Monday, 25 September 2017

Lending rate cuts key to economic recovery: Report

The report said that structural reforms take long time of 5-10 years to reflect in growth rate or reviving the stranded projects

NEW DELHI: Lending rate cutsare the only viable way to economic recovery as they would perk up demand and push investments, a report has said.

The report said that structural reforms take long time of 5-10 years to reflect in growth rate or reviving the stranded projects.

In a research note, BofAMLsaid, "Lending rate cuts hold the key to recovery. They would push up demand, put idle factories to work, and spark off investment when capacity is exhausted, in our view."

The report further said that with 2017-18 likely to see sufficient USD 35 billion of reserve money, lending rates should come off 25 bps (0.25 percentage point) before the October-March busy season sets in (and 50 bps by September 2018).

Lending rate cuts are the only viable route to recovery rather than structural reforms which can take a long time of around 5-10 years to reflect in growth numbers, it adds.

"We never shared the market enthusiasm for reforms (as it can take 5-10 years to show up in growth) or clearing 'stalled' projects (given idle capacity)," the report said.

According to BofAML, growth is stuck at an "anaemic 5 per cent (in old GDP series), well below our estimated 7 per cent potential", as high real lending rates are constricting domestic demand in a long global recession.

Regarding the Reserve Bank's monetary policy stance, the report said that the central bank is expected to key policy rates by 25 bps December 6 policy review meet as inflationis expected to normalise and stay well within the RBI's 2-6 per cent range.

The next policy review meet is scheduled on October 3-4.

RBI reduced the repo rate by 0.25 per cent to 6 per cent in August, citing reduction in inflation risks. The rate cut was the first in 10 months and brought policy rates to a near 7-year low.

Tuesday, 19 September 2017

CREDAI Maharashtra organizes study tour for realtors

The study tour helped the members in learning new way of planning which begins from the root level, duties of supervisors at the construction site

PUNE: In order to study new technology, mass conceptual housing and affordable housing projects, 161 delegates from 19 Cities of Maharashtra visited NCR Delhi recently, informed Shantilal Kataria, President- CREDAIMaharashtra.

The visit was planned at the construction sites of Ashiyana Group known for their project designed especially for senior citizens called Comfort Homes which not only takes care of physical comforts of the senior citizens but their emotional needs as well, Bharat City known for its conceptual housing, Bharat PreFab factorywhich is ideal for mass conceptual housing and thus making it most cost effective, and the high end projects of ATS and Affordable housing projects of Signature Global of Agarwal brothers.

“The study tours helps our members to know more about happenings in real estate sector, new inventions & technology, trending projects, creative executions etc Such tours further help them to refurbish their knowledge and apply the same in their own business”, said Kataria.

The study tour helped the members in learning new way of planning which begins from the root level, duties of supervisors at the construction site, the innovative way of store management, arrangement of training at site etc. The members, esp from Tier II and Tier III cities, also learned how the use of Mivan technology in mass affordable housing segment that can control the cost of the project.

It was also observed that the developers at Delhi do not only sale the apartments but also maintain them for year through the contract with Residential Welfare Societies. It is seen that these welfare societies maintain the buildings more professionally due to which the buildings which are 25 to 30 years old are still fresh.

Vishal Gupta-Owner of Asiyana Group,GetamberAnand- Owner of ATS, S.P.SING-owner of Bharat Prefeb factory, Pradeep Agarwal from Signature Global offered full support to the members in explaining and introducing to new technologies.

Thursday, 14 September 2017

5 key takeaways from 9th Annual National Association of Realtors India Convention

The focus at the convention was on the three tsunamis that have hit the real estate sector in the past one year namely demonetization, RERA and GST. Here are 5 takeaways from the convention.

Ashwini Priolker
It was a buzzing morning at the 9th Annual National Association of Realtors (NAR) - India convention in Mumbai. More than 1,200 realtors and developers across India were present, belying the general belief that the residential real estate market is down in doldrums! The focus at the convention was on the three tsunamis that have hit the real estate sector in the past one year namely demonetization, RERA and GST. Here are 5 takeaways from the convention.
1) RERA Harsh on Brokers: No surprise that the Real Estate Regulatory Authority (RERA) was the main topic of discussion at the conclave. The realty broker community did feel that the RERA rules were unfair to them. "The penalty for the brokers and developers is the same. This is too harsh especially when the broker manages to get only 2 percent commission. Even the registration fee is very high", said Ravi Verma, Chairman NAR India. This was countered by industry veteran Anuj Puri, Chairman, Anarock Property Consultants, who has recently moved into residential business in India. He felt that RERA has been able to weed out unscrupulous fly-by-night brokers, leaving more room for serious professionals. “For the very first time brokers have been recognized as an industry,” said, Puri.
2) Dilution of RERA Rules by States: Industry leaders made no bones that RERA is simply not the last mile solution to all the problems plaguing the sector. In a strongly worded statement Nirnajan Hirnandani, MD, Hiranandani Group, said “RERA is a good law for all the future projects. But the problem related to ongoing projects is deep rooted, like cancer. These cannot be solved only with RERA. We need to find other solutions like alternative funding mechanisms and these projects to be taken over to be completed, with government intervention."
3) Impact of GST on Homebuyers: The implementation of Goods and Services Tax has left Real Estate Industry with more questions than answers. The tax neutrality of GST on prices of homes was challenged. “GST in its current form cannot be tax neutral especially in bigger cities like Mumbai where the prices are more than Rs 10,000 per sq ft,” says Boman Irani, Chairman & CEO, Rustomjee Group. So, buyers will have to be prepared to shell out more in bigger cities was the verdict.
4) Return of the Homebuyers: Despite several setbacks, first-time home buyers seem to be coming back especially for well located, well priced projects. According to the Anarock Chairman Anuj Puri, the sales in the past six consecutive quarters have been more than the launches across India. This clearly indicates that the launches have come down drastically, and unsold inventory is steadily getting absorbed. On home prices correcting further, the consensus was that most markets across India have already witnessed a 5-25 percent correction. The builders said the government was itself buying land at way above the market price for infrastructure in different locations, leaving little room for land prices to moderate. In fact, the circle rates do not even allow for property prices to fall below a certain point, added the panelists.
5) Consolidation on Cards: There was complete unanimity on the topic of consolidation. "Landowners who earlier had ambitions of becoming developers cannot do so, after RERA and now only the serious players will survive," added Kushroo Jijina, CEO, Piramal Finance. PE investments in the realty sector have touched Rs 15,000 crore amount in first six months of 2017, and a large part of these inflows have been to bail out cash strapped builders.

Monday, 4 September 2017

9th NAR-INDIA Annual Convention

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On this special occasion, we have opened up few Delegate Registration at a very Special Price for you
₹ 11,000 for NAR-INDIA Members
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This Special Offer is only for the next TWO DAYS

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Check out all about the Convention at

Thursday, 31 August 2017

MahaRERA gets 55 complaints against builders by homebuyers

These homebuyers of current projects that are registered with MahaRERA have complained about issues including delay in delivery and builders not signing agreement with them

NEW DELHI: Homebuyers filing complaints against realty developers has picked up, and the total number of such complaints filed with the Maharashtra Real Estate Regulatory Authority (MahaRERA) has now risen to 55. The authority has started hearing these complaints and rulings in two cases are expected within the next few days, said a top MahaRERA official.

“We have received total 55 complaints from homebuyers of projects registered with MahaRERA so far. Out of these, six complainants have taken it to the next stage by sharing hardcopies of documents required for the same,“ MahaRERA chairperson Gautam Chatterjee told ET.“We have already concluded hearings of two complaints and the final hearing will be done by the end of this month.“

These homebuyers of current projects that are registered with MahaRERA have complained about issues including delay in delivery and builders not signing agreement with them.

The number of complaints aga inst projects registered with MahaRERA had touched 30 until August 18.

The regulator has already received around 13,000 applications for registration of ongoing projects. Of these, MahaRERA has already processed and registered over 8,000 projects. Information on all these registered projects will be available on the MahaRERA portal from September 1.

Apart from this, the regulator will also be looking into complaints of those developers whose projects need to be registered, but have not done so until September 1. The regulator has also suggested that homebuyers can send emails about ongoing projects -which need to be registered but have not done yet -directly to the regulator.

Chatterjee has already warned that MahaRERA is planning to take strict action against those realty developers whose ongoing projects remain unregistered even after September 1.

Tuesday, 22 August 2017

MahaRERA warns strict action against ongoing projects not registered until September 1

From September 1, information on all these registered projects will be available on the MahaRERA portal

MUMBAI: The Maharashtra Real Estate RegulatoryAuthority (MahaRERA) is planning to take strict action against realty developers whose ongoing projects would remain unregistered even after September 1, said a top official of the regulator.

“We have received 12,700 applications for registration of ongoing projects. Out of these, we have already processed and registered 8,000 projects. Remaining applications will be processed over the next one week,” said MahaRERA chairperson Gautam Chatterjee. “We will deal with those (project developers) required to be registered but not registered until September 1 in a strict manner.”

From September 1, information on all these registered projects will be available on the MahaRERA portal. Following this, homebuyers can send emails about ongoing projects, which are required to be registered but have not registered so far, directly to the regulator, he said on the sidelines of a FICCI- Grant Thornton Advisory conference here.

So far, the regulator has received total 30 complaints from homebuyers of ongoing projects and most of them are related to the issue of delay in delivery.

MahaRERA has already taken a decision to slap a minimum penalty of Rs 1 lakh or an amount equivalent of its registration fees, whichever is higher, for ongoing projects registration applications to be received between August 3 and August 16.

The project registration fee ranges from minimum of Rs 50,000 to Rs 10 lakh depending on the size of the specific project.

This quantum of penalty was applicable for all applications received in the office of MahaRERA until 5pm of 16 August. Applications made for registration of ongoing projects after August 16 will be heard on case-to-case basis and the penalty will be decided by the authority. The builder then will have to explain as to why the application cannot be rejected.

The government enacted the Real Estate (Regulation & Development) Act 2016 and all the sections of the Act have come into force with effect from May 1 this year. Maharashtra was one of the first states to notify its rules under the Act and establish authority MahaRERA.

The builders had to register their ongoing projects with their respective state RERAs within three months and deadline for the same was set at July 31. Without registering their ongoing projects, the developer is not allowed to undertake marketing or selling of their projects.

As the rules, if the promoter allegedly contravenes the provision of Section 3 – it deals with registration, selling and marketing of new and ongoing projects - he will be liable to pay penalty up to 10% of the project’s estimated cost as determined by the authority.

Until the midnight of July 31, the regulator had received total 10,852 applications for registration of ongoing projects across Maharashtra. The regulator had earlier decided to levy a fine of Rs 50,000 on applications received after the deadline of July 31 until August 2.

The regulator had received 500 applications for registration of ongoing projects until August 2.

Saturday, 19 August 2017

Mumbai civic body's nod to be made mandatory before any repairs to building columns

Investigations revealed that politician Sunil Shitap, main accused in the case, had tampered with the building's columns, even removing some of them, which eventually caused the structure to crash

MUMBAI: In a first, the Brihanmumbai Municipal Corporation (BMC) is moving to amend a crucial section of the Mumbai Municipal Corporation (MMC) Act 1888 following the ill-fated Ghatkopar building crash which killed 17 persons last month.

Investigations revealed that politician Sunil Shitap, main accused in the case, had tampered with the building's columns, even removing some of them, which eventually caused the structure to crash.

Hence, the BMC has decided to tread carefully when repairs in a building can affect its columns in any way. The civic body's law officer has been asked to remove 'guniting,' a form of repairs in which the column is exposed, from the ambit of 'tenantable repairs'.

Currently, guniting is included under section 342 of the MMC Act under which a person who intends to make any alterations or repairs to a building involving removal, alteration or re-erection of any part of the building, can do so without having to procure any permission from the civic body.

Tenantable repairs in the section clearly include guniting and plastering, painting, changing floor tiles, flattening of roof or repairing roof with different material. "However in case of guniting we have realized that plastering is done under tremendous pressure if the condition of the column has deteriorated. A weak column may not be able to withstand such force. For any work as such, the BMC's nod would henceforth be made mandatory," said a senior civic official. The plan is to incorporate guniting under section 337 of the MMC Act wherein a notice would be required to be given to the commissioner about the work to be undertaken.

The official said investigations into the Ghatkopar collapse are highlighting how Shitap tampered with the building columns causing it to crash and therefore the BMC wants to put in place measures so that such incidents can be completely avoided. "The investigation report is likely to table a few recommendations as well. However as an immediate measure, the law officer has been instructed to work upon amending the Act in a way that permission of the civic body is taken in case any person intends to tamper with the building structure to a large extent," said the official.

The report into the building crash is expected to be out only on August 21, said a member of the enquiry committee. "The report is in its final stages and it should be out by next week," said an official.

Tuesday, 8 August 2017

MahaRERA to fine 480 housing projects Rs 50,000 each for deadline breach

Consumer forums and registered builders across the state had been demanding that the MahaRERA issue a circular or direction to stop registration of projects without any penalty after the deadline

The Maharashtra Real EstateRegulatory Authority (MahaRERA) on Wednesday decided to slap a penalty of Rs 50,000 each on the 480 ongoing housing projects that registered with it after the July 31 deadline.

"We had allowed the developers to register their projects, but a decision on the penalty was pending. At a meeting on Wednesday, we decided to impose penalty on the projects registered after the deadline," said MahaRERA secretary Vasant Prabhu.

A decision on the penalty to be slapped on projects registered after August 3 will be taken later, he added.

Consumer forums and registered builders across the state had been demanding that the MahaRERA issue a circular or direction to stop registration of projects without any penalty after the deadline.

“We will convene another meeting to finalize the penalty to be slapped on projects registered on and after August 3,” Prabhu told TOI, adding that there would not be any deadline extension “as it is against the law”.

Section 3 of the Real Estate Regulatory Act (RERA) states that no extension for project registration will be allowed and developers registering their projects will be penalized under Section 59 (non-registration) of the law. The quantum of penalty can be 10% of the project cost and even imprisonment, if the builder concerned does not comply with the order.

Nearly 11,000 projects have been registered with MahaRERA as the deadline came to an end on July 31. Officials said developers still not under the RERA ambit can upload their documents on the website. “But each case will be examined for penalty,” an official said.

The MahaRERA website saw registration of 10,852 ongoing housing projects as the official deadline came to an end. Pune district topped the number of registrations with 2,908 (26.8%) applications.

In the meantime, a circular issued by the Union government stated that Maha-RERA has been entrusted with the additional responsibility of Dadar and Nagar Haveli and Diu and Daman territories in the absence of RERA authority in these union territories.

Saturday, 5 August 2017

Goa extends RERA deadline till October on delay in notifying rules

The central Real Estate (Regulation and Development) Act (RERA) came into effect on May 1, 2017, exactly a year after it was passed by Parliament

PANAJI: A delay in notifying the Real Estate (Regulation and Development) Act (RERA) rules for Goa has once again delivered a setback to consumers who were waiting for RERA to be enforced before buying homes. The BJPgovernment on Sunday extended the deadline to October for ongoing projects to register with RERA, even though the central government and other states have clearly refused to grant an extension.

The central Real Estate (Regulation and Development) Act (RERA) came into effect on May 1, 2017, exactly a year after it was passed by Parliament. As per the Act, developers, projects and agents had till July 31 to mandatorily register their projects with the Real Estate Regulatory Authority.

Any unregistered project would be deemed to be unauthorized by the regulator, but since the state government has failed to notify the rules and the authority as on date, the ministry of urban development has given Goan builders additional time to register with RERA.

TOI had reported on July 15, that the Goa government was likely to accept the demands from builders and extend the deadline by three months.

“Builders and promoters can submit their applications of new and ongoing projects in the prescribed form which can be downloaded from the website. For ongoing projects, applications for registration will be accepted upto October 31, 2017, without levy of penalty,” designated Real Estate Regulatory Authority Sudhir Mahajan said.

The central law, which was enacted to regulate the real estate sector and secure the interest of consumers, states that no builder can advertise, market or sell a plot, apartment or building without registering the real estate project with the Real Estate Regulatory Authority.

A builder has to pay Rs 10 per sqm of area to the regulator as registration fees for the project.

Goa is one of the few states in the country which has failed to notify the RERA rules. Officials said, the RERA rules for Goa have been framed along the lines of the regulations notified by Maharashtra, which has partially diluted the penalties for non-compliance by builders.

“Notification of the rules will take time. We will try to do it at the earliest,” Mahajan said to TOI when asked if the rules under RERA will be notified in the coming days.

The new regulatory authority was meant to end the uncertainty for home buyers, bring transparency and protect buyers from unscrupulous builders.

Tuesday, 1 August 2017

Builders take Centre to court, say RERA illegal

Earlier builders’ demand to exclude incomplete projects was turned down by the Centre saying the law was enacted to bring relief to crores of home buyers who had been waiting for their flats for years

NEW DELHI: A bunch of builders have approached two high courts challenging some of the key provisions in the Real Estate Regulation Act (RERA) including binging all “ongoing” projects under regulation and penalties for failure to register such projects. They have pleaded that these provisions have retrospective effect since the projects were started when there was no such law and hence it’s illegal.

Earlier builders’ demand to exclude incomplete projects was turned down by the Centre saying the law was enacted to bring relief to crores of home buyers who had been waiting for their flats for years, even after making full payment. According to the law, the mandatory registration of incomplete and new projects with the regulator will have to be done by August 1, else the builders face the risk of paying penalties.

The builders have been opposing this provision amid reports that most of them are cash strapped. Moreover, the law brings transparency and accountability and property developers have to give fresh timelines for completion of projects. The timelines will have to be adhered to.

While Builders and Developers Welfare Association has filed a PIL in Madhya Pradesh High Court, Swapnil Developers has challenged provisions of RERA in the Nagpur bench of Bombay High Court. These cases are coming up for hearing in the next one week.

Sources in the housing and urban affairs ministry said RERA is not a law with retrospective effect since it covers all projects, which have not got completion certificate by May 1, 2017. Secondly, the penal provisions come to effect only after the law came to existence.

Till now 22 states and seven Union Territories have got proper or interim regulators and real estate projects can be registered with them.

Builders have challenged the Centre’s right to enact the law relating to land, which is a state subject, and how submitting details of projects to the regulator would amount to infringement of right to privacy.

“The law came into force in March 2016 and there was enough time to complete the ongoing projects. The law says the builders will have to give fresh timeline while registering all projects including the ongoing ones,” a government official said.

He added that the law has been made under the relevant constitutional provisions of the Concurrent List and the ministry had even obtained opinion of the law ministry in June 2012. “The RERA does not provide for matters relating to ‘land’ or ‘local authority’. It aims to regulate the contractual obligations between the builders and buyers. It focuses on resolving disputes in the sector,” the official added.

Saturday, 29 July 2017

Madhya Pradesh RERA issues notice to Gammon India

Gammon authorities, however, have rejected her charges

BHOPAL: Following complaints raised by a buyer, the Madhya Pradesh Real Estate Regulatory Authority (RERA) issued notice to Gammon India's Shrishti CBD residential project in Bhopal. The complaint was made last week; and after verification of the charges, a notice was issued to Gammon.

State RERA member Dinesh Kumar Naik confirmed to TOI that a notice has been served to Gammon. Among the charges levelled against project authorities, the complainant, Chandana C Arora alleged issues of payment and possession. She said: "Gammon Shrishti is supposedly the most exorbitant housing project in the state and we have willingly paid huge amount of money for the location and its credibility of government land. Gammon has en-cashed these two things for maximum monetary benefit. If builder is not delivering or is looting the buyers' right under the nose of the state government and MP RERA, it is more of a problem for the above two, rather than for us as buyers," Arora said.

Arora said that till October 2015, she had paid 90% of the total sale price with the assurance that possession would be given by mid or late 2015. However, till date possession has not been given. She added that others who had invested in the project would soon approach RERA as well.

Gammon authorities, however, have rejected her charges.

The project in question has not been registered with RERA yet. It is mandatory for a project to register with RERA in 3 months from May 1 - the date RERA came into existence.

Monday, 24 July 2017

Builders' FY18 performance may be hit on delayed implementation of RERA ICRA

The agency expects RERA, which became effective from May 1 this year, to increase customer confidence and improve demand prospects over the long term

NEW DELHI: Delayed implementation of the the Real Estate (Regulation and Development) Act, 2016 (RERA) and transition to the new regulatory framework is expected to impact the operational performance of real estate developers during financial year 2017-18, according to rating agency ICRA.

Howeever, the agency expects RERA, which became effective from May 1 this year, to increase customer confidence and improve demand prospects over the long term.

“The current transition period of RERA implementation is expected to be challenging for developers as they need to realign their business operations to comply with the new regulations," said K Ravichandran, Senior Vice President and Group Head, ICRA.

Ravichandran also expects the constraints imposed by the Act to adversely impact the business model of unorganised developers and to bring some level of consolidation in the 

"This will benefit larger developers who have the resources and financial flexibility to withstand the near term challenges and scale up execution levels as required," he added.

The provisions of the Act will also significantly impact developers’ financial profile as it will raise their working capital requirements and increase reliance on equity or debt financing, according to the rating agency.

"With the commencement certificate being a pre-requisite for registration and sale of projects, developers will no longer be able to part-finance some of the pre-development costs with customer advances, said Shubham Jain, Vice President and Sector Head, ICRA.

Moreover, Jain feels the restrictions on withdrawal of customer advances will reduce cash flow fungibility across projects and increase working capital requirements.

Saturday, 22 July 2017

Maha RERA allows builders to correct project docs from Sept

MahaRera announced the changes on Monday through a circular issued to encourage developers to speed up the registration of their projects with the authority

PUNE: Developers can from September 1 make revisions or corrections in their uploaded documents following MahaRera's permission and a fee of Rs 5,000 for every change.

MahaRera announced the changes on Monday through a circular issued to encourage developers to speed up the registration of their projects with the authority.

The new circular comes a relief for the developers, who had repeatedly said that they should be allowed to correct the documents uploaded and cleared by MahaRERA. The earlier rules did not allow them to make any such revisions and corrections.

With MahaRERA estimating that there are over 10,000 ongoing projects in the state, there was less than 5% registration by developers till July 15.

"Till Wednesday, we saw 898 developers registering with us. We hope that the registration with MahaRERA for the ongoing projects will speed up after the new circular," MahaRERA secretary Vasant Prabhu said.

He added that with every revision or correction, they would have to pay a fine as stated in the circular put up on the website. Besides the correction clause, the circular also mentions project detail updates within three months from registration.

Credai Maharashtra president Shantilal Kataria said the new circular would encourage the developers to upload their documents sooner. "In the last two days, more than 400 projects have been registered. We are urging all developers to register with MahaRERA as soon as possible," he said.

A developer, who did not want to be named, said the scope to make revisions or corrections was a long-pending demand of the developers. 'They should have done it a month ago. It would have made the builders feel confident to register their projects earlier," he said.

Tuesday, 18 July 2017

DB Realty partners Radius group for housing project in Mumbai

Indo Global Soft Solutions and Technologies is part of realty firm Radius group

NEW DELHI: DB Realty Ltd on Monday said its subsidiary firm has entered into an agreement with a Radius group's firm to develop a housing project in Mumbai.
DB Realty's arm Neelkamal Realtors Tower has entered into a development management agreement with Indo Global Soft Solutions and Technologies Pvt Ltd for the development of its Orchid Height project on over 19,000 sq meter land parcel, the Mumbai-based developer said in a regulatory filing.
Indo Global Soft Solutions and Technologies is part of realty firm Radius group.
As per the agreement, Indo will arrange the entire funding required for the project and will be jointly responsible to construct, develop and market the housing project with construction area of 3.2 million sq ft.
Indo Global has provided the initial funding requirement for fast completion of the project.

Saturday, 15 July 2017

Godrej adds 2 housing projects in Bengaluru, Gurgaon

Godrej Properties today announced expanding in Bengaluru and Gurgaon markets by adding two housing projects comprising 1.6 million sq ft of saleable area.

The real estate arm of the Godrej group said it has added a new group housing project in Gurgaon. 

"This project will offer approximately 98,000 square meters (approximately 1.05 million sq ft) of saleable area and will be developed as a modern group housing development," the Mumbai-based developer said in a statement.

This is company's 11th project within the National Capital Region (NCR) market where it entered 5 years ago.

"This fits with our strategy of building our presence in the country's leading real estate markets. We look forward to delivering an outstanding project," said Pirojsha Godrej, Executive Chairman, Godrej Properties.

In a separate statement, the company said it has signed a development management agreement for a premium group housing project on Magadi road in West Bangalore.

"This project will offer approximately 58,000 square meters (approximately 6,00,000 sq ft) of saleable area," it said, adding that this is company's first project in the micro market of West Bangalore and 11th project in Bangalore.

"Bangalore is a key market for us and this project addition fits well with our strategy of expanding our presence across the country's largest real estate markets," Goderj said.

The company did not disclose the name of companies or land owners with whom it has tied up to develop these two projects.

It is currently developing residential, commercial and township projects spread across 136.34 million sq ft in 12 cities.
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

Wednesday, 12 July 2017

Despite anti-profiteering rules, tax on new flats in Nagpur higher under GST

Though not covered by GST, stamp duty is a major tax component in buying a home

NAGPUR: The anti-profiteering provisions of Goods and Services Tax (GST) call for builders to pass on the benefit on account of input tax credit (ITC) to buyers. However, the final benefit to a buyer would be nil, if the stamp duty is also taken into account, say calculations cited by builders and other experts.

Though not covered by GST, stamp duty is a major tax component in buying a home. Loaded with cess for NMC, Metro Rail, NIT and registration charges, it comes to 8.5% of the cost of a house in the city.

In pre-GST era, there was also 1% VAT and 4.5% service tax to account for, taking the entire tax component to 14%, including stamp duty. Now, the GST applicable is 18%, but after passing on the input credit, tax-cum-stamp duty would come to 14.5% or even higher, say realtors here.

This is how it works out, according to calculations by CREDAI, considering the scenario in Nagpur. GST is applicable at a rate of 18%. A deduction of 30% on the sale price is available as abatement towards land cost. This brings the effective base rate of GST to 12%. Now, if input credit is deducted, net GST rate chargeable from the buyer comes anywhere between 7% to 10%. If the stamp duty and registration component is added to GST, the tax would be 15.5% to 18.5%, says Gaurav Agarwala, secretary of CREDAI Nagpur.

In Nagpur, construction cost does not go beyond Rs1,500 a square feet. So, for a flat worth Rs3,000 a square feet, net GST after deducting the credit comes to 7% to 8%. It comes to 8% to 9% for floor price of Rs6,000 to 7,000 per square feet, and nearly 10% for 
flats in the range of 9,000 square feet and above. On this, 8.5% stamp duty would be added, said Agarwala. There is a demand to remove NMC cess, which would give relief of 1%, he said.

The input credit benefit would be less in premium localities since the component of land cost is higher here. The abatement available is fixed at 30% of the sale price. However, in high-end localities, a big chunk of the sale price constitutes the land price with input on materials or services remaining the same everywhere, said Amit Agrawal, a chartered accountant practising on indirect tax front.

The government needs to increase the abatement on land price to at least 50% of the sale price, so that the buyer gets benefits. At present, the builders will also get a transitional input credit for stock purchased before GST. Input credit is a rebate available on indirect tax paid on raw materials and services used during construction. If not passed on, it can lead to action under anti-profiteering laws, said Agrawal.

Saturday, 8 July 2017


Builders now have to pay a premium linked to ready reckoner rate in return for extra FSI.

Chief Minister Devendra Fadnavis has cleared the way for the redevelopment of 56 MHADA colonies in the city by dropping the condition that builders who undertake such redevelopment projects would have to give MHADA housing stock.

Instead, builders will now have to pay a premium which will be linked to the ready reckoner rate in return for extra floor space index (FSI), a senior official in the CM’s office told Mirror.

In 2008, MHADA came out with a policy for the redevelopment of housing colonies, as part of which a builder would get an extra, or incentive, FSI, which was capped at 2.5. To get this, builders had to either pay MHADA a premium equivalent to 40 per cent of the ready reckoner price, or share 67 per cent of the apartments they built using the incentive FSI.

The FSI indicates how much one can build on particular plot of land. If FSI is 1 and the size of the plot is 1,000 sq m, the permissible construction is 1,000 sq m. Currently the island city has a basic FSI of 1.33, while the suburbs have an FSI of 1.

In 2010, the government made it mandatory for builders to share housing stock with MHADA, even though in 2013, it altered the formula to make it easier for builders. Still, most builders found the option unviable and, as a result, a number of redevelopment projects failed to take off.

There are 55 MHADA colonies spread across cities, mostly concentrated in Kalachowkie, Sion-Koliwada, Vikhroli, Ghatkopar, Goregaon and Dindoshi. These colonies accommodate a little over two lakh dwellings.

“Now the housing societies that occupy a plot of less than 2,000 sq m will have to pay only a premium, and the builder will get 2.5 FSI. The condition of giving housing stock has been dropped altogether,” a senior official in the chief minister’s office said.

In the case of housing societies that occupy plots between 2,000 and 4,000 sq m, an FSI of 3 has been given -- whether builders have to give premium or housing stock in return will be decided based on how much land remains after rehabilitating a housing society’s existing residents.

However, in the case of housing societies located on plots of more than 4,000 sq m, builders will be given an FSI of 4, and it will be mandatory for them to give MHADA housing stock.

Rajan Bandelkar, vice president of the National Real Estate Development Council, said: “The state government’s move is welcome, but it should have removed the condition of housing stock for all kinds of plots, not just plots under 2,000 sq m. Due to the housing stock condition, the redevelopment of MHADA colonies has been stuck for the last seven years.”

Now, to take advantage of the 2,000-sq-m rule, instead of redeveloping an entire layout or colony, individual societies will be redeveloped, and limitation will be imposed on offering amenities like parks, schools and swimming pools, Bandelkar said.

“The decision has been taken to benefit builders, clearly. However, if the premium charged from builders is only used to create a stock of affordable houses, it is welcome; but past experience shows that such premiums will be used in some extravagant scheme of the government,” Chandrashekhar Prabhu, town planner and housing rights activist, said.

Tuesday, 4 July 2017

Revenue department told to follow RR rate directives

According to the cabinet decision, the ready reckoner rates are decided as per the 1995 formulas

To control the soaring ready reckoner (RR) rate, the Maharashtra government has made it mandatory for the town planning branch of the revenue department to refer to the given directives while calculating the government rates each year.
According to the cabinet decision, the ready reckoner rates are decided as per the 1995 formulas. “That includes the land value, construction qualities, advantages and disadvantages, education facilities, transport and appreciations in property. But most of the times, these directives are not considered while fixing and increasing the government rates. Now, it will be mandatory to refer to these directives, and then hike the rates. This will give a true picture of that particular locality,” the cabinet notice stated.
The government had made an amendment to the Bombay Stamp (Determination of True Market Value of Property) Rules, 1995 and the revised rules were issued through a gazette notification.
“Due to a haphazard rise in property rates at most locations, the rates provided by private builders are usually higher. The stamp duty and registration is based on the government rates. In that case, the builder has no options but to increase the property rates. It makes it difficult for home buyers to buy a property. We want to control the prices therefore the given directives have to be followed while deciding the RR rates,” said an official from the state revenue department.

Earlier, the Maharashtra government used to announce the rates on January 1 of every year, but since last year, the RR rates are announced in April.

Friday, 30 June 2017

Will GST make homes expensive

The members of CREDAI (RNE) Raj Nagar Extension, believe that property prices will go up once the new tax regime kicks in

Come July 1, under-construction projects will attract a goods and services tax (GST) rate of 12%. Amid all the hullabaloo over the unified tax regime in the country, speculation is rife on would it lead to a hike in property prices?

The members of CREDAI (RNE) Raj Nagar Extension, believe that property prices will go up once the new tax regime kicks in. They feel RERA and GST will push price trends with a 10-20% spike in property prices.

“Taxes are being rationalised which will lead to increased transparency. There will be more clarity post-GST in terms of taxes. Under GST, the under-construction projects are going to attract 12% tax, where previously it was about 4.5%. This will push the market and we can expect an increase in prices. Steel will also attract 18% GST, which will further put stress on prices,” says Manu Garg, Director, Carol Infrastructure Pvt Ltd, who was speaking at a press conference held by CREDAI, RNE chapter.

“Cement has seen both highs and lows in the past and it directly impacts the construction cost. Any increase in cement prices will directly influence the construction cost of a project. The government is also working on the correction of minimum wages. From here, the market will only move ahead so the best time to buy a house is now. Home loan rates are low and the market gives end-users and investors the right climate to buy,” adds Garg.

General Secretary of CREDAI RNE, Gaurav Gupta says that the best time to buy property is now as prices are attractive and home loan rates are cheapest at this point in time. “The market offers attractive prices for home buyers. Home loan rates are the cheapest and affordable homes are getting subsidies from the government,” explains Gupta.

The GST rate for steel has been finalised at 18% which is expected to be beneficial in the long run for other sectors as well. Cement prices are expected to go up marginally, as it has been put in the 28% tax slab from the earlier 23-24%.