December 5, 2017

Home buyers to get status of primary secured creditors

The Union ministry of housing and urban poverty alleviation (MHUPA) has accepted the long-standing demand of consumer organisations that home buyers should be given the status of primary secured creditor (PSC) in case the developer goes bankrupt or financial institutions begin process of liquidating assets. Currently, if a builder becomes bankrupt, home buyers have last rights on his assets. The labourers have the first right on the proceedings from sale of his assets, then come financial institutions. Home buyers, who invest money in the developer’s project, come last.

Source: Mumbai Mirror, Thursday 2 November 2017

The return of the NRIs

The Indian real estate sector provides a huge opportunity for NRIs, which they can capitalise upon to safeguard their retirement plans. According to CBRE, the Indian realty sector is likely to witness a $7-billion investment in 2017, and the NRIs are likely to contribute a major chunk. With RERA in place and GST rolled out across the nation, the real estate sector has been streamlined, thus making it more transparent than ever. In the process, this has reinforced Non-Resident Indians’ (NRIs) confidence in the Indian real estate sector.

There is a huge opportunity for NRIs who want to invest in their native country. This is also a part of giving back to their motherland. Property buying is largely a long-term investment decision and NRIs’ decision to invest back home, is more for retirement purposes. NRIs investing back home are always abreast with all the developments in the Indian market – right from financial conditions to growth prospects. Recent developments in the Indian real estate market such as RERA, GST, Benami Act, REIT, FEMA and government initiatives like demonetisation have been steps in the right direction by the present government, thus resulting in NRI sentiment turning positive, thereby attracting investments into Indian realty.

TAX BENEFITS: Indian residents staying abroad are entitled to almost similar tax benefits as resident citizens; The government of India allows a deduction of Rs. 1 lakh under section 80 C of the Income Tax Act, 1961 for NRIs investing in Indian real estate; On selling of property within three years of purchase, which is a short term capital gain, NRIs have to pay the required taxes on the capital gains; If the NRIs sell their property after three years, they have the option of reducing the longterm capital gains tax by investing in another property.

What the Laws say? NRIs need no permission from RBI to buy residential/commercial property; NRIs need no permission of RBI to buy immovable property for residing purposes in India; There are rules guiding transactions of this sort under the ambit of the Foreign Exchange Management Act (FEMA); There is no restriction on the number of properties that can be invested in; However, an NRI cannot buy agricultural land, farm house and plantation property. They can own such property only if it is inherited or gifted to the NRI; If you are buying property that is under construction, you may have to give your developer or a trusted associate a power of attorney.

Source: Times Property, Saturday 4 November 2017

Realty Glitters

A recent report indicates that real estate investment in India has gone upto $7 billion in 2017 from $6 billion in 2016. Thanks to a host of institutional changes streamlining the sector, investments into the real estate sector has increased significantly. This report by CREDAI-CBRE further states that while office and residential are expected to remain traditional drivers for the industry, alternate sectors such as retail and warehousing will also come to the forefront.

A slew of measures — RERA, GST and REITs — are aimed at improving transparency in the sector, thus increasing the share of the organised segment and enhancing the overall investor sentiment. These will help in catalysing ease-of-doing-business in the country while supporting corporate entities entering or expanding their footprint in India, showed the CREDAICBRE report released in London, on August 11, 2017. The report further highlights that a favourable regulatory environment coupled with attractive asset valuations, would enhance investor confidence significantly by changing the perception of Indian realty in the global arena.

Source: Times Property, Saturday 4 November 2017

Land details at your fingertips

The state Department of Registration and Stamps has launched a portal that lists the values of all properties – agricultural and non-agricultural. Mumbaikars will soon have all details pertaining to the value of immovable properties at their fingertips. In order to make investments more transparent and to make property ownership details accessible, the state Department of Registration and Stamps has launched a portal that lists the value of all properties – agricultural as well as non- agricultural land, flats and bungalows – across the city.

According to senior officials in the department, if the pilot project, launched on November 1, is deemed a success, after two months the model will be replicated throughout Maharashtra. Confirming the news, state inspector general of registration and stamps ( IGR), Anil Kawade said, “ The idea is to make the process of purchasing land more transparent. For the time being, this portal will only list properties in Mumbai.

Source: Mid-Day, Thursday 9 November 2017

Importance of Infrastructure

Infrastructure developments like educational, medical, retail and recreational facilities in a project find more buyers and higher appreciation. It is extremely important to consider upcoming infrastructure expenditure when deciding the location for your next property investment. That is because major infrastructure ugrades are associated with strong demand in local markets, as property investors often seek locations with infrastructure developments in the pipeline. What is Infrastructure? Infrastructure provides essential services that drive economic growth, employment and productivity. In short, they can be classified into three main categories: 1) Utilities: electricity, gas, communications and water; 2) Transport: airports, roads, and rail; 3) Social: schools, hospitals and community facilities.

Importance to Investors: Properties in areas without good infrastructure tend to have cheaper property rates as developers with projects in such locations know that the area has little or nothing to say for itself in terms of quality of life. Buyers should place infrastructure availability prominently on their checklist while scouting for suitable homes. Road and rail connectivity, water supply, proximity of shools, hospitals and shopping outlets are of paramount importance. Buying a home cheaply if the location does not offer these is meaningless and will give cause for regret. Consider future appreciation: If one is buying a property for a long term investment and primarily for capital appreciation, one can afford to be philosophical about existing infrastructure. However, if one is buying the property in order to generate rental income, existing infrastructure is far more important than upcoming infrastructure. Where the option exists, give preference to townships over others with a good saturation of support infrastructure as well.

Source: Mid-Day, Friday 10 November 2017

Realty terms Decoded

Some real estate terms in practice could also confuse buyers. Here we simplify them for you. CARPET AREA is the area within the walls of an apartment that is for the exclusive use of the buyer. Normally in large societies, with many common amenities, the carpet area could be as less as just 2/3rd of the built-up area. BUILT-UP AREA includes the carpet area and thickness of external walls, internal walls, lobbies and corridors, basements, atriums, etc. SUPER BUILT-UP AREA: includes common amenities, such as the area of lift shafts, lobby, and corridor, proportionately divided among all flats. Common usable areas such as a swimming pool, garden and club house, may also be included. Per square foot rate quoted by the developer is typically applied on the super built-up area.

BSP is Basic Sale Price of the apartment that the builder advertises and more often than not there are other add-on charges like PLC, floor charges, car parking, club charges, electricity connections, etc. PLC is Preferential Location Charges that the apartment commands and normally parkfacing, pool-facing and other visually attractive views command better premium compared to less attractive views like road-facing apartments.

Source: Times Property, Saturday 11 November 2017

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