Plot summary: Constructing your own house

Plot summary: Constructing your own house

Chennai

V S Rajasekaran talks about how buying a plot near Medavakkam in 1994 and building a house on it, has benefitted him.

While buyers today mostly have the option of apartments or villa to choose from, not many will have the luxury of choosing a plot to build their house upon. But for those who bought homes in Chennai a few decades back, they had the option of buying an empty land and constructing their house on it.

V S Rajasekaran, a government employee, is one among those who bought a plot. “I bought a 2,178 square feet of land near Medavakkam, in 1994. And in 1995, we constructed a 2-BHK house there and moved into it. We have been living there ever since,” he says. The fear of buying a plot or its encroachment always existed. Recounting this struggle, he further adds, “We ensured that the land came with proper patta (legal document for land ownership). Besides, we immediately started construction, which also helped. So, there was no fear.”

Having lived in Chintadripet, as a tenant in a rented house, he was glad to have moved into his own independent house. Medavakkam was far away from the bustle of the city. “It was considered a back of beyond area. There was just one bus-51H, which would ply between Saidapet and Tambaram, which would stop at a bus stop in Medavakkam. Travelling to other parts of the city was difficult. Thankfully, there are innumerable buses today, which help the residents here commute to many parts of Chennai. Also, there are good amenities that have come up in the area, like good hospitals, schools and shopping malls,” he says.

The plot and the construction together did not exceed Rs 3 lakh. Overall, he is glad to have made the investment.

Ranjitha G, Times Property, The Times of India, Chennai

Property tax in Coimbatore higher than in Chennai

 

With the revision of property tax in the state, tax payers in Coimbatore corporation will be paying higher tax for their buildings than those in Chennai.

“The revised property tax might be appropriate for buildings in Chennai corporation, but it definitely is not appropriate for those in Coimbatore,” said K Kathirmathiyon of Coimbatore Consumer Forum.

During 2008, civic bodies other than Chennai corporation revised property tax not extending up to 25% of the existing slab for residential buildings, up to 100% for industrial buildings and up to 150% for commercial buildings, he said, explaining that Chennai corporation last revised property tax during 1998.

Though the land value is higher in Chennai, building owners from other parts of the state are paying higher tax than those in Chennai, he said.

“For instance, if a building owner in Chennai is paying Rs 2,000 as property tax until revision, we have been paying Rs 2,500.” He explained that now the tax amount has been increased to Rs 3,000 for the building owner in Chennai and to Rs 3,750 for people elsewhere.

“Why should we pay a higher amount,” Kathirmathiyon asked.

Former counsellors said that if the local body council had been in place, such a thing would not have happened.

The hike is exorbitant, C Padmanabhan, a former counsellor, said. The civic body, without knowing how to manage funds, has spent lavishly. “How will the civic body have funds if they privatise all projects?” he said.

The state government in general recommends that the civic body hike the tax up to a certain point and during the discussion at the council meet the exact hike percentage per building type would be decided, said S M Samy, former counsellor.

Since there is no council this year, civic body officials had accepted the government recommendations without any discussion, he added.

Source: Economic Times, Chennai

Happy New Year | தமிழ் புத்தாண்டு வாழ்த்துக்கள்

Happy New Year | தமிழ் புத்தாண்டு வாழ்த்துக்கள்

Happy New Year | தமிழ் புத்தாண்டு வாழ்த்துக்கள்

Chennai tops in broadband speed

 

Records download speed of over 32.67 Mbps, finds study

At 32.67 Megabits per second (Mbps), Chennai clocks the highest fixed broadband download speed among cities, according to a study titled ‘India’s digital divide: how broadband speed splits the nation’ by Seattle-headquartered firm Ookla. Globally, India is ranked 67th with an average speed of 20.72 Mbps.

“Of the 20 largest cities in India, Chennai’s download speed of over 32.67 Mbps for fixed broadband is 57.7% faster than the average for the rest of the country,” the analysis said. The analysis is based on February 2018 data from real consumer-initiated tests taken using Speedtest.

Speedtest by Ookla provides independent insight into the speed and quality of mobile and fixed broadband connections.

Fixed broadband speeds in metros including Delhi, Bengaluru, Hyderabad and Visakhapatnam were also higher than the country’s average of 20.72 Mbps.

Bengaluru follows Chennai in terms of fixed broadband speed with reported average speeds of 27.2 Mbps, while Delhi ranked fifth with average speeds of 18.16 Mbps. Mumbai was the lowest among the four big metros with an overall ranking of eight and broadband speeds averaging 12.06 Mbps.

The study also revealed that Patna is by far the slowest city compared to the rest of the country, with average speeds 62.4% slower than the country’s average.

Top States

A quick scan of the States shows that residents of Karnataka enjoyed the fastest broadband in India, with a mean download speed of 28.46 Mbps during the month of February, which is 37.4% faster than the rest of the country.

Tamil Nadu is a close second at 27.94 Mbps. Mizoram is the slowest with a mean download speed of 3.62 Mbps.

The Hindu

Registration of sale deeds to be banned in Tamilnadu

Govt. to get tough on unapproved buildings

Registration of sale deeds to be banned

The government has decided to ban registration of sale deeds for resale of unapproved buildings after December 21.

Any owner who fails to submit an application online for regularisation of unapproved buildings by December 21 will not be able to register the sale deed of such property after the deadline.

Power supply, water supply and sewer connections will be disconnected for such buildings.

Speaking at a public consultation, Housing and Urban Development Minister Udumalai K. Radhakrishnan urged residents to make use of new schemes to regularise unapproved buildings.

“The schemes will help the weaker sections of society who want to own a home,” said Mr. Radhakrishnan.

CMDA Member-Secretary C. Vijayaraj Kumar said approval for buildings would be checked by officials concerned before registration of sale deeds after December 21.

Self-declaration scheme

“Resale of no building will be permitted without proper approvals. This is a voluntary disclosure scheme. We trust the residents. It is also a self-declaration scheme. A large number of those who have a sanctioned plan but have deviated from it are expected to regularise their buildings. Buildings that do not have any sanction will also be regularised,” said Mr. Vijayaraj Kumar.

“For ordinary buildings, we will permit an FSI [Floor Space Index] of 2 under the regularisation scheme. The permissible FSI is 1.5. Minimum road width will not be required for regularisation of ordinary buildings. For special buildings, the minimum road width has to be 7 metre for the regularisation scheme. For continuous building areas such as Mylapore, George Town and Chintadripet, setback is not required for regularisation of unapproved houses. But commercial buildings in continuous building areas will not be regularised if the front setback is less than 1.5 metre,” said Mr. Vijayaraj Kumar.

“At least 90% of the buildings are expected to be covered under the scheme. Almost 50% relaxation in the FSI has been given for multistorey buildings. Relaxation of other planning parameters is expected to benefit many residents. We are also collecting feedback from stakeholders on the regularisation scheme. We will make changes to help the maximum number of residents. Residents need not worry even if their application is rejected. There is a provision for appeal also,” said Mr. Vijayaraj Kumar.

After the applications for regularisation of buildings constructed on or before July 1, 2007 are submitted online at www.tnbuildingreg.in, the officials concerned will screen the documents submitted and issue regularisation order for the buildings.

In the Chennai Metropolitan Area, the CMDA member-secretary will issue the regularisation order for special buildings, group developments and multistorey buildings. The Chennai Corporation Commissioner will issue regularisation order for ordinary buildings in the city. The commissioners of municipalities, executive officers of the town panchayats and the block development officers (BDO) of panchayat unions will issue the regularisation order for ordinary buildings in their jurisdiction. In other parts of the State, application for regularisation of multistorey buildings will be received by the DTCP.

For special buildings and group developments, the member-secretary and the deputy director of the DTCP will receive applications. For ordinary buildings, the BDOs of village panchayats or executive authorities of the urban local bodies will issue the regularisation order.

The number of unapproved buildings in the Chennai Metropolitan Area is estimated at five lakhs.

Unapproved layouts can be regularised online at www.tnlayoutreg.in. The last date for application is November 3, 2017.

The Hindu 

Tax incentive on second home misused, won’t extend it beyond Rs 2 lakh: Govt

Tax incentive on second home misused, won’t extend it beyond Rs 2 lakh: Govt

HIGHLIGHTS

  • The Finance Bill 2017 restricts set-off of loss towards second home against other heads of income up to Rs 2L under Sec 71 of the I-T Act
  • Currently, there is no such limit for set-off of loss from house property, which is mainly the difference between the rental income and interest on home loan

Representative image.

NEW DELHI: Ruling out rollback of the proposal to restrict tax incentive for second home+ to Rs 2 lakh per annum, revenue secretary Hasmukh Adhia on Saturday said there is no point in subsidising purchase of second property by those who have surplus funds.

Moreover, he added that the tax incentive for second home loan borrower is being “virtually misused.”

Citing limited resources, he said it is prudent to subsidize first-time buyer and not the second property owner who is not staying in that but earning income from the second unit.

The Finance Bill 2017+ has restricted set-off of loss towards second home against other heads of income up to Rs 2 lakh under Section 71 of the Income Tax Act.

Under the present dispensation, there is no such limit for set-off of loss from house property, which is mainly the difference between the rental income and interest on home loan. In other words, a buyer could deduct the entire net interest paid on the home loan.

“Government resources are very very limited. The question is should the government be subsidizing first-time home owners who are occupying own house or should the government be subsidising the second acquisition of the property by people who have got surplus money to invest in real estate,” Adhia said while addressing industry representatives here.

He cited an example: “If I have already my own house, I buy a new property by taking a bank loan of Rs 1 crore, the interest on it is Rs 10 lakh per annum and I rent it out to somebody who gives out Rs 3 lakh as rent, the remaining Rs 7 lakh you could offset against your salary income or business income.”

The loss to the government for the second house were almost one third of that, he said, adding that it came to about Rs 3 lakh in addition to Rs 2 lakh advantage.

“So, why should the government bear the cost of second house acquisition, that was the question. We have a lot of people to be given affordable housing, we need to help them out… so the revenue loss was huge and people were virtually misusing it,” he said.The Finance Bill, 2017, proposes to restrict such set-off of house property loss to Rs 2,00,000 per annum only. Balance loss, if any, will be carried forward to be set off against house property income of subsequent 8 years.
Hence, individual tax payers having loss of more than Rs 2,00,000 will now have a higher tax outgo.

 “In line with the international best practices, it is proposed to insert sub-section (3A) in the said section to provide that set-off of loss under the head ‘Income from house property’ against any other head of income shall be restricted to Rs 2 lakh for any assessment year,” the Finance Bill 2017 said.

“However, the unabsorbed loss shall be allowed to be carried forward for set-off in subsequent years in accordance with the existing provisions of the Act.”

Timesofindia

Infra status to boost low cost housing – Budget 2017

Builders will be eligible for tax and subsidy incentives, and institutional funding at affordable rates.

Union Finance Minister Arun Jaitley, in the Budget 2017-18, has proposed to grant ‘affordable housing’ the coveted infrastructure status to facilitate higher investment in the sector and, in turn, achieve the government’s ambitious goal of ‘Housing for All’.

The grant of infrastructure status would mean builders will be eligible for many government tax and subsidy incentives, and institutional funding at affordable rates for low cost homes.

The move has evoked mixed response from the sector. Tushad Dubash, Director, Duville Estates, said, “With the infrastructure status, the sector can look at funding through insurance companies, which is a huge alternate sector and opens up a new avenue for real estate funding.”

Issue of land cost

However, Rohit Gera, Managing Director, Gera Developments & Vice President, Confederation of Real Estate Developers’ Associations of India (Pune) said, “The infrastructure status will truly see a big impact only if these lower cost funds are actually made available for acquisition of land. Without this, a large part of the funds required for the affordable segment for the construction will be provided by the end consumer. Large scale capital is not required once the land acquisition is completed and approvals are in place.”

Pointing out that in his Budget proposals last year, he had announced a scheme for profit-linked income tax exemption for promoters of affordable housing scheme and that it had received a good response, Mr Jaitley said he intended to make this scheme more attractive.

In a bid to boost affordable housing, the Budget 2017-18 proposed to ease the condition of period of completion of the projects from current three years after commencement to five years. Besides, measurement norm of affordable housing has been amended to carpet area from built-up area — a move that will expand the area and make more projects eligible.

The Budget also proposes to modify the affordable housing scheme by stating that “instead of built up area of 30 and 60 sq.mtr., the carpet area of 30 and 60 sq.mtr. will be counted. Also the 30 sq.mtr. limit will apply only in case of municipal limits of four metropolitan cities, while for the rest of the country including in the peripheral areas of metros, limit of 60 sq.mtr. will apply.

Refinancing loans

The National Housing Bank will refinance individual housing loans of about ₹20,000 crore in 2017-18, Mr Jaitley said. He added, “Thanks to the surplus liquidity created by demonetisation, banks have already started reducing their lending rates, including those for housing. In addition, interest subvention for housing loans has also been announced by the Prime Minister.”

There are also tax sops for developers struggling with completed but unsold homes, estimated at around six lakh units in eight major cities. “At present, the houses which are unoccupied after getting completion certificates are subjected to tax on notional rental income. For builders for whom constructed buildings are stock-in-trade, I propose to apply this rule only after one year of the end of the year in which completion certificate is received so that they get some breathing time for liquidating their inventory,” Mr Jaitley said. He also proposed to make several changes in the capital gain taxation provisions in respect of land and building. “The holding period for considering gain from immovable property to be long term is three years now. This is proposed to be reduced to two years,” the Finance Minister said.

“Also, the base year for indexation is proposed to be shifted from April 1, 1981 to April 1, 2001 for all classes of assets including immovable property. This move will significantly reduce the capital gain tax liability while encouraging the mobility of assets,” he added.

The Hindu 

Home loan to become cheapest in 6 years as banks slash rates

  1. SBI home loans up to Rs 75 lakh, earlier available at 9.1%, can now be taken at 8.6%
  2. The reduction in MCLR will mean that new borrowers will get loans at the cheaper rates
  3. Old borrowers will have to enter into a fresh contract with the bank (by paying a small fee) to get loans linked to MCLR

MUMBAI: Home loan rates have fallen to their lowest level in six years with the State Bank of India, the country’s largest lender, cutting the effective rate to 8.6% from 9.10%.

While the SBI cut its one-year marginal cost of lending rate (MCLR) — the benchmark to which home loans are linked — to 8%, against 8.9% earlier, it kept the spread above MCLR at 60 basis points, against 20 basis points earlier.

So, home loans up to Rs 75 lakh, earlier available at 9.1%, can now be taken at 8.6%. For others, the rate would be 8.65%, against 9.15% earlier. Besides SBI, the Union Bank of India and the Punjab National Bank also cut rates.

Private sector banks like ICICI Bank are expected to follow suit.

TOI had carried a frontpage report on January 1, saying the SBI and other banks were set to cut rates following a prod from PM Modi to signal that benefits of demonetisation in the form of record deposits are being shared with the poor and middle class.

The reduction in lending rates by several public sector banks will make the affordable home loan scheme, announced by PM Modi on Sunday, available at a little over 4% for borrowers seeking loans of up to Rs 9 lakh. Details of the scheme are yet to be announced.

The reduction in MCLR will mean that new borrowers will get loans at the cheaper rates. Since home loans are linked to one-year MCLR, the rates are locked in for 12 months.

Older loans will get the benefit of the new rates only after their one-year lock-in ends.

Those who had availed loans before April 2016 would have their EMIs linked to the earlier benchmark, the base rate. These borrowers will have to enter into a fresh contract with the bank (by paying a small fee) to get loans linked to MCLR.

SBI has also reintroduced a teaser rate loan, where loans will be available at 8.5% for the first two years and at a floating rate in subsequent years. These loans were discontinued five years ago after the RBI frowned on them.

Other banks which have announced lower rates with effect from the New Year include State Bank of Travancore, IDBI Bank and Indian Overseas Bank. Top officials of the SBI said that home loans would provide the bank with an alternative to parking funds in government bonds where the return is less than 7%.

Meanwhile, banks expect the interest subvention on loans for affordable homes and home extensions and small enterprises to counter the slowdown caused by monetary contraction following demonetisation.

The impact of the schemes is expected to be felt in lending and on the overall economy in the first quarter of FY18.

“Today, 45% of bank loans is going to only 300 companies. The extreme concentration of bank credit on the top end of the corporate sector has begun to border on the ridiculous,” said Rajiv Lall, MD & CEO, IDFC Bank.

He added that the announcements by the Prime Minister would help rebalance this by encouraging loans to small business where the framework has already been created with the help of payment systems and bank accounts.

Lall also welcomed the fact that the government was encouraging small lending through market related programmes as compared to the past when priority sector lending was in the form of a diktat.

“From our perspective this is extremely positive and will help us further in penetrating into the segments we serve. With these announcements, the challenges that all faced following demonetisation would clearly be history,” said Kapil Wadhawan, chairman and MD, Dewan Housing Finance Corporation.

According to Gagan Banga, vice chairman and MD, Indiabullls Housing Finance, subsidised home loans will find many takers as the EMI cheque will now be smaller than the rent cheque. “This is a tremendously positive announcement coming on the back of many directed steps to realise the ‘Housing for All’ objective,” said Banga.

Real estate rules notified: What it means to you?

 

So the rules for the Real Estate Regulatory Act were notified for the Union Territories on October 31st as per requirements. Is that a cause for celebration yet for Indian home buyers?

The answer is a resounding yes. The fact is that these rules will become the model on the basis of which the states can draft their own regulations and rules. Some leeway has been provided to the states to make changes according to their own special requirements. But model rules make state-level policy-making easier. Explains one expert involved in the entire process who did not want to be named, “Notifying RERA rules is a relatively simpler process where the executive can draft them and just needs to be signed off by the cabinet ministers.” This holds promise of most states meeting their RERA rules notification and creation of regulator deadline of April 2017.

The regulatory authorities are to become the recourse for the consumer with speedy justice in two months, passive display of information to allow consumers to make informed decisions and also to legislate against errant developers.

So how will RERA impact you as an end consumer? It is important to analyse the details of the notification that was released by the Ministry of Housing and Urban Poverty Alleviation.

1)      If you buy a project, you will be able to assess exactly how much liveable area you get. It is mandatory for developers to declare the carpet area which was earlier hidden in the format of super area. Carpet area is the actual liveable space within your house. Super area is what you are charged for carpet area plus external common areas such as lift lobbies and corridors.  As a result while absolute prices may not come down, for you as a buyer, purchasing liveable space will be cheaper.
Promoter shall also declare size of the apartment based on carpet area even if it was earlier sold on any other basis. 

2)      You also get to know how much covered and uncovered parking space there is in the development. This has been a major bone of contention with many buyers in different cities.
Promoter also has to declare information regarding the number of open and closed parking areas in the project.

3)      Another critical benefit of the RERA is that the money that you paid to buy a project will be used for that project only. The developer needs to deposit 75% of collections into a seprate account that will service the project.
The developer, within three months of applying for registration of a project with the Real Estate Regulatory Authority shall deposit in a separate bank account , 70% of the amount collected and unused for ensuring completion of ongoing projects. 

4)      As per the RERA, all projects that are ongoing and not handed over to consumers will be under the purview of the regulation. Developers have been asking for this to be restricted to projects launched in 2016, but that is against the spirit of the Act which is drafted to ease the misery of consumers who have been struggling with non-delivery of projects that have been paid for.
In respect of the ongoing projects that have not received completion certificate in specified time,  developers will have to make public the original sanctioned plans with specifications and changes made later, total amount collected from allottees, money used, original timeline for completion and the time period within which the developer undertakes to complete the project, duly certified by an Engineer/Architect/practicing Chartered Accountant.

Many inconsistencies and unfair trade practices will come to an end. This includes the fact that both developers and consumers have to pay the same rate of interest for delay in payments and deliveries. Developers will be required to refund or pay compensation to the allottees with an Interest Rate of SBI’s highest Marginal Cost of Lending Rate plus 2%. 

Further to an assurance given by the Minister of Housing & Urban Poverty Alleviation to the Parliament during passage of the Real Estate Act, Rules stipulate such payment to the allottee be made within 45 days of it becoming due. This interest applies to payments due to the developers by the allottee which is to be paid within the period to be specified in the Agreement of Sale.

5)      One of the biggest problems that many consumers faced was the fact that there were changes in the plans after selling started so that they had no idea how the project would pan out on completion. This has been specifically addressed by mandating developers to put up earlier and changed approvals in the public domain for scrutiny.
 In respect of the ongoing projects that have not received completion certificate in specified time, developers will have to make public the original sanctioned plans with specifications and changes made later, total amount collected from allottees, money used, original timeline for completion and the time period within which the developer undertakes to complete the project, duly certified by an Engineer/Architect/practicing Chartered Accountant. Promoter shall also declare size of the apartment based on carpet area even if it was earlier sold on any other basis.

6)      Have you bought into a project and found that many years later, there has been no development? That could be a thing of the past. The new law mandates quarterly information sharing about the progress of the project.
Promoter shall upload on the webpage of the project, within 15 days of expiry of each quarter information regarding number and type of apartments or plots, garages booked, status of the project with photographs floor-wise, status of construction of internal infrastructure and common areas with photos, status of approvals received and expected date of receipt, modifications in sanctioned plans and specifications approved by the competent authority.

7)      Even though registration of projects and units with authorities was mandatory, there have been many instances where this was not done due to high registration charges. Keeping this in mind, the government has reduced the registration charges for projects.
For registration of projects, the fee has been reduced to Rs.5 per sq.mt for up to 1,000 sq.mt area and Rs.10 per sq.mt beyond this limit subject to a maximum of Rs.5.00 lakh per project. For commercial and mixed development projects, it will be Rs.10 and Rs.15 per sq.mt subject to a maximum of Rs.7.00 lakh. For commercial projects, it will be Rs.20 and Rs.25 subject to a cap of Rs.10 lakh per project. For plotted development, it is Rs.5 per sq.mt with a ceiling of Rs.2.00 lakhs.  A cap has been placed on the total amount of registration fee based on the suggestion of real estate bodies. Fee for renewing registration of projects with the Regulatory Authorities would be half of the registration fees.

8)      Searching for real estate agents has been a challenge for buyers across the country. Normally one would look for a recommendation from someone who has used the services earlier. This may well be a thing of the past with registration of agents coming under the ambit of RERA.
For registration of Real Estate Agents, fee now prescribed is Rs.10,000 for individuals and Rs.50,000 for other entities as against Rs.25,000 and Rs.2,50,000 proposed in the Draft Rules. Similarly, fee for renewal of registration of projects and agents has also been reduced to Rs.5,000 and Rs.25,000 respectively.

9)      Once the regulatory authorities are in place, consumers can approach the authority which has to dispose of the case in 60 days. That will come as a great relief to buyers, many of whom have battled in court for years against powerful legal teams of developers to seek justice.
Under the Rules, Adjudicating Officers, Real Estate Authorities and Appellate Tribunals shall dispose of complaints within 60 days.

Keep watching this space for more 101 write-ups on the RERA as we do a deep dive into this critical legislation that will bring order and harmony into a critical sector that serves as an economic indicator in most developed economies.

 E Jayashree Kurup is the head of Content and Advisory team at Magicbricks