Mumbai Property Exchange

Current Market Situation in Mumbai and Future Analysis in Brief - by Sandeep Sadh

2008-12-26T11:52:00.001+05:30

The past 4 years in the real estate market will always be termed as the “Golden Period”, as these years have been the best in the past 15 years in respect of movement all across different sectors in the property market. Buyers who invested and bought properties earlier in 2004/5 have multiplied their assets and at the same time increased their net worth.

Let us go back in the memory lane again, when the year began, we all knew the markets were all time high and each location was termed as being over priced and as lot of investors had already invested through 2004 to 2007 there was little hope for them to see a major capital appreciation in the coming year and they are the ones who usually go for the first bookings at the opening prices. But 2008 compared to earlier years, saw the least of new projects announcements a lot of builders are sitting on the fence and they may launch new projects after doing a clear market research and analysis.

Then of course, we had the stock markets playing spoilt sport as the Sensex which people were used to seeing up and up only started coming down and before it was Monsoons, the entire market was in a stalemate and signs of the times were being seen as a lot of Builders gave a miss to the bids by MMRDA, Railways and a few Mill lands. We can read that liquidity crunch or the willingness to buy at a highest price was not seen here, which shows that the sentiment was weak inspite of the prime lands offered.

People thought that by Diwali the markets will have some movement, but despite various discount schemes, which most of the Buyers now know are clear marketing gimmick as before the exhibition and Diwali time most of the builders increase rates and then decrease it as a discount. So the buyers, were not fancied by the freebies given, on the contrary the markets went cold from there on and with the global melt down in the financial markets, high interest rates, political instability and the Terror Attacks in November, the markets literally came to a standstill.

Now, let us analyse, what is the current scenario, people are saying that the markets should come down by nearly 35% and you will continue to see some news articles or the other every day in a different news papers. Actually speaking, the buyer is only wanting to make a killing in today’s market condition and he is concerned, scared and he is not willing to buy at the same inflated prices.

But!!! The important question is how many builders are willing to reduce the price from their respective levels in spite of the fact they are sitting on projects which they started constructing in 2005/6 and now they have limited stocks to sell. If you review, each area and location is differently placed in Mumbai and can be termed as “Micro Markets” for example a location like Lower Parel which has been in the news since, 2004/5 when the mill lands started auction etc. now there are hardly any properties under construction in that location and a few big builders who are constructing there have started construction from nearly @6000/- psf and now reached levels of 25000 plus. Even, if the builders reduce, they will come down by 10% or so to please a client and finish the remaining flats etc. So the interesting point is that, and which will mostly happen is that the buyer will move North for his killing and unless he does not get a good deal he will not relent.

So in short, each location will have its own dynamic role and it can be seen in today’s market that not only Location, every individual Builder will have his own pricing which may be varying a lot in each location and his personal liquidity factor in the market and also how much stock he has to sell and how much can he hold on to before he starts getting a little financially strained and how much demand is there.

This means that each location can now have different pricing policy and I guess the mantra which comes out is Cash is King once again...but this mantra was not useful a few years back for the Buyers when they used to sit for hours in Builders offices to get the booking done etc, so we need to wait and watch now.

Mumbai as a city is crumbling as far as infrastructure is concerned, the property deals which are now happening and will probably happen in the first quarter would be typically need based buying as we still have to feel the impact of global recession in India and with unclear clouds of Politics hovering in the elections which are due in May and stock markets at a low we do not see major happenings in the real estate sector.

Over the next year, Mumbai as a city will hopefully have the Bandra- Worli Sea Link ready, the 2nd bridge near the domestic airport for south bound traffic may be ready by the 1st quarter as well. This will not impact too much but if everyone now is talking about affordable housing now, Where is the infrastructure? Where are the empty trains, proper roads to travel from distant places? Travelling within the city in the pathetic roads has become like a big task and the back and knee hurts now really after sitting in the car for hours together so imagine talking about affordable housing where the person has to travel from 60KMS plus to come to Mumbai.
From here onwards a lot of property prices will be determined by the way the infrastructure develops in a particular location and the connectivity to the location and the “Transparent Deals” which are a rare commodity in Mumbai today. In the recently held CNBC Real Estate awards there were two separate categories Best Ethical Practises and Best Transparent Legal Practises by a developer and guess what there was not a single developer who qualified from Mumbai, the award went to some developer in Chennai.

Real Estate development and growth mandatorily requires a healthy climate which comprises of Economic Growth, Political Stability and Infrastructure Development coupled with good governance and sops from the government as a little sweetener to all the parties concerned be it a developer or the buyer. The Indian Government last week did a little bit of movement in that front to ease the burden of the common man and reducing interest rates to fresh loans for amounts upto Rs.20,00,000/-. In my opinion, this is not enough, it is a good sign that people in the government are concerned about the development in the real estate sector but a lot has to be done before a little momentum is built.

The present market will be highly restricted to an actual buyer and an opportunity buyer who will like to see that he is getting a deal less than the market to further averse his risks, if any and I am sure with global peers reducing pricing drastically, why Mumbai should not reduce pricing. Look at Dubai, China, UK and USA markets we can learn from them pretty much and see the trends there and understand what is happening. I have been reading through lots of reports filed by investment bankers and they are all nearly predicting the same trends everywhere of prices correcting and this means that after correction the markets will gain momentum automatically. The outlook howver, remains in negative for the next 1 year to begin with and hence advice to all property buyers, do not be in a rush, do your homework well and do not hesitate to lease an apartment if you need a home as the markets will have to come down a lot to set the expectations right and no one is going to splurge any more the way it was done earlier.
Sandeep Sadh
Mumbai Property Exchange.com

Will Builders or Buyers Give IN???

2008-07-24T18:58:00.004+05:30

The property market in Mumbai seems to go through a Mid - Life Crisis. While the requirement is still persistent, the view of a lot of seasoned experts in the business is that the prices are over valued. The question now is that who will first blip, will the builders lower their rates or they can hold on to their prices or will the buyers give in?

Please write your comments so that we can all get a share of knowledge?

Sandeep Sadh

Mumbai Lease Market to be Impacted

2008-05-06T11:17:00.001+05:30

Mumbai Lease Market to be Impacted

After the Inflation jumping to 7.57% Mumbai the City of future, a known Financial Hub and the Dream City for many is in for a Rude Shock. The BMC plans to impose Property Tax upto 83.5% on residential properties and 112.5% on Commercial Properties which after rebate of 40 to 60% becomes nearly 30% of your rental income. As per the current news this is payable every 6 months by the property owner.

The BMC has taken 2 decades Old Formula of Accounting for Taxation this time around and the simple logic given so far is that they are going by the book, even if the book is 20 years old. Before coming out with these harassing policies the BMC must look at the General Interest of the public and consult professionals in this regard. This is actually a trigger point which will be responsible for the collapse of the property market in Mumbai as higher taxation, inflation, crumbling infrastructure, spiralling property prices, high interest rates etc. all together will have a Lesser Yield on Investment and property transactions done purely from an Investment perspective will take a big hit due to lesser anticipated returns owing to double taxation. If you sit down to calculate the yield after paying the overall taxes you will be totally dismayed and loose interest in such investments.

Mumbai being the Financial Capital of India, and the fastest growing city in Asia has a lot of inflow of both local Indians and Expatriates who typically come to work in Mumbai for a short span of 2-3 Years and who are always looking for rented accommodation and sign up a Leave and License agreement for any period between 1 to 3 Years generally. With BMC now planning to impose a 3 month rent as tax to the owners per year, the rents will go up by nearly 30% which is totally absurd.

This is an excerpt of a recent article published in the Times of India, which says, “Rentals at many places in the city have gone up by 100% to 200%, and yet we don’t get our share of that profit. Under the BMC Act, it is mandatory on the part of the owner to disclose the rent of their premises, but we have experienced that the taxpayers are averse to declaring the rents. Therefore, this drive will appeal to honest taxpayers to disclose the rent of their premises, which will help us arrive at a fair property tax calculation,’’ said V Radha, joint municipal commissioner.

Why should the BMC be given a share of Profit Firstly, it is the Investors or Property Owners hard earned money and they have the right to make profit and they are paying Income Tax on that? These are policies which are already 3 decades old and based on the old rent system in the good old days etc. Why cannot an Intelligent System be brought in which should be based on keeping all the Taxation both the Licensor and the Licensee are already paying and keeping in mind the present day market and future? The BMC policies are already known to be notorious by taxing year on year even if the property is not rented. There is no rationalisation on the taxation and when the owners hear the word BMC & Property Tax they want to close their doors on any transaction, one of my seasoned property investor once quoted, “God also cannot know the assessment which the BMC will do on your property”. Just yesterday, i was speaking to a Consulate and they have called off a transaction for a residential property as the owners wanted to place the onus of taxation to the Consulate. The Consulate General said, that this kind of irrational taxation will be bad for Mumbai’s reputation as a city as Companies who will want to relocate their expatriates will find it difficult to pay such higher taxation. He added, nowhere in the world taking an apartment on lease is such a task and with such higher prices and taxation it is a problem, they are already thinking of shrinking the size of expatriates in the consulate.

If the BMC spends that money on the Pot Holes improvement, Proper Roads, Pavements, Gardens, Common Amenities for masses I am sure the Owners would happily want to contribute. Look at the way, the city is maintained and with crumbling infrastructure and vision less policies for such a great City the BMC is placing itself into a one - sided High Handed body to only collect money and have proportionately less accountability and contribution to the city’s welfare. Mumbai is already one of the most expensive cities in the world to live in and to place on Record the 7th most filthiest city as well which is Thanks to the BMC. How do you expect people to pay such high rental values to survive after taxing them and what do they get in return back?

Both the Licensor and the Licensee terminate the Leave and License agreements mid-term for whatever reasons, what happens to the Tax then? With higher taxes more and more people will opt out of Mumbai and find out ways and means to circumvent taxes and therefore increase corruption in the already “Cash Rich” BMC.

If BMC has its way, Mumbai Lease Market will crash and the impact will be far greater on the Economy. The BMC and the Government should find out ways and means and take more and more property owners and individuals and Companies renting out properties in confidence before announcing any such policies. It is clearly understood by all concerned here that the BMC is looking for revenue but what it does not realise is that it cannot be done at the cost of Individuals who spend their Hard Earned money to invest in properties only to Lease out for income and they are already paying all sorts of taxes to do so. The annual return on investment on residential properties has already gone to 4% owning to higher property prices in the city. Not each location gets a great rental value and with extra tax liability the government is only looking at closing the doors for the Investors who are looking to invest in real estate. If there are no returns in the property market why should investors look at buying it and in short this will impact the sale of properties from hereon. All the mutual funds, Reits and other real estate related transactions will also be impacted.

In the past 3 Years, the rental values in Mumbai have gone drastically higher ranging from 30% to 200%. Because of a higher rental values, a lot of people started buying their own apartments as the rental values will be nearly 50% of their EMI. Inventories in Mumbai are already building up, there are more and more apartments vacant and a lot of property owners are willing to give 10% to 25% discount on the quoted prices already due to a little slow down in the economy and markets. The scare of huge taxation will also impact this further as none of the Licensor / Licensee will want to be a part of any further hike or taxation. Earlier, the Tussle used to be between the Licensor and the Licensee to get a deal done now both of them will have to unite and sit and find ways to fight out with the BMC.

Highlighted below are the Taxes which both the Licensor and the Licensee pay in any case for renting out properties, besides other expenses like maintaining the properties, painting, polishing, Annual Maintenance Contracts, Furnishings, Paying Vat etc on all house hold goods, Service Taxes on labour etc.

1. Fringe Benefit Tax payable by the Employee in case of a Company Lease – 20%
2. Service Tax – Presently only on Commercial Property – 12.36%
3. Property Tax on Leasing/Licensing (more in commercial property)
4. Stamp Duty and Registration Fees
5. Income Tax
6. Society Outgoings/Non – Occupancy Charges paid by the Owners
7. Municipal Taxes on Property in General

This typically means, that the BMC wants to penalise the Investors who invest in real estate.

Sandeep Sadh
Mumbai Property Exchange

High Expectations from the Budget This Year

2008-02-12T14:05:00.001+05:30

High Expectations from the Budget This Year

The booming real estate market in India coupled with strong economical growth is truly a success story. The Government should further reform and tighten norms for the real estate sector to protect the interests of the Investors and actual home buyers and NRI’s who are looking to invest in India in a big manner still and also certain reforms need to made to control to ensure low quality housing pricing to appeal to the masses. A lot of proposals by the State and Central Governments are announced every year, but only a few see the light of the day, the Government should have a vision which is long term for the sole benefits of the Housing and Commercial Sector as improper policies in this sector can only reflect negative movement.

With Union Budget round the corner, the Government this year should make its Policies firm and more centric to the Low Cost Housing for the actual consumer and Strict but yet not Stern for the Developers. The Developers and Builders in India have been having a field day with no control over built up and carpet areas, illegal property documents and constructions, possession related issues and many more illegal entanglements. In Mumbai rules and regulations for Re-Development of old buildings and the Slum Rehabilitation should be made more lucrative for Investors and Builders as this is the only way the city can be cleansed.
The Government this year should act in ways wherein the Low Cost Housing and Actual Consumers Interest is protected First and Foremost and a few expectations which one could have from the budgets are as follows:

1. Continuation of Section 80 IB of the Income Tax, this is an act which gives tax relief to the Builders for construction of units which is less than 1000 sq.ft built up in metros and the benefits under this section had come to an end a last year. A lot of builders have created houses under this scheme and consumers are benefited through the mass construction. The only problem here is that while the builder gets the tax relief there is nothing passed on to the consumer and as such it has become, “The Apple of the Eye” for the Builders. A majority of home buyers are unaware of this tax respite which the government had given to the Builders. The Government should continue giving this subsidy to the Builders as this will encourage them to make more middle class and affordable homes and it also will support the 10th Plan estimate of the Government where the shortage of housing units is expected to be in the range of 22.4 Million Sq.ft, This benefit hence, is the need of the hour but with some rider that the benefit is mandatorily passed on to the consumer.

2. Under Section 24 of the Income Tax, the exemption of the interest alone on the Home Loan should go up from the present Rs.1.50 Lacs to at least Rs.3.00 Lacs, this is suggested keeping in mind the average ticket size of the price of the apartment has grown 200% over the past few years. Also, the benefit of tax should be given from the date of booking of the property and not from the possession.

3. TDS Deduction on housing rental income for Individual Home Owners should be brought down from 16.83% to 10% and especially for NRI’s, a Flat Slab of 15% or a Tax Holiday of initial 3 years should be considered on rental income as they have invested in India and this is their only income in India against the property. This will boost in NRI Investment in the country and in the real estate sector as the NRI’s will not look at any other countries like Dubai etc for returns on their Investment. Also this will rationalise the prices of rentals in Mumbai and other Metros and more and more people will be willing to easily begin renting out properties and also the demand and supply situation will improve as more and more incentives are given and passed on to both the licensor and the licensee. A lot of NRI’s lock up their apartments for fear of higher taxation and an upfront deduction of TDS more than 30% and which effects there Rate of Return. Further, a standard deduction of 30% towards maintenance should be improved to 40% for local residents and 50% for NRI houses.

4. Stamp Duty charges should be reduced down to 2.5% from the current 5% as this will bring in more transactions and the revenue will increase for the Government. Since, the value of transactions has gone up the government is in any case being benefited.

5. The government should issue look at the interest given on bonds to be linked to Bank Interest Rates on Fixed Deposits. A lot of property owners still are conservative and prefer to invest their money in Capital Gain bonds and earn living out of the same. This specially is extremely helpful to elderly in ensuring their safety for future and it also has a social impact.

6. The buyers should be allowed to cross purchasing like one should be allowed to invest in Residential Properties from the Sale of Commercial Properties and from the Amounts Received from the Sale of Commercial Properties to Purchase of Residential Properties. Also buyers should be allowed to investment in both Commercial and Residential properties from the proceeds of one single property so that a good portfolio for the property buyers/investors can be built out.

7. Government should take more steps to curb Black Money in the Land Deals, as if a cash transaction begins from the root it will have a cascading effect till the end. A full Cheque Transaction will automatically yield in more money flowing out of Bank Accounts than from hidden lockers.

8. Presently, a lot of builders are not making 1 BHK apartments across the city in Mumbai especially, and special incentive should be given to builders to make 1 BHK apartments less than 400 sq.ft Carpet Area. These smaller and affordable apartments are the life lines for a lot of middle class people who have to be by default in a particular location and because of the non availability they have to go to other locations creating an imbalance.

9. Fringe Benefit Tax for Corporate Employees for renting out properties should be reduced from the Current 20% to 5% as the Corporate Employees and Executives in any case have an option to get into an Individual lease without paying FBT. If the taxes are not heavy people will happily pay them and especially corporate incomes are transparent and hence they should be given incentive which is well deserved.

10. Individuals, Companies, Employees of Multi National Companies should be given 100% tax exemption for the rent paid towards taking the House on Leave and License/Lease basis. This will help people take a decision to lease the properties and avail tax benefits if they cannot afford to buy the properties. This will encourage people to opt for leasing more and more which in turn will help curb migration.

11. Owners renting out their properties for a minimum lock period from both sides for 3 years with no right of termination to either parties and built in fixed escalations should be given Tax incentive, as with this people will start getting into the habit of at least changing their houses once in 3 years.

12. FSI should be increased within city limits with immediate effect to bring down real estate prices and builders should be strictly made to create the required infrastructure to meet the demand for water, electricity, parking and sewage system by using innovative and latest methods available.

13. CRZ should be further rationalized as a lot of prime properties are stuck because of this and because of the basic character available on the Sea Front, these properties become premium and because of the shortage it is becoming more expensive.

14. Incentive in the form of Higher FSI should be given to Builders looking who are looking to Re-Develop Housing Societies, As by merely paying higher prices for re-development the prices of real estate are only sky rocketing and unaffordable.

15. Buyers who buy real estate should be allowed to Exit/Sell after a span of 2 years with a lesser tax slab so that it becomes easier for them to exit and this way the black money can also be curbed. Artificial shortage of property is created and prices are hiked because of the Sellers inability to sell within a short span and pay higher tax.

16. Real Estate Brokers/Agents should be given proper Licensing to practice real estate business and by doing so that there will be a decline of unscrupulous transactions and there will be a sense of transparent transactions.

17. Benefits to be given to developers who adopt Area Management Schemes in and around their complexes for beautification and development of the area and keeping the location neat and clean.

18. Ratings to Property Developers to be made mandatory by Government and a Regulatory body should in Real Estate to keep a vigil on the activities of builders who create smaller dwellings of less than 100 units a year.

19. Code of Ethics for the real estate developers and agents to be formed for a better future and professional services.

20. Property Taxes to be rationalized all across for leasing both residential and commercial properties.

21. IT and ITes benefits with regards to STPI to continue but with lesser red tape.

22. Commercial and Retail Premises given to Banks/ATM’s should be exempted from Property Tax as they are given for longer periods of time and lesser escalations in the license fees.

Construction activity is a Big Economy Driver and any positive step towards the interest and welfare of the small consumer shall have a Macro impact overall on the Economy. We require Policy Changes which will further strengthen and fortify the Growth of the Economy in the coming year and with the able leadership of our Prime Minister Dr. Manmohan Singh, we shall hopefully see a “New Awakening in the Government” and it’s Far and Deep Sight in understanding and implementing policies this budget.

Sandeep Sadh
CEO – Mumbai Property Exchange.com

Stock Market and Real Estate

2008-01-26T18:10:00.000+05:30

Has the increase in profits in the Stock Markets has lead to the prices what they are today? As people who have made easy money in the stock markets over the past few years, are easily able to buy properties offered to them at what ever prices prevalent without contesting and thus the markets have reached this level.

Please send your reviews in this regard.

Thanks
Sandeep Sadh

Mumbai Property -2008

2007-12-25T16:14:00.000+05:30

We invite reviews from our clients, members and visitors to our website as to what they feel about the proeprty market in 2008. Please feel free to voice your concerns in regards to infrastructure, and if the markets will be flat in 2008 or if the pace of rate increases will be the same as what it was in 2006-7.

Look forward to receiving your views so that others can also benefit.

Regards,

Sandeep Sadh
CEO,
Mumbai Property Exchange.com
ssadh@mumbaipropertyexchange.com

Impact of ULC - A Simple Review

2007-11-30T10:06:00.000+05:30

The Maharashtra Government finally has decided to scrap the ULC and after a few years we have seen demonstration of Political Will despite the opposition from the Shiv Sena which has been voicing frail concerns and not being practical about the matter.

Out of the 52 Clearances required by a Builder Finally the auspicious figure of 51 Remain and i guess, to bring them down further is a battle of sorts as our Government still does not have a vision and what they can do to make this City better then what it is today.

Many are thinking with ULC gone, there will be supply in abundance of at least the land and with Newspaper Headlines of 17000 Acres etc. to be freed, it will be intersting to see how much really comes out in the open market for sale and how soon.

The markets may be gripped for the next few weeks with this Hot News but there is more than this will be happening in Real Life. People if they go to buy homes in builder offices today will not get any reduction, re-sale prices will not come down, besides speculation and heavy head lines and enough footage on the small screens of NDTV, CNBC etc. will be eaten up by Builders and Industry Experts.

One must understand Ground Realties before taking into consideration the impact of this decision which will be more felt in further suburbs, outside Mumbai and 2 tier and 3 tier cities. Also, a lot of land is still under forced or framed litigation which needs to come out and it will be interesting once again to see a sudden eruption of a new plot of land from the centre of the city which was long hidden.

Buyers looking to buy property today should not worry much as if you need a home today, you need it now, you cannot wait endlessly to see what transpires hereinafter.

The markets may temporarily stabilise as it was already due to post the Diwali Frenzy and the Builders have already escalated rates all across Mumbai, Thane and Navi Mumbai.

I guess, the only respite here is that the flat buyers may not have to do multiple agreements for projects which required the mandatory ULC rules applicable.

Sandeep Sadh
CEO
Mumbai Property Exchange.com

Indians Spending more than their means

2007-11-14T10:41:00.000+05:30

I saw this interesting piece on line, we are definitely going the US way and very soon we will be all in the clutches of Electronic Debts...

I invite comments on this from our viewers....Rgds Sandeep Sadh

NEW DELHI: Indians seem to be living way beyond their means. An extensive survey has found that more and more households seem to be borrowing not for creating assets like building a house or buying a car, but to meet consumption needs ranging from food, transport and medical bills to even repaying loans.

Consumers using credit facilities, probably credit cards, for purchasing fuel and renovating their houses constitute the biggest chunk of the borrowings, a soon-to-be released survey by National Council for Applied Economic Research and Max New York Life Insurance said.

The findings confirm the trend towards urban India's transformation into a consumerist society with diminished stigma associated with debt. Thus, while housing loan business may be big in terms of value but in terms of number of loans, it is still the odd renovation expenditure or a loan to buy jewellery at the time of a weddings that dominates.

Also, while banks may be pestering you with calls offering a variety of loans, many urban households don't mind tapping the much-maligned moneylender or friends and relatives to borrow for meeting routine expenses.

Though only 7.2% of urban households borrow from moneylenders, compared to nearly 21% in rural areas, the figure is significant because of the widening institutionalised credit bouquet. Then again, one-third of city borrowers who approach moneylenders do so for meeting routine expenses, the Indian Financial Protection Survey which visited 63,000 households said. In villages the number is a little lower at 25%.
For Indian households, food makes up over half the household budget, followed by transport (10%) and education (7%). Urban households spend 45% of their income on food while the figure for rural households is 55%.
Surprisingly, spending patterns in urban and rural India are more or less similar, with education being the only major point of difference.

Even the spend on durables in rural areas, in what marks good news for white goods companies, has caught up with the pattern in cities. Though 7% of the household spending is on education, only 1.5% of the families have borrowed to finance education. For this purpose, banks, with a share of 19%, are the most important source.

In rural areas, 36% of the households borrowed from friends and relatives to meet education-related expenses.

Mumbai Market Extremely Expensive

2007-11-01T12:17:00.000+05:30

I am inviting all our Members to write their Comments and Views on the increasing prices in Mumbai and how they feel about investments and Mumbai as a city on the whole for their future from the perspective of growth, quality of life, living with traffic, pollution etc.

Sandeep Sadh

Tax Benefits to be dervied from a Home Loan

2007-10-14T01:10:00.000+05:30

Against the backdrop of rising property prices & interest rates, borrowers need to be aware of the tax breaks offered by home loans. Tax breaks can be availed on both components of the loan installment — principal and interest.

Tax benefits, in respect of repayment of the principal amount and interest payments, are provided under Sections 80C and 24 of the Income tax Act, 1961, respectively. For claiming a deduction of the principal amount, the loan can be taken for purchase or construction of the house property and from specified lenders, such as central or state government or any bank (including a cooperative bank).

Further, deduction for interest can be claimed not only for loans taken for purchase or construction of house property, but also for repair, renewal or reconstruction of the existing house property.

Let us illustrate. Sanjay Bhatt takes a bank loan of Rs 20lakh for construction of residential house property (to be used for self-occupation) on September 1, 2006. For the sake of simplicity, let us assume that he is required to repay this loan in monthly installments of Rs 25,000 (comprising Rs 15,000 of principal amount and Rs 10,000 of interest) over a period of 10 years. The construction of the property is to be completed on September 30, 2009.

PRINCIPAL
The borrower can claim a deduction of the principal sum and stamp duty, registration fee and other specified expenses incurred for the purpose of transfer of the house property to him. The deduction can be availed starting from the financial year in which the house property is purchased or the construction thereof is completed up to a maximum limit of Rs 1,00,000 per year.

Therefore, from financial year 2009-10 onwards, Mr Sen can claim deduction for the actual principal payment or Rs 1,00,000 per year, whichever is lower.

INTEREST
The borrower can also claim a deduction for the interest due on the housing loan, starting from the financial year in which the purchase or construction or the repair, renovation etc take place.
In case of self-occupied property, the borrower can claim interest up to Rs 1,50,000 per year on loan taken on or after April 1, 1999, for acquisition or construction of the property, provided the acquisition or construction is completed within three years from the end of the financial year in which the loan was taken. For loans taken before April 1, 1999, the deduction is Rs 30,000 per year.

In case of let out property, the borrower can claim interest on actual basis, as no maximum limit is prescribed. Further, interest incurred for the pre-acquisition or pre-construction period, can be claimed equally over a period of five financial years, starting from the year in which the property is acquired or construction is completed. However, the total interest deduction cannot exceed Rs 1,50,000 a year.

In Mr Bhat's case, deduction for the interest of Rs 1,20,000 a year can be claimed from FY10 onwards. The interest for the pre-construction period (November 1, 2006 to March 31, 2009) being Rs 2,90,000 (ie, Rs 10,000 per month x 29 months) can be claimed as a deduction in five equal instalments of Rs 58,000 per year from financial year 2009-10 onwards, subject to aggregate limit of Rs 1,50,000 a year.

HOW TO CLAIM
The above deductions can be claimed by the borrower on the basis of a certificate issued by the lending institution stating the principal amount paid and the interest amount due for that particular financial year.

OTHER ASPECTS
A few other points which a borrower should keep in mind in the context of tax benefits are as follows:

Sale of property: If the house property is sold before five years from the end of the financial year, in which possession of such property is obtained, the deduction allowable for principal amount will no longer be available and deduction allowed in earlier years for the principal sums will be considered as the borrower’s income of the financial year in which the property is sold.
Pre-payment of loan: In case of complete or partial pre-payment of loan, the above provisions would continue to apply up to the year the loan is alive. Once the loan is entirely paid, no tax benefits can be claimed in subsequent years.

Property under construction: Principal amount repaid before construction is not eligible for deduction. However, pre-construction interest can be claimed in the period after completion of construction.

Make the Right Move

2007-10-12T13:17:00.000+05:30

While there are still a few days left for the auspicious season and festivities to begin, it might be a good idea to begin doing your Home Work now and be prepared for buying your Home or an Investment as the Capital Values have escalated and you cannot afford to take a risk with your hard earned money. While the prices have become expensive, the laws, legal compliances and clearances for making a building have also become a bit stringent and real estate being lucrative, it has brought in a lot of new single or multiple building developers who are constructing and developing. While they are all there to make a mark in the market, it is essential that you should know some basics as well. Before you set out, here are a few simple recommendations which may be helpful while you are planning to buy the proposed investment or home.

Ø Choosing a Location – Each individual usually understands which location is most suitable for him and he has to further decide based on his family needs and of course “Budgets”, seeing today’s market conditions. It is important that you look at a location in regards to connectivity from Main roads, Highways, Railways Stations, Schools, Hospitals, Markets, Your Office and last but not the least, malls and entertainment hubs which have also carved a niche in our lives in recent years. Any property in a location which is far and wide may be a bit cheaper but with a potential of future development in the area, it can become a good investment but for present, if the property is ready possession you may have to go through some inconvenience which is worth the wait at times. Do not compromise on safety and security elements while buying a home for the family. “Connectivity” is the Buzz word in property and fortunes change with the same and understand the impact of Infrastructure Development happening in your neighbourhood.

Ø Price Analysis – In the past 2-3 years, prices in most of the locations have become double or in certain locations the prices have jumped beyond that, hence you need to understand the prevailing prices of projects in these locations and usually each location has multiple projects rating from a Top of the Line Developer to an average developer and the price difference can be as much as 30% or above. So before you set sail, please check on the internet or local papers about the prices and the proposed developments in the area. Visit the offices of these developers with your trusted and experienced real estate agents or if you are visiting directly, don’t be hesitant to ask straight questions on prices and negotiations. Most of the Builders negotiate today marginally and it is only when you are serious about the property and your cheque book is on the table things start looking a bit different. A lot of Builders today give you cost sheets which tells you the Down Payment, Total Value, Incidental Expenses, Car Parking Charges, Stamp Duty and Registration values, time frame to pay the balance amounts and details on slab payments etc. All these are pretty important for you to consider at the time of booking the property as you are committing here.

Ø Bank Loan – Bank Loans have become expensive these days but they still remain the integral portion of your funds to buy the dream home. It is essential for you to be pre-qualified and have a personal eligibility sanction letter with you., This letter will highlight that you are entitled to a loan of X amount and your monthly EMI will be Rs. X for X no. of Years. If you are equipped with this letter, you will have no problems in buying any property as you will know both the Disbursement Values and the Monthly EMI you need to pay and based on both these figures you can take a calculated decision. Getting a Sanction letter is a process of nearly more than a week, so if you are not pre-approved, I would recommend that you should contact your Bankers or Housing Finance Companies. This letter can be used as a negotiation tool with a few builders as well, as they will be happy to have a client whose half home work is done and ready.

Ø Property Papers – Usually, with renowned builders you do not face legal problems, but you need to watch out here, you cannot be swayed by a fancy looking property with a defective title or certain clearances which are of importance are missing at the time of purchase. You would require to look at a document called a “CC – Commencement Certificate”. This permission is given by the BMC to the Builders to construct the proposed building. There are many more documents like Title Deeds, Conveyance of the land in favour of the Builders, Title Certificate from a Lawyer, but a lot of Builders may not be open to show you these papers directly at the time of enquiry, however, they will show you these papers if you require, if you are buying the property. But then if you cannot understand them, you will have to hire a professional lawyer to review them for you, which means both time and money. The easiest way out is to go for a home loan and a lot of Banks and there DSA (Direct Selling Agents) have tie ups with the Builder Offices to give Home Loans and hence it is in your interest to take up a Home Loan. If you do not want to take 80% of the property value, you can just take a lower amount and be more secure and thus have a third party interest created here. This way at least that you will be doubly sure that your property papers are in order even though your builder did not give you many documents or you do not understand this much the Bank would by default have done the homework.

Ø Construction and Planning – It may be of help that at the time of buying a home and especially if it is an under construction property, see and feel the quality of the walls, brickwork, finishing, tiling, plumbing and light fittings. This might give you an idea of shape of things to come. Study the plan and the layout of the property well and see the carpet area. In Mumbai, the wind usually comes from South West and West and any westerly flat will give you more light and breeze. However, ignore this if you are getting a better view in another direction and if you are not fussy about Vastu and the entry and exit directions. Watch out for the buildings around, ideally go to Google Earth and pinpoint the location and see an aerial view of the property which will give you a sense of surroundings more and envisage the view from your short listed property. See the Sample Flat and ask questions as to what comes with the apartment and what does not.

I am sure, keeping in mind these few parameters; you will successfully be able to locate your dream home. Best of Luck!!!

Sandeep Sadh
Mumbai Property Exchange.com

ssadh@mumbaipropertyexchange.com

Sensex on 19000 - Impact on Real Estate

2007-10-11T13:35:00.000+05:30

With the Stock Market Raging and bringing this festive season with Cheer, the property market will not be left behind. There is immense liquidity in the market and for property buyers who have exposure to the stock market there is no dearth of money and they are willing to buy quality homes. Of course, there will be a wait and watch strategic move to see how much money can be still made in the stock market, which may effect the real estate sales so to say, but the builders on other hand are likely to increase the prices keeping in mind the proposed investment in real estate.

Sandeep Sadh

Pune - The New IT Destination

2007-10-10T14:11:00.000+05:30

This article here only depicts that the Pune Market will go the Mumbai way, the prices in Pune are poised to double in the next 3 Years. People are tired of the expensive life styles and traffic issues in Mumbai and Bangalore. Pune becomes the most intermediate choice keeping in mind a lot of factors - Sandeep Sadh

http://www.mumbaipropertyexchange.com/bi_news.asp?news=618

How home loans help you save taxes

2007-09-16T14:41:00.000+05:30

The average age of person/s having own residential accommodation has come down substantially from about 42 years in the financial year 2001-02 to 31 years in the financial year 2006-07, as per the National Housing Bank estimates.
Do you know how has this become possible for a vast number of young Indians to own their dream homes? This was made possible because of lower interest rates and most importantly tax sops.

Why are tax sops so important?
Over the last few years, the major tax sop available to the employees was in the form of a standard deduction, which is now withdrawn. There are virtually no tax sops available to the employees, who are having significant taxable income and tax liability.
The investment opportunities for the purpose of tax planning are also limited with a cap up to Rs 1 lakh only. Hence, housing loans have become an attractive proposition to save taxes, apart from other equally important aspect like fulfilling the dream of owning a house.

What are the tax sops available through housing loans?
The first and the foremost tax sop is the interest amount that you pay on housing loans. The interest on housing loans in the initial years is the major component of the EMI you pay. The interest may exceed the rental income from house property, resulting in loss from house property.
In the case of self occupied residential houses, the entire interest is the loss from such house property. This loss can be set off against income from other heads such as salaries, business or profession.
The next important tax sop is the installment paid on housing loans. The installments are allowed as a deduction from the gross total income on par with other tax saving investments u/s 80C of the Income Tax Act.

What kind of housing loans are eligible for tax sops?
Housing loan can be taken for the purpose of acquiring or constructing a property. Housing loan taken for the purpose of repair, renewal or reconstruction of the house property is also eligible for tax sops.

What kind of house properties is considered for deduction of interest?
All kinds of house properties are considered for allowing the deduction of interest on loans. The gross annual value from house property is considered for the purpose of allowing deduction of interest on loans.

How is gross annual value from house property determined?
If the house property is let out, the fair rental value of such house property is considered as gross annual value.

Tips for the first time home loan borrower?

Sometimes you may get conned

2007-09-05T14:45:00.000+05:30

Gopakumar Nair, a resident of Kalina, is a member of a housing society which has signed a redevelopment agreement with a prominent builder. Months after work began, Nair says he discovered the members were being shortchanged.

We had agreed for redevelopment as all the nine buildings in our colony were constructed in 1965-67. But we got into trouble with RNA Builders (AA) when they failed to keep the promises made in the development agreement. As per the agreement, the builder had offered us 355 square feet carpet area in a eight-storey building. But now the builder wants to construct 12-storey buildings. In the redevelopment plan, there was a park but now there is no mention of any park.

We had agreed to an eightstorey building as the monthly maintenance would have worked out to below Rs 1,000. In a 12-storey building, we will have to pay atleast Rs 1,500 a month for maintenance. People in the building cannot afford such high rates. Left with no option, the residents have now moved court. The court has asked both parties to get an architect. We are still looking out for one.

Sunder Nagar Cooperative Society Union Ltd comprising members of all nine buildings was formed in August 2004 to look into the welfare of residents. But the union members are now working in connivance with the builders. The redevelopment agreement was not even registered. This we found out through the Right To Information (RTI) Act. It was in February this year that we got the redevelopment agreement registered.

Building numbers 2, 4 and 7 have already been broken down by the builder and foundation work is underway. We at building number 8 have told the builder to take us out of the redevelopment project so that we can repair it ourselves. Redevelopment of old buildings is good, but residents sometimes get conned by the builders.
In our case, most of the residents are not well educated so they did not know what they were getting into.

India ranks 17th on the - Economic Wellness

2007-08-12T14:19:00.000+05:30

The 9% GDP growth may not mean much for the masses, going by an ADB study which says india is ranked 17 among 23 when economies are compared based on a measure of people’s economic well-being. Emerging economic power and neighbour China doesn’t fare much better either as the communist country is ranked just two slots above at 15.

According to international comparison programme (ICP) in Asia and the Pacific’s purchasing power parity preliminary report, China and India account for 64% of total real GDP of the 23 economies participating in the study.

However, if the size of these economies is adjusted by population, China and India drop down to 10th and 18th positions respectively in the full GDP comparison.

Similarly, China ranks 15th and India 17th when economies are compared based on ‘actual final consumption of households’ (AFCH), a better measure of economic well-being of the population, the study reveals. AFCH is a measure of what households actually consume, comprising what they purchase and what they are supplied for individual use by the government (principally education and health).

Home loan rates unlikely to come down

2007-08-05T14:11:00.000+05:30

If you have a housing loan with a floating interest rate, you can breathe easy, as rates are likely to remain steady in the near future. However, prospective loan seekers don’t have much to cheer about, because interest rates are unlikely to fall anytime soon. RBI decision to keep key policy rates unchanged in the first quarterly review of its annual policy statement is likely to keep interest rates steady in the near term.

The RBI move is good news for investors in stock market. Barring a few sectors like banking, the market is likely to remain buoyant on the back of strong foreign fund inflows.

On Tuesday, the RBI left its key rates — repo and bank rates, among others — untouched. Concerned about excess liquidity in the money market, it has hiked CRR, (money banks have to keep aside on their deposits) by 50 basis points (100 basis points=1%) to 7%. The move is likely to suck Rs 15,000 crore out of the system. It has withdrawn the cap of Rs 3,000 crore on daily reverse repo auction (purchase of securities by RBI) from August 6.

‘‘The RBI’s moves aim to pre-empt inflationary pressures that easy liquidity and low short-term rates could foster. By removing the limit on reverse repo lending, the RBI has ensured that short-term interest rates will rise sharply. However, despite the CRR hike, there will be a surplus in the system, and this should keep long-term yields in check,’’ says HDFC Bank chief Economist Abheek Barua. Short-term deposit and lending rates are likely to harden.
Fitch Ratings senior director Ananda Bhoumik believes that banks are unlikely to raise lending rates despite the CRR hike.

‘‘Banks would be loath to increase lending rates, especially in retail loans — the second largest customer segment after companies — as recent quarters have shown rising interest rates affecting the consumers’ repayment capacity with corresponding increase in delinquencies.’’

Assembly to discuss hsg policy

2007-07-26T19:04:00.000+05:30

Mumbai: Nine months after it was first tabled, the state’s housing policy will come up for discussion in the legislative assembly on Monday or Tuesday. The approval of the House is expected to be the last step before the state government frames laws to enact the policy.

In November last year, the state government announced its first comprehensive housing policy. One of the key proposals was to make it mandatory for builders to set aside a fixed percentage (up to 50%) of houses in all new layouts for lower and middle income groups. Builders would, in return, be offered incentives including 0.5 additional Floor Space Index (FSI) or tax concessions.

The government also wanted to encourage rental housing by giving incentives to builders who create housing stock that will be used exclusively for rental purposes. Proposed incentives include higher FSI, lower taxes and a relaxation of some sections of the Rent Control Act.

Other proposed changes include allowing the transfer of development rights to be used beyond the limits of the BMC in areas, like Thane,Kalyan, Dombivli, Mira Road and Vasai-Virar.

The FSI, which is currently fixed at 0.5, was proposed to be increased to 1 in these areas.

The state government also planned to set up a housing sector regulatory commission, an independent statutory body that would investigate complaints against builders as well as issues relating to housing, including the pricing.

In a presentation made to MLAs a few months ago, the state government had also proposed moving away from the current system where the first developer to get consent from 70% of the slum-dwellers is given permission by the Slum Rehabilitation Authority to redevelop an area. Instead, a system of inviting tenders would be introduced.

City MLAs, including Shiv Sena’s Subhash Desai from Goregaon and Congress’ Bhai Jagtap from Khetwadi, had also discussed the problems faced by residents of old, dilapidated and cessed buildings. Chief minister Vilasrao Deshmukh has asked for a full chapter on this issue in the final housing policy.

Hiranandani’s Mega Development

2007-07-26T17:50:00.000+05:30

Just recently, Hirco Plc, the real estate investment arm of the Hiranandani Group, announced plans to invest over Rs. 1,000-crore (28.4-million pounds) in a commercial township development project that is scheduled to come up near Mumbai.

The company, listed at the AIM market of London Stock Exchange, in a filing to the Bombay Stock Exchange confirmed the project located at Panvel, would be the firm’s third investment after its incorporation in December 2006.

Priya Hiranandani-Vandrevala, CEO – Hirco Plc says there is great excitement in his firm over the launch of Hirco’s Panvel project, which is located in an extremely attractive area of suburban Mumbai that is currently witnessing tremendous growth, including the recently approved airport development at Navi Mumbai, within close proximity to the Hirco project site. According to Priya, featuring a mix of office and retail space with strong focus on IT and Biotech, the development will build upon Hiranandani’s heritage in the Mumbai market as a developer of high-quality commercial space.

A new development, the Panvel project will consist of 18-million developable sq. ft. of mixed-use commercial space on 303-acres of land in Panvel, a rapidly growing corridor in the Mumbai metropolitan region.

Hirco, together with its wholly owned subsidiary, Hirco Holdings, has entered into an investment agreement with Burke Consolidated Ltd., an entity controlled by the Hiranandani family, to invest in the township project through a special purpose vehicle owned by BCL called Burke 3 Ltd.

Nariman Pt rents higher than in NYC

2007-07-15T18:26:00.000+05:30

Nariman Point in Mumbai has moved two notches up to the fifth spot in the list of the world’s top ten most expensive office centres, while Delhi’s Connaught Place has broken into the elite list, claiming the seventh spot. Both cities are placed well above metros like Paris, New York, Hong Kong and Singapore.

According to a global market rents survey prepared by real estate consultant C B Richard Ellis,Connaught Place, often described as the heart of Delhi, is the only newcomer in the list with an occupation cost of $116.19 per sq ft per annum. Rent rates at Nariman Point—India’s costliest place to set up an office—were quoted at $138.41 per sq ft/annum.

The two most expensive office markets are both in London—West End at $241.22 per sq ft per annum and the City of London at $165.72. The next two are in Tokyo—Inner Central at $162.09 and Outer Five Wards at $143.52.

At $69.44/sq ft per annum, midtown Manhattan is the priciest market in North America, ranked No 21 worldwide. In other words, setting up an office in the Big Apple is cheaper than doing so in Connaught Place or Nariman Point. An earlier study had placed Khan Market in Delhi as the costliest retail space, while a recent report said residential rents in Mumbai were the seventh highest in the world.

C B Richard Ellis has tracked the world’s most expensive markets as well as markets with the fastest growing rents in the last 12 months. It found that in terms of growth, Delhi ranked second with year-over-year rent growth of 79%. Rentals have grown at a faster pace (103%) in the last year only in Abu Dhabi. Singapore ranked fifth, with a 54% increase, and Mumbai sixth, having experienced 45% rent growth. In fact, many South Asian markets are in the top 50 fastest growing rents list, including three in the top ten. In North America, Edmonton in Canada saw rents growing the fastest at 60%. Downtown New York ranked tenth with rents increasing 43%.

Of the 176 office markets monitored across the world, 90% showed positive growth in the 12 months to the first quarter of 2007. Singapore rose from the 43rd spot to the 24th in the most expensive market places list. In the Pacific region, Sydney was the only market that made it to the top 50, coming in at 44th.

Mumbai is becoming Dearer by the day...

2007-07-11T18:44:00.000+05:30

Soaring real estate prices are leaving a big hole in expatriates' pockets too, with Mumbai being ranked as the costliest city in India for them.

The cost of living for expats in the four major Indian cities - Mumbai, New Delhi, Chennai and Bangalore - has increased over the past year primarily due to high real estate prices, says a new study by global human resources advisory and research firm Mercer HR Consulting.

According to the study released on Monday, Mumbai has jumped to 52nd position in the worldwide ranking from 68 last year, while New Delhi has moved up to 68th place from 73rd. Chennai moved up four ranks to 133, while Bangalore rose to 134 from 139th position last year.

Mumbai among world's top 10 financial flow hubs
It was the rising property prices that pushed the Indian cities up the ranking, Mercer said.

The study has ranked the cities based on cost of basic necessities, including housing, transport and food among others during the 12-month period ending March 2007.

The list is topped by Moscow, which has retained its position as the costliest city for expats, followed by London, Seoul, Tokyo and Hong Kong among the top five.

Commercial space may get costlier

2007-07-10T18:21:00.000+05:30

The aftershocks of the finance minister’s announcement levying a 12.5% service tax on commercial lease rentals were felt in Mumbai’s real estate industry on Thursday. Corporates, banks, multi-nationals, malls, restaurants, BPOs, IT companies and multiplexes are expected to be hit if the proposal goes through.

“Today, 90% of the BPO/IT companies in the city have a policy of only leasing properties to carry out their functions. Many banks, MNCs, malls, restaurants and multiplexes are also likely to be caught in the crossfire. The bottom line of all these companies can be affected, which in turn will affect the stock prices of these companies,’’ warned property consultant Ashok Narang.
For instance, a company paying Rs 1 lakh as lease rental will now have to shell out Rs 12,500 more as service tax. The bigger the premises on lease, the bigger the impact on the company. Lease rentals in the city are anywhere in the range from Rs 80 a sq ft to Rs 225 a sq ft. There are commercial premises in areas like Worli where foreign banks have taken on lease floor space at the rate of Rs 400 a sq ft.

J S Augustine, corporate advisor of the Acme Group, said the proposed service tax will have a bearing on the commercial lease rental market. “This is bad news for the industry as it will reel under high prices. A lot of real estate companies can get affected because many of them have stopped selling and have started leasing out their commercial properties. It will also affect the retail industry and developers.’’ According to him, investors buying commercial premises and leasing them out too will be hurt.

“Introduction of service tax for commercial rent is likely to increase pressure on the developer and thereby the tenants. As for new leases, this will, in all likelihood, become a passthrough cost (by way of increased rentals). This can result in further increase in property prices as the enduser demand remains strong,’’ said Sanjay Verma, executive managing director, South Asia, Cushman & Wakefield India.

Jaidev Mody of Piramals said the cost of rent will go up in an already over heated market. “It will be passed on to the end user,’’ he said. Mody did not rule out the possibility of companies buying property outright instead of taking them on lease. “Today, most MNCs take it on lease because it is a deductible expense,’’ he added.

Some experts warned that the payment of service tax may lead to disputes between the landlord and licensee/tenants, if the agreement already executed is not clear on who will pay the tax. According to them, returns of mutual and real estate funds which have invested in commercial leased premises may be affected if the licensees refuse to pay the service tax. Others feared that ownership prices of commercial property are likely to go up because of the impact of service tax on rented premises.

Rising rates begin to pinch, prime property sales fall 50%

2007-07-02T18:29:00.000+05:30

THE residential property market may soon be losing some of its sheen. Rising interest rates and additional pressure on household budgets are believed to have impacted price trends in the residential property market, which seems to be cooling down after touching record highs over the past few months.

Many potential house hunters have stayed away from the market for the past three months, forcing developers to freeze price hike. Sales in many prime markets have come down by 40-50%, industry officials said. During past one year, banks have increased the interest rates four times, and on Friday, RBI increased the CRR by 50 basis points in two phases, hinting a fresh round of rate hike by commercial banks.

“The sales are down now. Next two months are crucial for developers. If the sales are not picking up, it might lead to price cuts,” Pranay Vakil, chairman, Knight Frank India, said.

Spurred by low interest rates, the housing market had boomed during the past two years. However, the government is now trying to curb the unusual spurt in the Indian real estate sector by the hike in interest rate, the new service tax on commercial rentals and withdrawal of the tax benefits enjoyed by the Sebi-registered funds. RBI has been warning of an asset price bubble in the Indian property market and has blocked foreign venture funds from investing in the realty sector.

Developers have admitted that home prices are stagnant for the past three months and sales have dropped by 60% last month. “We used to sell 15-20 units a month. But in last two months, it has come down to 5-10. But, we have not cut the prices so far,” a Worli-based developer said.

Builders will be fined for delaying flat handover

2007-06-18T17:27:00.000+05:30

THE government plans to impose a penalty on builders who delay in handing over possession of flats. The department of consumer affairs and urban development ministry are planning a provision in the Real Estate Management and Regulation Bill where defaulting builders would have to pay a penalty for not providing the house on time.

Real estate companies who fail to deliver properties on the agreed date would have to pay a penalty of 1% of the price of the property. This is proposed to be calculated for every month till the property is delivered to the buyer. This means that if a flat costs Rs 20 lakh and there is a five month delay, the buyer will get a compensation at the rate of Rs 20,000 per month totalling Rs 1 lakh for the five month time overrun. This provision will have to be incorporated mandatorily in a pre-determined manner, at the time of transaction itself. “Once implemented, the policy will have a major impact on develop-ers, as most real estate projects inevitably get delayed. For instance, Sahara City Homes projects has been delayed by over 2 years. Moreover, the developers would be prevented from shortchanging consumers,” a consumer affairs official said.

On the other hand, for the end-buyers, though they will be bereft of their dream house, the 1% compensation on offer is significantly higher than the rent that the property would have otherwise generated.

States asked to set up realty regulators

AT present, in a place like New Delhi, the rental values commanded by a residential property is less than 0.5% of the capital value. For instance, a property valued at Rs 50 lakh, will not generate more than Rs 25,000 per month as rental.

The department of consumer affairs is working in tandem with the ministry of urban development over the proposed move.. Government’s move to fine builders for late delivery of property is a part of the modification.
The final Bill would be tabled in the monsoon session of the Parliament.

Thane is fast becoming a mainstream city

2007-05-14T18:39:00.000+05:30

A few years ago, the impression Thane gave property buyers and analysts was that of a sleepy town at the far end of Mumbai. Today, the entire scene has changed. Thane is no more a sleepy town or a suburb; it is home to the finest builders in Mumbai who are developing mega projects comprising residential, commercial and retail development. Over the past three years Thane has seen considerable development and traditionally we have seen that the moment road infrastructure grows in any city, the demand for real estate virtually scales up. It may be a little slow growth but with more than 200 residential projects under construction in Thane, it seems that the average Mumbaikar will get his dream home here and with builders looking seriously at commercial development things are likely to hot up in the Thane region.

Much of the demand in Thane is arising out of the IT and ITes companies which will be looking to relocate themselves as prices in Navi Mumbai, Powai, and Andheri East are scaling new heights. Thane in the long run may be another CBD in the suburbs.

Thane, after Mumbai and Navi Mumbai, remains a sought after destination as because of the Eastern Express highway's development distances from mainstream locations like Andheri, Borivali, Powai, Parel, Ghatkopar and South Mumbai have reduced considerably, thus causing a niche in the two primary categories of residential and commercial development