September 2018 Vol 02
The Homebuyer’s Toolkit
As you usher in the festive season, home-buyers await the auspicious time to buy a home. This period is a significant sale season where developers gear up to make lucrative offers and incentives. Here’s a ready reckoner to help you.
Be Prepared: If you are looking to invest, make the best of the festive offers and buy a home that has an appreciation potential. Before you begin the house hunt, identify your needs and criteria. Ensure that the property provides you easy access to business centers, recreational points, educational institutes and hospitals among others.
Seek Help: Appoint a lawyer to perform due-diligence of the project/property such as title, encumbrances, and mortgages. Consult a financial expert to help you manage your money.
Be Smart: Kapur says, “Developers are offering discounts and amenities such as spa, mini theatres, etc. Wardrobes, kitchen cabinetry and appliances, and toilet vanities are included as freebies. Focus on the right property and don’t get carried away with these add-ons. Remember that the freebies offered up-front by builders are usually already accounted for in the rates provided. So be smart and instead of focusing on free goods, try an approach based on your practical needs.
For redevpt, housing soc is also promoter: RERA
In a relief for flat buyers in a Goregaon redevelopment project, the Maharashtra Real Estate Regulatory Authority (Maha RERA) has held that a housing society is also a promoter. The Maha RERA recently heard a complaint by purchasers of flats in the sale component of a project called Horizon. Udayachal Goregaon Cooperative Housing Society, with 15 members, had appointed Jaycee Homes Pvt Ltd in April 2013 to reconstruct their building with stilt and 15 floors and to sell additional flats. The developer entered into agreements and collected money from purchasers. He constructed till the 11th floor. Due to non-compliance of development terms, the society terminated the developer and further refused to accept the rights of the purchasers to get their homes. Fifteen purchasers moved Maha RERA contending that their agreements with the developer are legal and binding on the society and the developer and they must be directed to hand over possession of their flats by completing the construction.
NRIs rush in to invest in Residential realty as Rupee weakens
The rupee’s plunge has led to a pickup in the residential real estate as an increasing number of non-resident Indians (NRIs) are rushing to take advantage of lower prices and discounts as the dollar surges in value. The rupee has dropped 13.04% against the dollar since the beginning of 2018, 6.20% over the past three months and 3.4% in one month, amid a global rout of emerging market currencies. Recent reforms such as an implementation of the Real Estate (Regulation & Development) Act, 2016 (RERA), amendments to the Benami Properties Act, the goods and services tax (GST) rollout and demonetization have also improved transparency in the sector, thereby offering more comfort to the NRI community.
“Depreciating rupee against currencies such as the dollar, pound, the UAE dirham, among others, is prompting a large number of NRIs to invest into the country’s realty market,” said Anarock Property Consultants chairman Anuj Puri. “Builders are also leaving no stone unturned in luring them with a host of amenities and features.” That’s led to a resurgence in serious inquiries by NRI end-users and investors, leading to deals taking place. This may result in a repeat of the phenomenon witnessed in 2012. The NRI segment usually contributes about a 10th of annual property sales in India but it soared to 25% in 2012 when the rupee depreciated 17.37% between February 3 and July 22 that year. The property markets that typically attract NRI investments are Bengaluru, Chennai, Kochi, Chandigarh, and Pune besides premium projects in Mumbai and Ahmedabad.
FSI benefits for bldrs withdrawn in new DP
The city’s new Development Plan (2014-34) notified by the state urban development department on Saturday has delivered a shocker to builders and architects as some of the construction benefits have been suddenly withdrawn. Sources said the incentive FSI, which was offered to developers and land-owners whose plots are reserved for public amenities and road-widening by the government, does not find mention in the new notification. Senior BMC officials blamed the urban development department for what they called errors. Neither urban development secretary Nitin Kareer nor municipal commissioner Ajoy Mehta responded to queries.
Construction industry sources said that withdrawals of FSI incentives in the new DP notification will hamper development in the city. Generally, about 50% of a plot is reserved for Accommodation Reservation (AR) meant for any public amenity like a hospital or a market. For surrendering this portion of the plot, the developer was earlier entitled to receive additional FSI
for the total area. The changed AR policy, architects said, will not find any takers. Industry experts warned redevelopment of housing societies will become unviable. Architect Manoj Daisaria said withdrawal of the AR and Road FSI benefits will severely hamper redevelopment.
State unlocks ‘wetland’ in Goregaon
A 500-acre parcel of land, the largest chunk of private open space in the western suburbs that could easily fit in as many as 23 Oval Maidans but which environmentalists call an eco-sensitive zone, has finally been opened up by the state government for construction. The land at Pahadi in Goregaon (West) belongs to the Byramjee Jeejeebhoy Group. About 106 acres of it is controlled by the Lucknow-headquartered Sahara Group.
The state government’s move to open up a 500-acre private open sprawl in Goregaon (W) for development has left environmentalists fuming even as builders are rubbing their hands in glee. The Sahara Group’s 106 acres, earlier defined as a “no development zone’’, has now been declared a Special Development Zone (SDZ). Under the SDZ policy, the owner will surrender more than half the plot to the BMC for affordable housing, public amenities, and open spaces. On the remaining portion of the land, additional construction incentives will apply for building residential or commercial buildings.
Construction industry sources said anticipating the government’s plan to open up the Sahara portion, some of Mumbai’s biggest developers have approached them to jointly develop the plot through a development management agreement. These include D B Realty, Shapoorji Pallonji, Piramals, Subodh Runwal Group, Omkar and Suntek Realty. Sources said a prominent Pune based builder was a key player in getting this land opened up for development. “The development potential of this 106 acres could be worth Rs 10,000 crore to Rs 15,000 crore,’’ said an industry expert.
Pay 25% of RR rate to convert collector land to freehold
Nearly two years after it amended the Maharashtra Land Revenue Code, 1966, the state on Tuesday approved the premium for conversion of collector’s land (class II occupancy land) and leasehold land into freehold land—one that allows individuals and societies to do what they wish with the land they own. For class II occupancy land, residents will have to cough up 25% of the ready reckoner rate as premium. There are 3,000 housing societies, largely in the suburbs, which are on collector’s land (there are 22,000 such societies across the state). Class II occupancy lands are spread largely in the eastern suburbs across areas like Ghatkopar and Chembur.
The collector has been appointed as the competent authority to collect the premium and carry out the conversion. The law is applicable only to plots given to housing societies, or for commercial purposes. It is not applicable to lands given to charities, hospitals, educational institutions, industry, and gymkhanas. Freehold land doesn’t require government permission to be sought for sale, transfer, mortgage, etc. In case of leasehold plots, if the lease is for less than 99 years, the premium is 50% of the RR rate and if for more than 99 years, the premium is 37.5% of the rate. In case of housing societies to which land is granted on a leasehold basis, the premium is 25%. These rates are applicable only for three years. There are 2,200 leasehold plots in Mumbai, of which 1,800 have been given to private individuals or societies and 400 given to government agencies. In the island city, most housing societies are on leasehold plots. These are spread across places like Nariman Point, Churchgate, Dadar, and Wadala.
Your Home is Safe
The Insolvency and Bankruptcy Code (IBC) has now included the home-buyer as a financial creditor. It works as a tool of empowerment for investors in projects where the builder has declared bankruptcy. The IBC has, therefore, allowed the home-buyer to be a part of the process in order to rescue the project. The IBC will now allow the home-buyer to be a part of the project and negotiations to rebuild the project that a developer abandons after declaring bankruptcy. This is a major change for the real estate industry while also empowering the home-buyer who has paid the developer to complete the project, thereby reducing the number of developer-abandoned projects.
In July, the government passed the rule that once a developer files his company with the IBC, the home-buyer who has given his share of the money to kick-start the project will be a part of the liquidation process and therefore, a part of a restructuring and buying out of the company by another. The rule was made in order to ensure that home-buyers as financial creditors be allowed on the Council of Creditors (CoC) so that the restructuring of the company takes place and the project gets completed. Ramesh Vaidyananthan Advaya, managing director and founder, Advaya Legal, says, “As a home-buyer from whom the developer has taken money, but later filed for bankruptcy – you can be a part of the Council. You can make sure that the project is taken over by another developer who is financially more secure. Here, you will get your home much later but at least there is hope of getting it.”
Source: Times Property, Saturday 22 September 2018
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