conditions (if any) imposed at the time of granting layout permit by the concerned authorities have been complied with.

∙ Ensure that the land is within the prescribed land ceiling limits applicable in that respective state.

∙ Ascertain that no high voltage transmission lines passes above the land intended to be purchased.

∙ Check whether there is no restriction in purchase of land in that respective state (In certain states in India, land belonging to people in the SC/ST category can’t be purchased by those in the general category without obtaining the previous permission of the district collector. Likewise, if the land had been assigned by the Government, then it must be ensured that all the conditions imposed for assignment of land should be complied with.

∙ Check the copy of the Gift Deed executed in favour of the local body (for gift of land for open space reservation and roads) in case if the layout or scheme land exceeds certain specific area prescribed by the respective state

Crosscheck the genuineness of present owner land revenue record online (if available in that respective State)

∙ Check whether any land tax has been assessed in the name of the present owner and paid to the concerned authorities (if applicable)

∙ In case if the present owner had executed a power of attorney in favor of the power agent, check whether the said power of attorney document is still in force and also ensure that the principal (present owner) is alive before registration of the sale deed for the land.

∙ Obtain a certified copy of the latest title deed by which the owner had acquired the title to the property from the records of the concerned sub- registrar office having jurisdiction over the property to be purchased (genuineness of any document can be ascertained only when certified copy of the same is obtained from the records of the sub registrar and compared with the original)

Physically measure the land and ensure that its dimensions tallies with the dimensions mentioned in the sanctioned layout/scheme/FMB Sketch.

∙ Check the value of the land intended to be purchased from the respective website of the State Government (this facility is not available in Assam) so as to know the value fixed by the respective state government for payment of stamp duty.

∙ Obtain a non-encumbrance certificate (computerised or manual – whichever applicable) for last 30 years so as to ascertain the correct title flow and also to ascertain that there is no subsisting mortgages or court attachments over the property intended to be purchased. Also cross verify the encumbrance details online (this facility is available only in Andhra Pradesh, Telangana, Maharashtra, Tamil Nadu, Jharkhand)

Ensure that you have all these documents. After all, the risk of purchasing a land or plot is for more returns.

Note : Article extracted from The Hindu Newspaper, Property Plus Edition.

Real Estate on Upbeat

Hold on to your dreams dearies. Get ready to invest in your image home. There is an uptrend in the real estate market. Before the trend touches the peak, decide on your investment.

Real Estate word on newspaper

What made real estate market hit the upbeat

The factors responsible for this growth are pretty fair.

  • RBI cut the key interest rates by 1.5% since January 2015. The repo rate has come down to 6.5%. This made a clear positive impact on the economy.
  • The Financial Year (FY) 2015-16 saw the economy become the fastest-growing in the world with a GDP growth of 7.6%.
  • During November 2015, the government has done away with restrictions of FDI in real estate on size and minimum capitalization. This helped developers revive projects that could not receive capital due to conditions applicable for attracting FDI. This resulted in lot of capital flowing into the sector, as there are many investors waiting to invest in India.
Where did Real Estate Market, in India, stand last year?

The residential sector saw the worst phase in 2015-16. As per statistics, new residential project launches reduced by 6 per cent in Q1CY16 over Q4CY15. For FY 2015-16, the number of new launches stood at 1, 81,294 units compared to 2, 16,082 units in FY 2014-15, equaling a drop of 16 per cent.

The sector is poised for faster growth by the fourth quarter of 2016.

real estate growth_loanyantra

With the reduction in the inflation rate and the revival in the economy, the real estate prices have changed its gear. Also, the government’s policies have been a great impact, as the rate cut on the interest rates will now influence the customers without deviation.

Hold on tight to your dream. Carry on with your research. Decide on your home investment for, the real estate market is on a good monsoon.