GST: Will GST make homes expensive?, Real Estate News, ET RealEstate

http://realty.economictimes.indiatimes.com/news/industry/will-gst-make-homes-expensive/59252316

Will GST make homes expensive?

The members of CREDAI (RNE) Raj Nagar Extension, believe that property prices will go up once the new tax regime kicks in

By: Ravi Kumar Diwaker (Magicbricks Bureau)

Come July 1, under-construction projects will attract a goods and services tax (GST) rate of 12%. Amid all the hullabaloo over the unified tax regime in the country, speculation is rife on would it lead to a hike in property prices?

The members of CREDAI (RNE) Raj Nagar Extension, believe that property prices will go up once the new tax regime kicks in. They feel RERA and GST will push price trends with a 10-20% spike in property prices.

"Taxes are being rationalised which will lead to increased transparency. There will be more clarity post-GST in terms of taxes. Under GST, the under-construction projects are going to attract 12% tax, where previously it was about 4.5%. This will push the market and we can expect an increase in prices. Steel will also attract 18% GST, which will further put stress on prices," says Manu Garg, Director, Carol Infrastructure Pvt Ltd, who was speaking at a press conference held by CREDAI, RNE chapter.

"Cement has seen both highs and lows in the past and it directly impacts the construction cost. Any increase in cement prices will directly influence the construction cost of a project. The government is also working on the correction of minimum wages. From here, the market will only move ahead so the best time to buy a house is now. Home loan rates are low and the market gives end-users and investors the right climate to buy," adds Garg.

General Secretary of CREDAI RNE, Gaurav Gupta says that the best time to buy property is now as prices are attractive and home loan rates are cheapest at this point in time. "The market offers attractive prices for home buyers. Home loan rates are the cheapest and affordable homes are getting subsidies from the government," explains Gupta.

The GST rate for steel has been finalised at 18% which is expected to be beneficial in the long run for other sectors as well. Cement prices are expected to go up marginally, as it has been put in the 28% tax slab from the earlier 23-24%.

Arun Gupta

Venkaiah Naidu: Modi govt approves over Rs 4.13 lakh crore for urban infra in 3 years: Venkaiah Naidu, Real Estate News, ET RealEstate

http://realty.economictimes.indiatimes.com/news/infrastructure/modi-govt-approves-over-rs-4-13-lakh-crore-for-urban-infra-in-3-years-venkaiah-naidu/59138697

Modi govt approves over Rs 4.13 lakh crore for urban infra in 3 years: Venkaiah Naidu

NEW DELHI: The Narendra Modi government has pumped in three and half times more investments than the previous UPA government to improve basic urban infrastructure, urban development minister M Venkaiah Naidu has said.

Along with investments, better per capital spending, central assistance and enhanced capacities of urban local bodies under new urban missions launched during the past three years are driving urban transformation, Naidu said. Comparing the urban development sector reforms during three years of the BJP-led government with 10 years under the UPA government, the minister said that per capita investment of Rs 15,475 has been approved during 2014-17 for a five-year period, more than three times the Rs 4,918 approved for 10 years under the UPA.

A total investment of Rs 4,13,475 crore has so far been approved for improving basic urban infrastructure, compared to Rs 1,18,034 crore approved under the Jawaharlal Nehru National Urban Renewal Mission, he said.

Addressing media persons on the urban sector initiatives, Naidu said, "A rule-based framework has been introduced to ensure objective selection of cities and allocation of central funds without any discretion and discrimination, and the same has been followed in getting unauthorised occupants of government houses evicted."

The minister said a major course correction has been launched during the past three years to improve quality of life in cities in an environment of inclusive, sustainable and accelerated urban development.

Giving an account of the positive outcomes of the initiatives of the government that are driving urban transformation, he said a total of 6,737 projects have so far been approved, more than double the 3,138 projects cleared under JNNURM.

"In an indication of the new language of governance and resource mobilisation, 322 AMRUT and smart cities have acquired credit ratings of which 147 have got investment grade," Naidu said. "For the first time, 500 AMRUT cities and 60 smart cities identified so far are pursuing five year comprehensive action plans for infrastructure development as against ad hoc approval of projects in the past."

Arun Gupta

licence: Why you must rent out your flat on licence not lease, Real Estate News, ET RealEstate

http://realty.economictimes.indiatimes.com/news/residential/why-you-must-rent-out-your-flat-on-licence-not-lease/59123116

Why you must rent out your flat on licence not lease

By: Shaveta Dua, Magicbricks Bureau

Squatters are every landlord's worst nightmare. As buying their own real estate is out of reach for a large number of people in the country, we often hear stories of tenants illegally occupying prime properties. If the squatter refuses to vacate your property, it normally translates into a protracted court battle or an out-of-court settlement arrived at on terms that may not necessarily be favourable to you. However, fret not as there is a way out: Leave and Licence Agreement.

A landlord can give his property either on 'Leave and Licence' or 'Lease'. Although these two terms are often used interchangeably in layman's parlance, they are inherently different.

While a licence, defined under Section 52 of the Indian Easements Act, 1882, gives permission to the licensee to use the property, Section 105 of the Transfer of Property Act, 1882, defines lease wherein a tenant has exclusive possession of the property for a specified time period to the exclusion of everyone, including the owner.

Under the Lease Agreement, a landlord gives full possession of his property for a certain period on a fixed amount to the lessee. The tenant can remain in possession of the property till the lease contract gets terminated but under the Leave and Licence Agreement the landlord has the right to enter and use the property and the licensee can't object to this.

"Mere labelling any such document as Lease or Licence does not make it so. There are certain characteristics that separate one from the other. In the case of a dispute, the court looks at the clauses in the contract and the intent of the parties concerned," says lawyer Akshat Pande of Noida-based law firm Alpha Partners.

"At the onset, it's important to label it as a 'Leave and Licence' Agreement and not 'Lease' Agreement. Instead of writing landlord and tenant in the Rent Agreement, it is advisable to write licensor and licensee, so it does not show an exclusive possession to the person who has taken the house on rent. Apart from that, there are other standard clauses which give full right to the property owner over his property," says Rani Wilfred, Managing Director of Pune-based property consultancy Prime Realty and Property Management Pvt Ltd and head of Real Estate Women's Association, India.

Although a licence is generally used to rent out commercial properties in the country, it is a popular way to rent out flats in Maharashtra, especially in cities like Mumbai, where space is at a premium.

Sudip Mullick, Partner, Khaitan and Co, adds: "A Leave and Licence principally does not create any right in the premises in favour of the tenant. The Agreement usually includes a clause to provide that no possession is being given and one set of keys will remain with the landlord. A landlord may not necessarily keep one set of the keys but such a clause is added to demonstrate that no interest or title is created in the premises or possession of the same is delivered to the licensee." In Maharashtra, the general practice is that the Stamp Duty and registration charges are borne by the licensee or shared equally by the parties.

Mullick adds that it is the best mechanism to encourage people to protect their premises from being usurped by tenants. "Tenants may act foul and deprive the landlord of the fair market price by squatting in the premises and claiming rights of a protected tenant. There is capital appreciation of properties but owing to the protected tenant laws in the country, courts often rule in favour of the tenant," maintains Mullick.

So, why is there less awareness about this type of agreement? "I think it is due to ignorance of the people. This system ought to be made popular in the rest of the country, including metros and Tier I cities, because many people don't give their properties on rent fearing unfair claim by the tenants and long drawn litigation," explains Mullick. . But Pande feels that owing to a high licence fee in many states of the country, property owners see a merit in Lease Agreements. "In many states licence is not subject to Stamp Duty but is as costly as Stamp Duty. This is a big deterrent," sums up Pande.

In Delhi, Stamp Duty is a little steep at 2% of the total rent paid for a period of five years along with separate registration charges of Rs 1,100. But in Maharashtra, the Stamp Duty is nominal at 0.25% of the total rent paid and 10% of refundable security deposit per year for the 5-year period which is to be paid by the licensee. "After the 5-year period, the parties have the option to convert it into a Lease Agreement or renew the Leave and Licence Agreement for another five years," says Wilfred.

A regulation structure under the draft Model Tenancy Act has also been drafted by the government of India for residential and commercial properties in the country. The proposed law tries to balance the rights and duties of both landlord and the tenant under a rental contract.

The draft talks about setting up of rent courts, rent authorities and rent tribunals by the Centre, states and Union territories on the principle of "natural justice".

But if one wants to avoid any legal hassle related to overstaying tenants, Leave and Licence is the best bet. After all, it's better to be safe than sorry.

Arun Gupta

housing prices: 4 reasons why residential real estate prices will rise post RERA - The Economic Times

http://m.economictimes.com/wealth/real-estate/4-reasons-why-residential-real-estate-prices-will-rise-post-rera/articleshow/59014397.cms

4 reasons why residential real estate prices will rise post RERA

Jun 06, 2017, 03.49 PM IST

With a pulling-back of supply and a continuous robust demand from end-users, the residential market will soon witness a marginal uptrend in residential prices.

By Ramesh Nair

RERA has been implemented with the purpose of enhancing transparency, mitigating information asymmetry and applying a uniform 'code of conduct' for developers across various states. It seeks to reduce the volatility seen in the real estate sector in the past, and eliminate the trust deficit between the two primary industry stakeholders - builders and buyers. However, residential prices are likely to rise in the post-RERA world. Here are some reasons:

1. The Supply Side Story:
RERA will play a fundamental role in determining the economic framework of demand and supply in the real estate industry. Supply will reduce because developers will now launch only those projects which they are likely to complete within the promised timeframe. (Post RERA, the penalty for time over-runs by developers are huge.)

2. The Demand Side Story:
Demand will remain robust but witness a redistribution. Since risk on residential investments will be mitigated, so will reward. This is why we will witness the incidence of high risk-high returns investors thinning down on the ground. Investors will also be low-key because they need to see increase in prices accompanying increase in sales - something they have not witnessed of late.

Instead, there will be more end-users in the market, as consumers' confidence in developers is a critical component of market sentiment and these are the primary beneficiaries of greater transparency. These end users will largely hail from the middle-income and low-income categories who will look closely at affordable housing. With the Government's incentives for affordable housing and the easy availability of home loans, we expect end-user driven demand to pick up.

With a pulling-back of supply and a continuous robust demand from end-users, the residential market will soon witness a marginal uptrend in residential prices.

3. Costs for Developers:
Apart from the demand and supply dynamics, the holding cost for developers is likely to go up. Essentially, no new projects can now be launched before all approvals are in place. The window of price escalation between 'pre-launch' and 'official launch' which was earlier available to developers is now shut. This additional holding cost will potentially be passed on to buyers, adding to their overall cost of purchase.

4. Land Prices:
The cost of land will go up within city limits as post demonetisation, there will be no leeway for diversion of surplus cash from other businesses towards purchase of land. The force-fed transparency post RERA will further make it necessary for developers to use legal funds to purchase land. This will add to their overall input costs and therefore lead to increased end product prices.

On the positive side, end-user demand is stable and some recent reductions in home loan rates by banks will see that the trend continues. Overall, we anticipate a marginal upward increase in pricing for residential units in a market backed by genuine buyers and a lower yet predictable and good quality supply pipeline.

The author is CEO & Country Head, JLL India
(Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of economictimes.com)

Arun Gupta

http://realty.economictimes.indiatimes.com/news/industry/here-is-the-step-by-step-process-to-withdraw-90-of-your-pf-to-buy-home/58643004?action=profile_completion&utm_source=Mailer&utm_medium=ET_batch&utm_campaign=etrealty_news_2017-05-13

EPFO: Here is the step-by-step process to withdraw 90% of your PF to buy home, Real Estate News, ET RealEstate

The government it seems is pulling out all the stops in making 'Housing for All by 2022' a success. The initiative gets a shot in the arm by allowing members of EPFO i.e. the contributory employees, to dip into their retirement savings to own a home of their own.

EPFO has allowed members i.e. the contributory employees of the provident fund (PF) scheme to use 90 percent of EPF accumulations to make down payments to buy houses and use their accounts for paying EMIs of home loans.

Under the new rules, an essential requirement for a PF member to withdraw one's PF money to buy a real estate property is that he or she has to be a member of a registered housing society having at least 10 members. An employee who has been allotted a PF number is considered a PF member by the EPFO.

The new rules will be in addition to the existing rules for withdrawal of PF by the employees to fund their home buying. Neeti Sharma, Sr. Vice President, TeamLease Services informs, "This is an additional condition under which the PF member can avail loan apart from the conditions prevailed earlier. He can withdraw funds in his individual capacity if he does not want to be a member of a housing society, provided all the requisite documents are in place. Since the previous rules prevail, he can still withdraw funds for purchasing a house."

As a member, one can use the PF funds for an outright purchase, as a down payment for a home loan, for buying plots, for the construction of a house. The transactions can be made through central government, state government and even from a private builder, promoters or developers. Only those members who have completed 3 years as a PF member will be eligible for this scheme.

No secondary market deals
The rules, however, do not encourage secondary market or resale transactions of real estate properties. EPFO will be making the payments directly to the co-operative society, state government, central government, or any housing agency under any housing scheme, or any promoter or builder, in one or more instalments, as the case maybe.

How much lump sum can be withdrawn
The maximum amount that can be withdrawn is up to 90 percent of the balance in the PF account or the cost of acquisition of the property, whichever is less. The balance will include members own share of contribution plus interest and employer's share of contribution plus interest. In the case of construction of the house and if it happens at a lower cost or the member doesn't get an allotment of the house ( where it was applied for), the amount has to be refunded back to EPFO within 30 days.

Making EMI payment through PF
The new rules allow a PF member who is also a member of any housing society, to dip into the PF to pay full or part EMI for a loan in member's name, after furnishing the details in a prescribed format. Sharma says, "Apart from the non-refundable loan, additionally there is now an option to repay the pending instalments to society on a monthly basis from the future PF contribution of the member which was not available in the past." EMI will then be paid by EPFO to the government, housing agency or the bank, as the case maybe.

How to apply
Once a PF member has become a member of a housing society, he or she can apply individually or jointly through housing society in a prescribed format (Annexure-I) to get a certificate from the EPFO.

Annexure I


In the Annexure I form, the employees ask for the balance and the deposits made in the last three months before applying. This will help EPFO to determine how much EMI can be arrived at. Also, the employee has to mention the name and details of the bank or housing society to whom such certificate is to be issued.

The EPFO then issues a certificate in a prescribed format (Annexure-II) showing the outstanding balance and last three month's deposit in the account.

Annexure II


Alternatively, members can take printouts of passbook downloaded from EPFO website and submit to housing agencies or banks.

If a member wishes to use PF money to meet EMI's, then in addition to Annexure I, an authorisation by the member is to be filled in a prescribed format. (Annexure III).

Annexure III


It will carry details such as PF amount, PF and loan account number, lender name, address etc. One has to get this form authorised from the lender i.e. branch manager of the lender who has sanctioned the loan. Once approved, EPFO will start transferring EMI's online to the lender's account.

What if employee leaves the job
The EPFO has made it clear that under no circumstances will it be liable for any default of payments to the lender. EPFO will not stand party to any agreement between member and society or builder. If an employee leaves service, it will be the responsibility of the member to repay the loan. In case the PF funds get over, the employee will have to arrange funds from own sources to meet the future EMIs.

One can avail this new PF withdrawal scheme along with the benefit under the PMAY.

Existing rules for house purchase
As per the existing rules, for the purpose of purchase of a house from a promoter (Builder), membership period required is minimum 5 Years. The maximum that one may withdraw from the PF account is 36 month's basic wages or the total of employee and employer share with interest or total cost, whichever is least. One, however, need not be a member of a housing scheme to avail it.

Conclusion
Remember, EPF is meant to take care of your post-retirement needs. Depleting it may jeopardise your retirement. Therefore, utmost caution should be applied before dipping into it. For those looking for a down payment amount may still consider it. Also, those who have a backup plan to meet post-retirement needs through equity mutual funds or PPF may still consider this route of owning a home. After all, it's one own money and what's good if it doesn't help me get a roof over one's head.

Arun Gupta

What is the right age to buy a home? | Housing News

https://housing.com/news/right-age-buy-home/?utm_source=housing-existing&utm_medium=email&utm_campaign=news-digest-22april2017

What is the right age to buy a home?

Considering that the age of an individual plays an important role in obtaining a home loan, we look at whether there is any ideal age, at which one should consider buying a property – for investment as well as self-use

By Kishor Pate•April 18, 2017

In India, the current belief is that property investment is ideal, only for those with upcoming or established careers. However, is this true? How do banks, lenders and the property sector at large, view investors who do not fall in that age bracket anymore? Can one be too old to put money into property and would one have missed the chance to grow their wealth through real estate at some point?

Of course, it is true that banks are willing to lend to a person only for so long. When a prospective borrower is nearing retirement, the concept of giving them a long-term home loan does not make much sense to them. Let us examine this a little more closely.

Eligibility for home loans, on the basis of age

When a person is in his or her 30s, they have around 30 years of active professional life ahead of them. Naturally, this gives them abundant time to develop a large property portfolio. However, even when they are in their 40s, they are far from being too old to successfully invest in property. They still have 20 years ahead as income-generating citizens and even more, if one is successfully self-employed or runs a business.

Of course, it goes without saying that the sooner one invests, the higher will be the ultimate gains because profits from property compound over time. Generally, it is assumed that one must have the ability to service home loans for 25-30 years, to finance one's property portfolio.

See also: Should you invest in a retirement home?

Investment strategy for individuals nearing retirement

However, many banks in India have now understood that people can and do work past the conventional 'retirement age' of 65 these days. Moreover, once one has secured a good portfolio of assets, one has additional clout and credibility with banks, since these properties can act as collateral for fresh loans even at the age of 50 or above. Definitely, the time to experiment with 'speculative' investment should be over by this time, as one should justifiably have a healthy aversion to risk by age 55.

By this age, the ideal strategy should be to boost the value of one's existing assets, via proven value-boosting routes, such as renovations. A person who wants to keep investing in property in India, at age 60 or above, needs to have a very clear understanding of the market, as well as a great deal of confidence in one's personal finances.

While it is now technically possible – under certain circumstances – to raise a home loan for property investment even after retirement, the question of whether one would want to is, of course, a personal one and would depend on a variety of circumstances – most related to one's financial soundness and appetite for such activities.

Ideal age for buying a home for self-use

What about those looking at buying a home for personal use? This is where it gets a lot simpler because there is no 'ideal' age for home ownership.

If one has been living in rented homes all along, buying a home even at 65 makes perfect sense. In the first place, it is the perfect retirement gambit, as it provides freedom from the recurring expense of monthly rent. Secondly, it secures a sound asset which gives unmatched financial security and can be used to raise funds in emergencies. Thirdly, a property is the perfect bequest to leave behind for one's children.

The bottom line is that there is definitely such a thing as an 'ideal age bracket' for property investment, although this age bracket is flexible, depending on various factors. However, there is no 'ideal age' to buy a home for personal use. The latter is especially true, if one sees a self-owned home more as an abode and sanctuary of financial freedom and security, than as an investment instrument.

(The writer is CMD, Amit Enterprises Housing Ltd)

Arun Gupta

Why 2017 is the best year to buy affordable houses, Real Estate News, ET RealEstate

http://realty.economictimes.indiatimes.com/news/residential/why-2017-is-the-best-year-to-buy-affordable-houses/58048099

Why 2017 is the best year to buy affordable houses

By: E Jayashree Kurup \ Magicbricks

Over 1.66 crore applications for various credit linked subsidies for housing loans have been received through various channels by the government in the past few months. In a country where online internet penetration is a mere 37% overall and 62% urban, this data available with the Ministry of Housing and Urban Poverty Alleviation shows that digital access is not an issue. It may require some facilitation. However, that too, provides job opportunities and therefore, is a good economic activity to pursue.

The Credit Linked Subsidy Scheme (CLSS) was the Housing Ministry's effort to dovetail finance availability into the Prime Minister's vision of a liveable house for every Indian family by 2022. The interesting thing is that while earlier it was housing shortages that were being computed, today the extent of subsidy sanctions are being touted.

So how does every citizen avail the sanctions? The CLSS announced in a previous budget offered a 6.5% interest subsidy to be credited into the borrower's account for the first Rs 6 lakh of loan availed for buying a house of 30 and 60 sq m carpet area, under the Pradhan Mantri Awas Yojana (PMAY). The family income of the buyer was to be within Rs 6 lakh. This amounts to a net subsidy of 21% for the applicant. For the first time the government efforts had been stretched to include the Lower Income Group (LIG) segment and not the social sector of the Economically Weaker Sections (EWS) alone.

The Prime Minister's announcement on December 31, 2016, that two new credit subsidy schemes for the middle classes, MIG 1 & 2, was also announced ensured that the net was widened further. Now those with upto Rs 12 lakh annual income could avail of the housing subsidy of 4% and those with annual income levels of Rs 18 lakh could avail of subsidy levels of upto 3%.

This meant that if a young urbanite with a family income of Rs 18 lakh approached a bank for a loan, he or she would be eligible to seek loan for a house of upto about Rs 65 lakh. This accounts for over 55% of the stock that is actively traded and listed on property portals like Magicbricks.com. On this loan the borrower is eligible for a subsidy of 3% on the first Rs 18 lakh, if the loan has been availed after January 1, 2017. This effectively brings the rate of interest down from the existing 8.5%. "This makes it the best time to buy an affordable house in urban India," said Amrit Abhijat, Mission Director, PMAY and JS (HFA).

While nay-sayers have been predicting the digital challenge, statistics show that over 30 lakh people, without any aid, have been able to come and apply on the HUPA website. When some states were found not to be pushing for more CLSS applications, the Common Service Centres, manned by IT literates was launched. They charge a facilitation fee of Rs 25 per application but 28 lakh people have applied, paying this charge. The National Housing Bank (NHB) is now determining the eligibility of these applicants and estimates that at least 80-90 lakh loans will be disbursed.

For the first time, the Middle Income Group (MIG) housing has got incorporated into affordable categories. However, stressed Dr P Jaipal, Sr Executive Director, HUDCO, "The MIG subsidies are for one year. If we struggle on interpreting the law for a long time, then time will run away. The industry needs to be facilitated to transfer to MIG and take advantage of the scheme, or the next year when the scheme is appraised, the verdict will be that it is not a success."

Another concern raised by Dr Jaipal was that since it is easier for the developers to make money out of the MIG sector, the higher end of the LIG segment that was being addressed by developers may be neglected. One way of ensuring developer interest is to keep a percentage of priority lending funds from banks for constructing LIG housing.

This plea was echoed by the State Bank of India representatives who asked for the definition of affordability to be dovetailed into the priority sector lending.
With or without priority sector lending, banks such as SBI and HDFC are holding major sessions on CLSS for its staff. This is part of the preparation for a large number of disbursals. NHB, on its part, is now equipped to make the disbursals into the bank accounts of the borrower in two days, thanks to a massive digitising exercise that has won them an award as well.

With the Digidhan and other digital cash movements in the past, many informal sector workers now have a digital footprint that gives them a CIBIL score. This is already being used by microfinance lenders such as the SEWA bank to lend between Rs 1-3 lakh. The ministry is already in talks with the Indian Banks Association (IBA) to sort out the concerns of lending to the unorganised sector. A simplified application form and document process has been circulated by the IBA. However, appealed the ministry, finally the banks have to take a compassionate view when lending to those in the informal sector as they may not have too many documents to support their application.

If you are buying a house in resale markets from someone who has got a house using subsidy and is selling now that the lock-in period is over, you are eligible to be considered for funding under the subsidy scheme. But seller does not get more subsidy.

The PMAY was launched in 4011 statutory towns as per Census 2011. Now all states are adding more statuatory towns, which now numbers 4300, to avail PMAY advantages. NHB, has now mapped all the localities in these cities to postal codes that will facilitate lending by the banks.

As the Secretary Dr Nandita Chatterjee stressed, "The entire purpose of PMAY is that those with no shelter should get a house and not to trigger speculation. So the schemes are all to facilitate purchase of the first house."

With the inclusion of LIG and MIG in the fold of affordable housing, the government is clearly matching aspirations to resources to create a kind of ecosystem fuelled by incentives. They are available in 2017-18. The home loan interest rates too are low. Coupled with subsidies, they are the lowest in 20 years. But unlike in the Housing and Habitat policies of 1998 and 2007, when there was a lot of consumer facilitation and access to funds, this time round, the extent of the incentives is for a far shorter period.

Come 2018, all the incentives may not exist. Therefore, it is a good time to buy now if you don't own a house.

Arun Gupta