November 2016 Vol 01
RERA rules for UTs notified; developers of ongoing projects must deposit 70% of unused funds in separate bank account
Giving in to demands by consumer groups across the country, the Union government’s rules for the Real Estate (Regulation and Development) Act 2016 (RERA) mandate that even developers of ongoing projects have to deposit 70% of the unused funds in a separate bank account to ensure that they use it only for completing the project.
Buyers to get refund if builders fail to hand over flats on time
From May 1, 2017, all new house purchases will come with three commitments – adate of possession in writing, full refund of the amount paid with 10.9% interest in case of delay beyond the committed date of possession and interest for the delayed period in case the buyer doesn’t want the refund.The guidelines have provided for compensation in case of delayed delivery even for ongoing projects, but the new sale agreements will apply only to projects launched from May 2017, when the law comes into force.
RERA may hit Realtors’ pre-launch sales
Realty developers, who used to collect at least 20% of project revenues through pre-launches, will find it difficult to do so from next April as the recently notified Real Estate Regulatory Act (RERA) delays any road shows before formal regulatory approvals are granted.
Pre-launch refers to a process where a builder announces a project while the approval processes have either just been initiated or still in progress. The usual discounts of up to 15%-20% offered to homebuyers during these pre-launches are also expected to be a thing of past.
Leases on 1,800 acres of salt pans expire, Centre wants land back
Leases on three of Mumbai’s biggest salt pans, measuring above 1,800 acres (roughly 82 Oval Maidans), given to salt manufacturers at the turn of the previous century, expired last month.The development comes at a time when the city’s sprawling salt pans, spread over 5,430 acres, are being eyed by the government and realtors for housing projects.
Housing society certificate will suffice for tax break
Income tax tribunal has ruled that completion certificate from government authorites is not a must for availing home loan tax exemption.Home buyers might get relief from the income tax (I-T) department even if the developer has not obtained the completion certificate.
According to a recent order passed by the Income Tax Applellate Tribunal’s Mumbai bench, a letter from the housing society showing the possession of the house in the borrower’s name is sufficient for the borrower to claim income-tax exemption on the home loan. According to income tax rules, home loan borrowers can claim up to Rs.2 lakh exemption on the interest paid on the loan. They can also claim exemption on the principal upto Rs.1.5 lakh
Why it may be a good time to buy a Home
The clamp down on black money may have a negative impact on the real estate sector, but it may be just what the doctor ordered for home buyers. For fence sitters waiting for housing prices to correct, this could well be the time to buy a house.
Reduction of cash component in a real estate transaction will encourage more genuine buyers in the secondary market rather than investors who are interested in simply parking their black money. This will eventually lead to deflation in property prices. Less than expected sales during the ongoing festive season is yet another reason why discounts are anticipated in the market.
Ready-to-move-in House is always better
The resale housing market, particularly the brand new, ready-for-possession segment, offers home-buyers a chance to side-step the risks of buying under-construction properties that are prone to inordinate delays. The usual 10-15% cost premium of ready-to-move in properties, however, has dissuaded buyers from investing in them. With this premium coming down, should home-buyers tap into the quick possession resale market, or does it make sense to wait for 2-3 years and invest in an under-construction property?
State unlocks green belts for townships
Thousands of new homes could come up on Maharashtra’s green belts with Chief Minister DevendraFadnavis incentivizing development of townships on these parcels.
Under the revised norms for integrated townships cleared by Fadnavis, developers will now be permitted to exploit anywhere between 3-3.6 times the existing building rights on green belts, depending on the size of the township. The green belts have so far been characterized by restricted construction activity.
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