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.

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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 industry.

"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.

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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.

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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.

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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.)

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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.

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RULE CHANGE TO EASE MHADA REDEVELOPMENTS

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.

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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.

CHANGE IN DATES

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.

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