The Supreme Court on Tuesday expressed concern over the interests of homebuyers being neglected in insolvency proceedings against real estate companies and slammed Interim Resolution Professional (IRP) in the case against Amrapali group for harassing flat buyers and demanding rest of the money due to the builder. A bench of Justices Arun Mishra and Amitva Roy said that homebuyers’ stake could not be compromised to protect the interests of creditor banks in insolvency proceedings and charged IPR with taking side of Amrapali group and neglecting the grievances of flatbuyers.
As the investment made by homebuyers has been put at the bottom of the priority list in insolvency proceedings, they could be refunded only after banks recovered their dues after selling the assets of the company, making the position of buyers vulnerable in such proceedings. The IRP has taken over the affairs of Amrapali after National Company Law Tribunal (NCLT) admitted the insolvency proceedings initiated by Bank of Baroda against the firm on September 4 last year.
Reckoner rate relief to boost realty sales
With real estate prices dropping in many cities, property is sometimes sold at prices lower than the government-fixed circle rates. To address the taxation problems that arise from this gap, the Budget has proposed tax relief for buyers and sellers by allowing property to be valued at up to 5% below circle rates for calculation of stamp duty and capital gains tax. Circle rates, also known as ready reckoner or guideline value, have been revised upwards by most local governments over the last 15 years. Circle rates were introduced to prevent tax evasion by declaring a lower sale price of the property on paper. Stamp duty is collected either on the sale proceeds or the circle rate value, whichever is higher.
But now that real estate prices are sliding in many cities such as Delhi-NCR, Bhopal, Kolkata, Lucknow and Jaipur, circle rates are higher than prevailing market rates. So a person may sell immovable property lower than the circle rate, but the registrar office still charges stamp duty at the circle rate. Developers, however, say this is not enough and that stamp duty should be levied on real transaction value and not on the circle rate value. Ramesh Nair, CEO and Country Head, JLL India, said the proposal would reduce difficulties for sellers. “With this, the government has recognised that there could be price variations within a zone or locality that has the same circle rate,” he said.
Make the most of Interest Subsidy
The decision by Prime Minister Narendra Modi’s government regarding interest rate subsidy is likely to provide a huge boost to the affordable housing segment, which will in turn drive growth prospects for the entire real estate sector. This scheme provides interest subsidy upto 4 per cent for loans upto Rs 9 lakh and upto 3 percent for loans upto Rs 12 lakh.
With home loan rates soaring near 8 per cent and falling, it means that a buyer purchasing a home for Rs 10 lakh can now avail the loan of Rs 9 lakh and pay less than Rs 5,000 a month as EMI, depending upon the tenure. Likewise, a potential consumer who purchases an apartment for Rs 13.20 lakh with a home loan of Rs 12 lakh will now pay a monthly EMI of approximately Rs 8,000 a month, thus making the purchase hugely affordable.
Source: Times Property, Saturday 3 February 2018
Panchshil Realty, global players form JV for Smart City projects
Panchshil Realty and Developers, Switzerland’s Carbon Asset Management (CAM), Korea’s Smart City Korea (SCK) and Posco E&C have entered into an agreement to form a joint entity to identify and develop real estate projects in line with the government’s Smart City initiative in India. The newly created joint entity, to be known as Smart City India Consortium, will develop township projects across the country and the first one of these will come up in Pune.
For the first such project to be developed in Pune’s Kharadi area, the investment is pegged at $500 million (Rs 3,200 crore). The project will be spread over 120 acres and is estimated to have 10 million sq ft smart built-up area. A memorandum of understanding (MoU) for the partnership was signed on Thursday, and the construction is expected to commence over the next three months and is expected to be completed within 36 months. Smart City India consortium shall work closely with all the government agencies to facilitate the development and its sustainability.
Don’t charge GST on Affordable Homes, Govt tells Builders
The government on Wednesday asked builders not to charge any GST from home buyers as the effective GST rate on almost all affordable housing project is 8% which can be adjusted against the input credit. It said builders can levy GST on buyers of affordable housing projects only if they reduce the apartment prices after factoring in the credit claimed on inputs. The effective GST rate, however, comes down to 8% after deducting one-third of the amount charged for the house, flat, towards land cost. This provision has been effective from January 25. The finance ministry said builders “should not recover any GST payable on the flats from the buyers”.
Budget 2018 to boost housing segment
The experts in realty industry are satisfied with the recently presented Union Budget as it revolves around ease of doing business and growth of smart cities, and has focused on ‘Housing for all by 2022’ by announcing a dedicated affordable housing fund under priority sector lending. It has been announced that 31 lakh homes will be built in 2018-19 in urban areas and 51 lakh in rural areas, through dedicated affordable housing fund under National Housing Bank (NHB), and the government assuming ownership of NHB from RBI.
“The fund will provide ease of credit to homebuyers, thereby giving a much needed boost to demand for low-cost homes across the country. The resultant increase in home loans will give a huge impetus to developers to take up affordable housing projects, and aid supply in the affordable segment that has remained largely under-penetrated till now, despite immense pentup demand. This is in line with our prediction for 2018 that affordable housing will drive residential sector and its share in new residential launches will rise, from 46% in 2017,” informs Anshul Jain, country head and managing director, India, Cushman & Wakefield.
Source: Mumbai Mirror, Saturday 10 February 2018
Mumbai world’s 12th richest city
India’s financial capital Mumbai, with a total wealth of $950 billion, is among the top 15 wealthiest cities globally, while New York tops the list, says a report. According to a report by New World Wealth, the economic hub of India is the 12th wealthiest city, followed by Toronto with a total wealth of $944 billion, Frankfurt ($912 billion) and Paris ($860 billion). Total wealth refers to the private wealth held by all the individuals living in each city. It includes all their assets (property, cash, equities and business interests) less any liabilities.
Mumbai also features among the top 10 cities in terms of billionaire population. The city is home to 28 billionaires, individuals with $1 billion or more in net assets. Regarding Mumbai, the report said, “Total wealth held in the city amounts to $950 billion. Mumbai is the economic hub of India. It is also home to the Bombay Stock Exchange, the 12th largest stock exchange in the world. Major industries in the city include financial services, real estate and media.” Going forward, Mumbai is expected to be the fastest growing city (in terms of wealth growth over the next 10 years), it added.
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