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About 45% Buyers Looking To Invest In Real Estate After Full-Length RERA Implementation

The market needs some more time to absorb the Real Estate (Development and Regulation) Act, 2016 (RERA) as still there are states and UTs those have not notified their respective real estate Act. States will have to carry out the regulations followed by the establishment of respective state RERA Authorities. RERA aims at organizing the real estate sector with the better transparency in operatives.

2018 market looks quite promising as RERA has already set the stage in the favour of the homebuyers in most of the states. Rolling out of RERA indicates approx 45% residential investment in the first half of 2018. With the steady confidence boost by RERA market sentiment is on its recovery path. The market is about to witness steady-going sale volume in the recent future.

“The successful implementation of RERA will reinstate the trust of the buyers at large. With the assurance of timely project deliverance along with the quality check RERA will significantly boost the demand of the real estate sector very soon,”- said, Mahesh Somani, Chairman- National RERA Committee, Head- East Zone, National Association of Realtors India (NAR).

Since RERA is the legal protector of the consumers in their real estate purchase, buyers will now have quality real estate products delivered on time. Currently, developers are offering attractive pay packages and discounts to steer clear their inventories. Again, investing in the ready-to-move project is favourable from the buyers’ standpoint as it is exempted from the GST (Goods and Service Tax) regime. Once, the consumer sentiment gets consolidated there will be no gridlock in new project launches. A balanced demand-supply proportion is likely to fuse the oversupply volume as well.

From May 1, 2017, the Act has been brought into action by the central government. It was the time when the market was undergoing the demonetization overhung. Thus, implementation of RERA made the realty sale graph even tender.Whilst no policy change or structural reform barely create any dent in the uninterrupted demand-supply chain of the affordable housing segment. During this massive slowdown, affordable housing sector contributed 17% of the total sale across the major cities of the country. It’s worthwhile mentioning, being the most incentivized sector affordable housing sector is expected to return a voluminous profit by the end of 2025. Buyers are in demand for budget housing ranged within Rs. 50 lacs at large. Alongside the inflation rates appear to have neutralized and lending rates have started declining as well.The availability of budget housing units and a sharp price correction in HIG segment opens a brighter market prospect for the buyers willing to purchase with self-finance.

–LNN (Liyans News Network) – Significant price correction in prime area residential projects. Invest in luxury residential property in north Kolkata. Price has reduced by 12-17%. Explore available flats/bungalows/penthouses online. Buy/Sell/Rent properties online across 100+ cities in India.

Importance of An Occupancy Certificate (OC) In Real Estate Deals

Who doesn’t want to own his/her own home and to give the family a secured shelter? It requires a whole lot of documentation and paperwork for buying your home in India. However, a majority of the home-buyers, especially the first time property buyers are either ignorant or pay the least heed to some of the most important documents, one of them being the Occupancy Certificate (OC).

As we all know that any real estate investment involves years of saving of the buyer. There is nothing that we can point out as a minimum investment from the real estate perspective. Owning a property can only give you a complete sense of ownership. The real estate project in which you are going to pour your hard-earned money can be labelled as “unauthorized” if it doesn’t obtain an OC. A little negligence in project documentation can pinch you harder in future.

Here are a few things that you should know about the OC

1. Occupancy Certificate is a certificate issued by the local civic authority after the completion of the project. An OC ready building is legally ready for inhabitancy.

2. Potential buyers should ensure that they have a clear knowledge about the Occupancy Certificate (OC) and the Completion Certificate (CC). CC is something that deals with the building configuration. CC ensures whether the construction has qualified to all the quality check.

3. In case the local civic authority finds a building without having an OC it holds the ultimate authority to even bulldoze the property straightway. Only an OC ready project is entitled to have both the basic and the advanced civic amenities. Also, there are many payment plans that are linked to possession. Consumers have all the rights to hold back the final installment till the builder receives the OC.

4. A property without OC, will invite lower returns during resale. In case the developer refuses to provide the OC you can issue a notice asking him to apply and hand over the copy of the OC. Make sure the builder hands over you not the application of the OC, but the copy of the OC stamped by the local civic authority which states that the property you are purchasing is ready for inhabitancy. You can also approach the consumer forums and file a petition seeking the OC.

5. However, with RERA implementation builders are asked to update the quarterly progress of their construction works on the respective state RERA websites. Possession is not complete without builder obtaining proper OC from the authorities.

“Builders might force you to have a quick absorption for selling out their inventories. Don’t fall in to such traps. Ask for all the legal documents related to the project from the builder before coming to an agreement,”- advised Mr Mahesh Somani, Chairman- National RERA Committee, National Association of Realtors India (NAR-INDIA).

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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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How Will RERA Benefit The NRI Buyers?

Undeniably the implementation of The Real Estate (Regulation and Development) Act, 2016 (RERA) is backing the real estate sector towards achieving a better accountability. Pre-RERA real estate sector used to be the most unruly sector with the poorest transparency level between the buyer and the seller. Non-residential Indians wanting to invest in Indian property market can now avail better transparency level along with standardized practice method. This is how implementation of RERA brings benefit for NRI property investors-

1. Accountability on real estate developers- Real estate developers has to comply with RERA norms for their business continuity. Thus, it’s obligatory for the developers to register their on-going projects with the state regulatory authority (RA) and to secure a timely deliverance along with a proper quality check. Now buyers shouldn’t be worried about project completion.

2. Timely update- Builders are now time-bound in terms of project deliverance. Alongside they need to update a quarterly progress report on the development on the state RERA website.

3. Secure investment- RERA mandates builders to maintain an escrow account with 70% of the received amount from the buyers. This amount can only be used for existing development work.

4. Better transparency- RERA is a big relief for the NRIs as there is significant transparency between the developer and the buyer. Now with the presence of the RERA website NRIs can access any data about the developer and their project works from anywhere. They will get to watch the project status on the site at any time.

5. State-wise distribution- Since real estate is a state subject, thus RERA is spread separately in states. NRIs can track all the project development works according to their area preferences. Interested NRIs can check for the details of the projects on state RERA websites.

6. Builders liable for interests- In case of possession delay, the builder is liable to pay interest on the value of the project to the NRI buyer until the delivery. Thus, NRIs don’t need to follow up builders regularly. Any delay will result in compensation which will benefit them anyway.

7. Simplified process-Under RERA real estate transaction and follow up have become less complicated than earlier which is a bigger benefit for the NRIs to understand the entire transaction process. Now they have a legal platform to raise their voice and file complaint against any deceptive act of the builders. RERA will monitor every realty transaction so that it can protect the consumer rights at its best.

8. Presence of a regulatory body- Now a regulatory body can be easily accessed to get exact information about construction works or the developers. Before RERA buyers used to move consumer courts for reporting fraudulent cases. Now buyers can easily approach the state RERA authority on account of any misleading approaches by the realty stakeholders.

“Real estate sector in India has been evolving into a secured and intelligent investment venture for the NRIs. NRI buyers can now actually monitor the development progress of their invested projects and use the legal platform in case of any default whenever needed. With increased security level of investment, enforcement of RERA broadens the scope of realty investment in India,”- said Mr. Mahesh Somani, Chairman- National RERA Committee, Head- East Zone, National Association of Realtors India (NAR).

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Can Aadhar Linkage Mark Down Benami Property Transaction?

‘Aadhaar linkage with property’ is another forthcoming step by the central government of India aiming to straighten out in real estate transactions. Linking of the unique Aadhaar number with property transaction will make the real estate sector more transparent. Now the big question how the homebuyers will have benefit from this move? Depending on the success of this move, legal ownership of property will have a sharp-cut. Still, the authenticity of the process of Aadhar linkage with the property is not free from doubts.

1. How far is biometric system infallible mechanism?
2. How will the process eschew the black money transaction which has involvement with the Benami Ownership?
3. Is PAN linking not that effective as Aadhar does?
4. Through this mechanism will government able to monitor transaction between two private parties in the secondary market?
5. Won’t this process further amass realty slowdown?
6. How will the government handle the data concerning the privacy portion?

Since, biometric is involved with Aadhaar card linkage, people using fake identity proofs such as dupe PAN Card or Passport will be there easily under government’s radar. Through this mechanism, the government will monitor property transaction and the practice of using Benami entities might face the ultimate inhibition.

While, the homebuyers disagree with the reason given by the government regarding this process, as they find this mechanism is not full-proof. As the biometric focus on the fingerprint identification, if anyhow some unfortunate incident happens which might upset the physical condition of the finger, in that case counting the fingerprint identity won’t be secure enough.

Few experts cite that the real threat to country’s economy is the rampant circulation of black money, whereas owning Benami property comes much later. Black money generation in real estate sector relates to the price disparity of the real estate products where reported price (area circle rate) mismatches with the original market price. Thus, the government should first come up with a substantial mechanism.

As a parallel, while having the legal take on linking Aadhaar with property transaction, it points out that the government should amend its UIDAI Act first to integrate new measures. The UIDAI Act mandates Aadhaar card for providing people government subsidies and benefits. While purchasing home totally depends on the personal capacity, the buyer is paying money to the exchequer by the way of stamp duty, he can’t be said to avail of government subsidies and benefits. Under the Registration Act of 1908, property-related transactions are always in the public domain. Any person can inspect the books of registration, by paying nominal fees- says Section 57 of the Registration Act, 1908. Then how can Aadhar linkage will identify such fake identities in real estate transaction?

Multiple other concerns with Aadhaar linkage :
• Right to property is a constitutional right, under Article 300A of the Constitution of India. With Aadhaar linkage, the government will get information about your property transaction against the existing ownership.
• The government wants to inspect large-value transactions in real estate with Aadhaar linkage.
• Homebuyers are primarily concerned about the safety measure of the personal data.
• Without digitization of land record linkage of Aadhaar can’t fully secure the property market from Benami ownership.

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