March 2018 Vol 02
State finally clears way for drop in stamp duty on real estate sale
Homebuyers could expect some relief as the state government has introduced a provision that will allow reduction of Ready Reckoner (RR) rates. Until now, RR rates, which are revised annually, could only be increased or kept steady. RR rates are used to assess market value of properties by government; stamp duty and registration charges are paid on this basis. The rates are revised every year on April 1.
Mumbai is divided into 700 zones for which RR rates are prepared annually. In the last five years, rates for these zones have been increased by 6-7% annually. However, it was not always so. In 1995, 1996, 1997 and 2001, the government, despite there being no amendment, had reduced the RR rates.
Cooperative societies can breathe easy as transfer fee is not taxable
Transfer fees received by a cooperative non-residential society (technically referred to as a ‘premise’ society) will not be taxable in its hands, according to a recent Supreme Court order. While the order pertains to non-residential societies, experts say it will also help residential societies.
As transfer fees, especially in the business districts or tony residential pockets of Mumbai, run into lakhs, the order to exclude it from income-tax will bring huge relief. Transfer fees, according to real estate agents, typically vary between 1% and 5% of the value of the property transferred and the fees are generally borne jointly by the seller and the buyer (incoming member). The order puts an end to another contentious issue: the portion of the transfer fee paid by the buyer (who is not a member of the society as on the date of payment) cannot be taxed.
MHADA empowers homeowners with D-I-Y plan
Creates separate cell to help societies that want to redevelop their buildings without falling prey to developers. If you’re scared your old building will collapse on you, but are even more afraid of handing over your home to unscrupulous builders for redevelopment, the Maharashtra Housing Area and Development Authority (MHADA) has just the solution for you. The authority is launching a Self Redevelopment Cell next month to make it easier for residents to redevelop their homes without relying on a builder. MHADA’s new Self Redevelopment Cell will guide residential societies on the procedure of redevelopment if they choose to do it without a builder. The society will have to prepare a plan, appoint an architect, gather funds, and pay rent or arrange for alternate accommodation of residents who have to move out during construction.
Another major function the Cell will perform is to fasttrack all the permissions for self-redevelopment, to make the process as smooth and easy as possible for citizens. While the Cell will only assist residents of MHADA building, the state government has introduced a similar policy for other private buildings in the draft Development Control Regulations (DCR) 2034 as well. Politicians have long pushed for this, and had also promised easy loans for redevelopment.
Rent out in haste, repent at leisure
Real estate is gold and gold is real estate in Mumbai. In a city where space is at such a premium, there should be little surprise that most scams and battles are over land, homes, offices and retail spaces. This paper ran a front page report about a family that, when looking for tenants for their home online, chanced upon a couple who wanted to rent their home. Unfortunately for them, they handed over the keys to the couple just a day before the agreement was to be signed. On the day of the signing, the couple who were now staying in the family’s home, dilly dallied over the agreement and months rolled by, with them even stopping rent payments. The distraught family is now living with the frightening thought of spending time and money approaching the court to get their home back.
Those who wish to rent out their homes need to do thorough background checks of the individuals they will be entrusting their homes to. Ideally, one should get a well-known professional broker as a middleman because they, too, can be held responsible in case something goes wrong. Most of all, one must insist on the agreement being signed before anything. Then, comply with the rule for police verification, where details about the tenants have to be submitted to the local police station. Most of all, one should not trust anybody or let them sweet talk themselves into moving into the house before the papers are signed and one must have everything down in black and white. One simply cannot afford to let one’s guard down. Citizens must not be inveigled by their supposed pleas and exhortations to let them move in. Rent out with all caution lights ablaze.
Societies get relief from ‘unfair’ NA tax
Bowing to pressure from residents’ groups in the suburbs, the state has decided to bring down the non-agricultural (NA) tax from 3 percent to 0.05 percent of the ready reckoner rate. The NA tax, which is not applicable in south Mumbai, is imposed on properties that came up on former farm land. The issue was raised in the assembly last week by Bandra (W) legislator and BJP leader Ashish Shelar. Housing societies in Bandra, Khar and Santacruz were among the worst hit by this tax. Some were asked by the suburban collector to pay pending NA taxes of over Rs 80 lakh. It has also been decided to revise the tax every ten years instead of five. Under the Maharashtra Land Revenue Code, 1966, non-agricultural tax is imposed in areas which were recognised as agricultural zones outside gaothans, where there is non-farming activity. It is levied over and above the property tax.
The tax was suddenly increased by over 1,500 per cent in 2006 and, despite a subsequent stay on the taxes, residents were billed arbitrarily in November 2017. For instance, the tax for three plots of Salsette Catholic CHS in Bandra was earlier Rs 44,553 for five years. After the hike, they got a bill of over Rs 81 lakh. Shelar said that he was seeking an amendment in section 44 of the Maharashtra Land Revenue Code (MLRC) (1966). “I will move a private member’s bill to amend this MLRC to completely withdraw NA taxes for the entire suburbs,” he added.
Flaws within 10 years of construction to attract action
Architects, licence surveyors, site engineers, supervisors, even a construction company and its consultant will be held responsible, if a defect is detected in a building within 10 years of its construction. The Maharashtra government has issued a notification to this effect, with a focus on the improvement of its (the state’s) rank in the quality control index of a World Bank report. It has made an amendment in Development Control Regulations (DCR), 1991, of the Brihanmumbai Municipal Corporation (BMC) in section 37 (1AA), holding architects and others mentioned liable for structural defects or flaws.
The state government notification was published on March 7 (in its gazette) and the BMC’s Development Plan (DP) department has started implementing the new law. According to the notification, any building constructed in an area of 750 sq m (8,000 square feet) or above, which is less than 10 years of age from the date of issuance of the occupation-cum-building completion certificate, will be covered under this changed law. According to officials from DP department, the changes came after the World Bank, in its Doing Business, 2017, report, in respect of the criteria for ranking of the construction permits, has given high importance to the provision of ‘latent defect liability period’ in the quality control index. Earlier there was no such rule under which architects or other persons could be held liable for any flaws.
Thank you for visiting our website. We are currently updating our website towards compliance of the newly introduced housing law for the State of Maharashtra i.e. the Real Estate (Regulation and Development) Act, 2016 and the rules and regulations notified thereunder.
In the interim, no information, images or material which is currently available / displayed on the website relating to builder projects shall be deemed to constitute any advertisement, invitation, solicitation, offer or sale of any such builders product offerings. Please contact us for any enquiry.CONTACT US