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Important Facts to Look For in The Real Estate Bill

The real estate industry has cordially praised the amendment of Real estate (Regulations and Developments) Bill in 2015 approved by Union Cabinet. This bill has been introduced to unite the regulations and environment in the industry. The main motive of the bill is to provide the best services to the buyers and investors by giving the possession on time and fastest project deliveries, proper and effective redressal of customer grievances, safe and secured investments and maintained growth in the realty sector

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Some featuring facts which are favorable for the homebuyers in the unauthorized market are discussed below-

Regulations of real estate projects and agents- A disordered realty sector has many small association developers and agents who are willing to expand themselves day and night. There was no organizer or any association who can control and regulate this disarranged industry. There was a lack of laws and rules which can stop the immoral activities of developers to save the buyers interest and hard-earned money. The bill is now introduced to bring the stakeholders under the regulations where they can suffer from 3 years imprisonment for developers and 1 year for agents for not obeying the laws.

Escrow amount limit increase- A developer uses a temporary account to stop the outflow of funds from one project to another. This account is called the escrow amount. After the introduction of the bill, the developers are bound to keep 70% of funds in escrow amount. Though some of the developers welcomed this measure and some have criticized it.

Disclosures of information are compulsory– A common phenomenon in the real estate is homebuyers are not being provided with full information about the projects. The amendment now made it compulsory for the developers that they should convey every information about the projects including layout plans, floor plans, and registration of the projects, details of the architect agent and contractor which will make property dealing transparent.

Weighing consumer opinion– After the amendment of the bill, the promoters and developers are being restricted for making changes in the project specifications without taking the consent of the buyers and investors.

Simplify the grievance redressal– The bill ensures that the grievances which are raised by the buyers will be solved and settlement of the disputes will be done by forming Appellate Tribunal by appointing adjudicating officers. The customers can appeal in the district courts in 644 consumer courts. This process will decrease the expenditure and consume less time for redressal.

Buyers can plan to invest in Flats In Rajarhat as the projects are capable to deliver the possession on time and all the apartments are made with good interiors.

Taxability On Real Estate And Under-Construction Property Under GST

“Applicable GST rate” is where the confusion of the property buyers cut loose. There’s nothing to get panicked if you have the right amount of knowledge of GST levied on the construction sector. The unified tax regime, GST replaces the earlier service charges, cess, VAT and other indirect taxes. Basically, you will have to pay a single tax on your purchase.

In order to remove the applicable GST rate on real estate, the Central Board of Excise and Customs (CBEC) has recently issued a clarification regarding the applicability of GST on ready-to-move and under-construction projects.

“The simplified tax policy will benefit the industry in a long run. It will squeeze the profit margin of the developers and it will put stop to the inconvenient practice of multiple taxations which used to result in an artificially jacked-up project price,”- said, Mr. Mahesh Somani, Chairman- National RERA Committee, National Association of Realtors India (NAR-INDIA).

GST rate on ready-to-move projects– These projects are exempted from GST purview. It’s neither considered as goods nor services. Worthwhile mentioning, projects those have received the completion certificate before giving out the possession will also be considered as ready-to-move projects and thereby not inviting GST.

There is no need of paying GST on those projects for which you already paid the full sale amount before the date of GST implementation (July 1, 2017). But such transaction will attract a service tax of 4.5% under the erstwhile regime. Resale projects will also be considered as ready-to-move ones; GST will not be applicable in such transactions.

In case the buyer has paid a part of the sale amount before GST implementation, he will have to pay GST separately.

GST on under-construction projects– The effective GST rate on under-construction projects or undivided share of land is 12% with full input tax credit. However, the original GST rate on under-construction projects is 18% but one-third of this 18% is deemed as the value of land or undivided share of land supplied to the buyer of the property.

GST on PMAY affordable housing purchased under Credit-linked Subsidy Scheme- Effective from January 25, 2018, any purchased property under CLSS scheme will attract 12% of GST and the effective rate will be of 8% after deducting one-third of the amount charged for the value of the land.

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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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Risk Involvements In Auctioned Home Purchase

There’s no myth in the selling of repossessed properties. These properties are sold through physical or e-auctions. Though these auctioned properties offer ample scopes to the bargainers, it’s a slightly riskier investment zone and needs to be gingerly invested. A lender legally repossesses a property, when a buyer fails his/her repayment.

The bank claims only the base price against such property put up for auction, commonly known as the base price the price gets determined by the total outstanding loan amount of the defaulter to the lender. The decided base price somehow remains lower than the current market appreciation by at the most 30% in some cases. The auction process has become transparent since the online platform was made available for the bidders. These properties are auctioned on an “as is, where is” basis. It’s worthwhile mentioning that more than retail investors, high net-worth real estate investors shine on these deals with their nexus with bank managers and agents.

Banks recoups its dues from the bid amount of the auction. Seeing as these auctioned properties come with an “as is, where is” clause, banks don’t hold any responsibility. From a buyer’s perspective, they need to ensure whether the risk is as good as the discount they are getting from the lender. Before one chooses to invest in such auctioned properties here some precautions that you need to watch for-

Loans from other lenders
Sometimes auctioned properties have their other dues. Mostly this happens in the case of land parcels than that of constructed flats. In such cases, the property might be mortgaged to other lenders too. Most of the lenders work on original sale agreement, share certificates and NOC from the housing society. One needs to diligently verify other co-related documents such as documents provided by the bank, the civic body and, the tax authorities. In case of joint-ownership property make sure owners are the co-borrowers in the loan agreements for avoiding future troubles.
Other outstanding dues
The winning bidder has to bear other all other pending co-related liabilities such as- pending society dues, electricity bill, outstanding tax dues. All these additional dues will cost added to the buyer. In case the earlier owner has projected less value during the time of registration and the department has raised any claim on that can put an investor in troubles in the coming days. Thus, the previous circle rate should always be verified. For under-construction projects, verify from the builder whether there is any outstanding.

Property titles
In most the cases banks provide loan against a clear title. Yet, some instances are there, where banks sanctioned loans for properties that don’t have occupancy certificates. Thus, there is no place for guesswork while investing in an auctioned property. Checking all due diligence of the property has become easier with RERA execution. Now legal diligence of any ongoing and under construction property, including builders’ info along with his previous track record will be available on the state RERA website. But when it comes to an auctioned project, it’s beyond RERA purview. Hiring a real estate lawyer for scanning all transactions for a reasonable time period (at least for the last 30 years) is highly recommended. Make sure that property doesn’t involve any tenancy records.

Physical condition of the construction
Since the property has been repossessed by the bank, there is high chance of the low-maintenance of the asset. Even before the auction banks hardly pay any heed regarding the physical condition of the property. Thus, before diving in the process, you should visit the property and its surrounding locality to have a fair assessment of the property condition. If possible, assign a civil engineer for this task for bringing the present property condition and prospective valuation under the radar.
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NHB Approaches For GST Rate Reduction On Affordable Housing

National Housing Bank is in conversation with the GST Council and the other authorities to cut down the effective Goods & Services Tax rate 12% after measuring out the lowering of the land prices that could smooth over the tax burden and advance the residential property sale.
Being the regulator of the housing finance companies NHB is expected to recommend lower GST rates for affordable housing category in particular even if the general category is under consideration at an effective rate of 6%, confirmed 2 people familiar with the development.

Realtors had conversation with the finance and housing ministry officials where they put forward a similar change in the existing GST rate. Presently, under-construction projects are under 18% tax slab of GST and while it allows abatement of one-third of the total apartment cost towards land purchase cost counting the effective tax rate at 12%.

Experts say that reducing tax level on under-construction properties will reflect in sales figures as it will likely to boost market demand for under-construction projects. As projected, the government might earn better revenue if the tax rates are dropped to 6%. Nevertheless, government will consider and audit its revenue size before reaching any conclusive decision. Again, chances are there of adverse possibility in respect to lowering tax rate i.e. – excess credit in builder’s hand which would be converted to an additional tax and ultimately passed on to the end-users.

Real estate developers also are in for of lowering the tax rates on under construction projects. According to them enquiry for under-construction projects has drastically dropped ever since it was set under 18% tax slab of GST. A rate-cut will definitely motivate them towards investing in under-construction projects than waiting for those to be completed. As per the current market scenario buyers have shifted towards ready-to-move projects for saving the additional tax amount.

Additionally, the gap between the tax rates for on-hand and up-coming projects has weakened the market demand for under-construction projects. Presently, there is no additional tax burden for under construction projects and for under-construction projects it’s 12%.

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