Month: January 2018

How To Select The Right Real Estate Developer?

Most would agree with me that the best way to have a secure property investment is to select a property, developed by an established construction company. A thorough research on operating developers in the current market is the first and foremost step that a future buyer should do while considering a home purchase. For instance- there are many real estate houses in Kolkata at present with alluring offerings. Running after those tempting promises is the most common mistake that the potential homebuyers often do. Here are few tips to choose the right realty developers in Kolkata-

1. Check the background and past construction report– You should keep all the required information about the developer of your chosen real estate unit. Check out the market reputation of the builder along with a genuine market report regarding the past 5 completed projects of the company. It’s always best to have the knowledge about the structure of the project. Choose a developer company that has years of market experience. Visit the company website and mark the public reviews about it.

2. Ask for the necessary project approvals– Surely, nobody would want to have future litigations against their property investments. Check the necessary approvals by the local civic authority and financial institutions to avoid future legal hassles.

3. Financial stability of the developer– A delay in project deliverance and using inferior construction materials could be a consequence of lack of fund availability to the developer. It is advised to have a close look at the financial stability of the builder. For that, you might go over business reports of the company or you can ask the bankers or the stockbrokers regarding the financial data of the real estate company. Also, the information of past project success and sale statistics will give you a rough idea of the financial condition of the real estate house. Check out the portfolio of the developer and run a quality check of the construction before investing in it.

“Buying home brings an absolute sense of pride and ownership. Choosing the right real estate developer brings a significant difference in your success. Buying home is a major decision of lifetime, choosing a genuine builder with years of realty experience can save them from a series of unpleasant consequences in future. It’s really important that potential buyers should check the due diligence and market reputation of the builder, before the investment,”- said, Mr. Mahesh Somani, Chairman- National RERA Committee, Head- East Zone, National Association of Realtors India (NAR – INDIA).

All these tips are to be followed to confirm the best real estate company for your project development. If you need any realty help put your requirements under post your property requirement in Kolkata category and avail free expert solution regarding property buying/selling/renting.

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10% Lower Stamp Duty On Residential Property Registration

Big news for property buyers! Stamp duty paid during property registration will come down at least by 10%. A circular was issued by the Maharastra government’s Inspector General of Registration and Controller of Stamps on Jan 2, 2018. The circulation states: “The built-up area will be calculated now as carpet area multiplied by 1.1, the previous ratio was 1.2. Also, stamp duty for open balconies adjacent to the flat shall be charged only 40% of the total sale price.” This circulation was signed by Anil Kavade, Inspector General of Registration & Controller of Stamps, Maharashtra.

As per the market experts, the reduced stamp duty will bring down the tax burden on the homebuyers. The circular reads, “The rate mentioned in annual valuation rate is of built-up area.”

If the documents bring up the carpet area, then the valuation must be made by the drawing of the built-up area i.e. – 1.1xcarpet area or carpet area = built-up area / 1.1”. It also explains, “If open balcony adjacent to the flats/offices/shops/industrial use is shown in documents and plans with it, then its valuation should be made at the rate of 40 % of the sale price.”

The enforcement of the Real Estate (Regulation and Development) Act 2016 has brought significant change is carpet area calculation. The new carpet area under RERA is as follows-The area covered by external walls and areas under services shafts, exclusive balcony or veranda area and exclusive open terrace area shall not be included in the carpet area calculation. This has brought a significant change in property valuation as well.

Explaining the new stamp duty circulation, Advocate Vinod Sampat said, “It is good news for home buyers as the overall stamp duty will come down in the new calculation. The percentage-wise change will be up to 10-15 % as the calculation earlier was based on 1.2 multiplied by carpet area; now it has come down to 1.1. Also, the balcony that is open won’t be charged completely only 40 % will be levied on it, this will also bring the total valuation of the property down. This means the prices will automatically come down be while calculating the stamp duty.”

“Stamp duty charges vary from the state-to-state basis. Lowering the stamp duty is a welcome move by the state government of Maharashtra to encourage residential absorption volume under RERA compliance. Also, the new carpet area calculation under RERA will cater the homebuyers the actual possession area which they are putting their hard-earned money on,”-said Mr. Mahesh Somani, Chairman- National RERA Committee, Head- East Zone, National Association of Realtors India (NAR).

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Indian Real Estate Sector is On Its Recovery Path

Starting from the end of 2016 to the entire 2017 Indian real estate industry had witnessed some significant policy changes and reforms. These have changed the face of the industry and will set to benefit the industry in long-run with global-scale performance. With the transparent transaction process and better accountability, the sector is expected to increase investment opportunity riding on better consumer confidence and strict transactional security.

The reforms began with an abrupt demonetization announcement of the PM. As soon as the announcement was aired, all the higher currency notes (500 and 1000) have been wiped out of the market. Among the other major sectors, real estate was the worst affected sector as a large number of real estate transactions used to get performed in cash. This is one major reason why the sector had been largely criticized as the haven space of black money parking.

Then the elephant arrived in the room, the Real Estate (Regulation and Development) Act 2016 (RERA). This is supposed to be the biggest reformation Act, exclusively formed for controlling the real estate business process. The Act came into effect from May 1, 2017. Being a consumer-centric Act, RERA promises to minimize project delivery delays, abrogate fly-by-night developers and agents and provide home buyers with the detailed information about the project features and progress of the projects they have invested in.

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RERA was followed by the introduction of the goods and services tax (GST) which a unified tax that subsumed all the 12 existing indirect taxes into one. Until then, both the developers and the consumers had to pay multiple and often varying taxes which caused confusion. GST brings clarity to the transactional process. With input tax credit benefit to the developers, it has reduced the cost of construction as well.

The sector will also benefit from the amendment of the Benami Transactions Prohibition Act. It aims to prohibit the black money circulation in real estate. Along with which the central government is aiming to make Aadhaar linkage compulsory for all property transactions for keeping the sector free from the unaccounted inflow.

The affordable housing scheme of PMAY also looks promising. Named as “Housing for All by 2022” a successful execution of this programme is projected to contribute $1.3 trillion to the Indian economy in the coming time. The affordable housing program is till date the biggest government incentivized housing sector and it will generate a large volume of employment along with the construction progress. All these new policies, if implemented well then will return the biggest ever revolution in the sector.

“One of the most important features of this revived realty market is top-of-the-line investment security for the homebuyers which will boost the market sentiment and inflow respectively. Real estate industry will be reaping benefits of the reform-driven environment and several positive institutional drives. It’s expected that the improved investment flow will return healthy gains to the stakeholders as well,”- said Mr. Mahesh Somani, National RERA Committee, Head- East Zone, National Association of Realtors India (NAR).

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New Year Surprise: SBI Cuts Base Rate by 30 bps to 8.65%

State Bank of India has slashed its Base Rate – an earlier lending benchmark by 30 basis points to 8.65% which means loan borrowers can now lend money from the banks at a cheaper rate. This is a surprising move at the onset of the year and is likely to be carried out by other banks too in the coming days. Yet the bank hasn’t made any changes in its existing benchmark. Thus there will be no change in the marginal cost of the lending rate (MCLR).

From the banking source, it is revealed that over 80 lac borrowers are likely to get benefited from this reduction. On its website, SBI declared, “Base rate reduced from 08.95% p.a. to 8.65% p.a. w.e.f. 01.01.2018.” The bank has also lowered the BPLR (Benchmark Prime Lending Rate) from 13.70 percent to 13.40 percent.

The Base Rate is the minimum lending rate below which banks can’t lend money. The reduction in the Base Rate will definitely benefit the active borrowers, who had borrowed money as home loans from the bank before April 2016 and also people who rose at floating rate. Additionally, the bank has also decided to extend the active waiver on home loan processing fees till March 31 2018, for the new customers who are willing to purchase home and people who want to switch their loan account to SBI.

“This surprise move is likely to usher in more residential property sale throughout the country. A large number of people, willing to buy their dream home in Kolkata and other cities can actually avail easy to repay home loan accessibility. Additionally, the waiver on home loan processing fees will translate in bigger sales and credit growth for the mortgage lending financial institutions, – said Mr. Mahesh Somani, Head- East Zone, National Association of Realtors India (NAR).

However, along with this latest announcement SBI has become the lowest among the other mortgage lenders. Earlier, the bank has reduced its Base Rate by 5 basis points from 9% to 8.95% in September 2016 which had been followed by the other financial institution until this latest announcement. This reduction is an effort of SBI to certify the transmission of reduction in the policy rates in the recent past. However, around 30-40% loans in the industry are still linked to base rates.

According to the latest market predictions, lending rates are an unlikely trend downward unless there is a steady resurgence in credit growth and higher loan volume ad-lib for lower rates.

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