Month: July 2013

Realty regulatory bill to be introduced in Monsoon session

NEW DELHI: The real estate regulatory bill that seeks to bring transparency and accountability in the realty sector will be introduced in the monsoon session of Parliament, a top government official said today.

Last month, the Cabinet had approved the Real Estate (Regulation and Development) Bill, that seeks to provide a uniform regulatory environment to the sector.

“The Bill will be introduced in the Monsoon session of Parliament,” Housing and Urban Poverty Alleviation Secretary Arun Kumar Misra said at an annual convention of National Association of Realtors (NAR) India.

The Bill will be sent to Parliamentary Standing Committee for consideration and suggestions, Misra said.

The month-long Monsoon session of Parliament is expected to start in late July.

Misra also disagreed with developers’ contention that prices would rise by 30 per cent once this Bill is passed in the Parliament.

“All that the regulatory Bill says that when you start selling the flats, all the licenses and permissions should be in place,” the secretary said.

Stating that the Bill deals with property brokers and agents as well, Misra assured the brokers’ body NAR that they would be included in the list of associations to be consulted by the Standing Committee. He asked the brokers to bring more professionalism in their business.

NAREDCO, an industry body of real estate developers, President Naveen Raheja emphasised on the need of self- regulation.

NAR-India is an industry body for property brokers and it has 1,700 members. They are affiliated to the national association of realtors (NAR), a global association based in Chicago, USA.

The Bill provides for setting up a regulator for the real estate sector and has provisions like a jail term of up to three years for developers who make offences like putting up misleading advertisements about projects repeatedly.

It also intends to make it mandatory for developers to launch projects only after acquiring all statutory clearances from relevant authorities. The Bill makes it mandatory for builders to clarify the carpet area of the flat.

Source: The Economic Times

Easier ECB norms to create more affordable housing: Crisil

MUMBAI: The easing of fund-raising norms through the external commercial borrowing (ECB) route will lead to developers focusing on low-cost housing projects, says rating agency Crisil.

Earlier this week, RBI lowered the total experience of developers or builders for affordable housing projects to 3 years, against 5 years prescribed earlier to avail of ECBs.

Besides, the apex bank has also withdrawn the condition of minimum paid-up capital requirement of not less than Rs 50 crore for housing finance companies (HFCs) to avail of ECBs.

“Both, housing finance companies and developers, are the direct beneficiaries while home buyers will also benefit in terms of concessional interest rates and greater availability of low-cost homes,” CrisilBSE 1.80 % said in a report.

Crisil estimates that the cost of funding for developers will come down to around 9-11 per cent (taking into account the hedging cost) from the current levels of 15-20 per cent, depending on the current source of funds.

“In addition to the cost of funds, since the criteria of past experience has been relaxed, relatively less experienced developers will also benefit as it will enable them to launch new projects in the affordable housing segment,” it said.

Source: The Economic Times

Use of agricultural land for construction activity: Govt eases norms

NEW DELHI: Lakhs of people living in rural areas in Delhi will benefit as Delhi Government today lifted certain restrictions on use of agricultural land for construction activities.

The government issued a notification today as per a decision taken by Delhi Cabinet on June 15.

As per existing norms under Section 81 of the Land Acquisition Act, no agricultural land could be used for construction of houses and other purposes but lifting of the restriction would pave way for building flats on those land.

“We have issued a notification effecting a cabinet decision,” a senior official in the govt said.

“The decision to lift restriction in use of the agricultural land for construction of houses and other purposes under the Section 81 of the Land Reforms Act will benefit 165 villages,” he said.

The decisions will help villagers get their properties registered and carry out construction works after approval of building plans from authorities.

The chief minister had earlier issued an order to the revenue department to withdraw all pending cases under section 81 in various courts.

The decision is seen as an effort to woo the people in rural areas ahead of the Delhi Assembly elections scheduled for November this year.

The Cabinet decided to exempt provisions of Section 81 to areas urbanised by way of notification under Section 507 of the Delhi Municipal Corporation Act.

Source: The Economic Times

Adding more districts in NCR to increase land supply: CREDAI

NEW DELHI: Hailing the inclusion of three more districts in the National Capital Region, realtors’ apex body CREDAI today said the move will lead to additional supply of land for development.

It cautioned however that the government prepare a master plan for development of the region or else builders will start accumulating land, leading to rise in prices.

The property consultant said there would not be any immediate impact on the property market of NCR.

Yesterday, the National Capital Region Planning Board (NCRPB) included Bhiwani and Mahendragarh districts of Haryana and Bharatpur in Rajasthan in NCR.

“It is a futuristic decision with vast ramifications for NCR region. Reports foresee almost 11 per cent increase in urbanisation of this area by 2021 and to reduce the pressure on Delhi, there was urgent need to expand the area,” CREDAI NCR President Anil Sharma said in a statement.

Stating that land is in short supply, Sharma said it was essential to expand the area to meet the future housing needs.

But, he cautioned that merely adding these areas to NCR will not serve the purpose unless infrastructure is developed in a rapid and planned manner.

“The decision should be followed up with preparation and implementation of Master Plan as soon as possible otherwise builders will start accumulating land, leading to speculative price rise,” he added.

Jones Lang LaSalle India CEO (Operations) Santosh Kumar said: “Its a long term decision. There would be no immediate impact of this on the NCR property market.

“More land parcel will come in the NCR. These districts would get central funds for infrastructure development. The connectivity of this region to the national capital will improve.”

The consultant noted that builders might start buying land, but it is unlikely that project would be launched in this region.

Source: The Economic Times

Home prices inflated; aggressive lending dangerous: Deepak Parekh

NEW DELHI: Terming the home prices as highly inflated in the country, including in smaller cities, industry leader Deepak Parekh on Friday asked builders to focus on affordable housing, rather than luxury homes, and said it is a dangerous thing to lend aggressively to developers.

Parekh, Chairman of the country’s largest housing finance company HDFC, also asked the home buyers to be cautious of ‘too-good-to-be-true’ offers from the property developers and warned them against schemes where builders claim of paying interest on the borrowers’ loans.

The eminent banker also asked the financing companies to stay away from innovative and aggressive loans, including teaser rates where the interest rates rise gradually and lending money to developers at the same rate as being offered on individual home loans.

While lauding the growth in the home finance market over the years, Parekh in his annual letter to shareholders of HDFCBSE 0.67 % said: “As a basic tenet, construction finance entails higher risks and, therefore, such risks have to be built into the pricing.

“Construction finance should not, through any innovative structuring be available to developers at the rate of interest being offered on individual home loans. Further, complete up-fronting of construction finance to developers, even before the ground is broken is dangerous,” he said.

Parekh also said the country continues to face an acute housing shortage, but prices continue to remain high.

“Having spent so many years in this business, one recognises that one’s voice can never be loud enough when so many vested interests exist as far as land markets are concerned. Nonetheless, I am of the firm belief that one must not give up or be beaten down to silence.

“At the cost of perhaps now sounding like a broken record, I continue to hold the stance that increasing supply is the only way home prices can come down in India. Even in Tier II and Tier III cities, home prices are inflated,” he said.

Parekh, however, lauded the role of a new breed of entrepreneurs and first-time developers who have ventured into the affordable housing space.

“Such projects may be few and far between, but the trend is encouraging because this is where the real demand lies. Most of these affordable housing projects have been sold out immediately. Hopefully, the more established and larger developers will take a cue and focus on the affordable housing segment, rather than high-end luxury homes that they currently cater to,” he said.

Talking about the interest rates where banks offer a low rate at the beginning and later increase them for the home loan borrowers, Parekh said such products were risky and should be avoided.

“To my mind, teaser products, of any nature entail risks. Customers need to be cautious of ‘too-good-to-be-true’ type of products. Borrowers must not be blinkered into believing that there are no risks when developers offer to pay interest on a borrower’s loan for a specified period.

“Borrowers have to be cautious because in the event of a developer delaying payment, the credit bureau reports will reflect this in the borrower’s records, thereby impacting his or her creditworthiness.

“Ultimately, developers need to recognise that in the long-run, it is to their advantage to allow a correction in prices which will help their cash flows,” he said.

Source: The Economic Times