Tuesday, 26 April 2016

Wagholi- An opportune destination

Wonderful WAGHOLI
With eastern Pune emerging as a central business district, Wagholi is reckoned as a promising residential and commercial destination
Business centres in Pune are gradu ally spreading their wings to the peripheral areas. That's a major reason as to why the outskirts have become happening hubs. Wagholi is one such premium residential destination on Nagar Road that is now a hotbed of realty activities.
Wagholi, which was predominantly an industrial and warehousing belt, is on way to becoming a popular residential destination.As a residential hub, the place is currently in a nascent stage and is recognised as an extension on the eastern corridor.
People are now opting for Wagholi because of the affordability factor, proximity to various IT parks, good connectivity via Nagar Road which has now been widened and access to social infrastructure, malls (Inorbit Mall, Phoenix Market City), schools, and hotels.
About a decade ago, the land price here was low. There were no significant residential projects at Wagholi. The developers started exploring Wagholi as a potential location around 2007 due to heavy demand by flat buyers. In 2007, a prominent developer had launched a scheme of row houses here.Since then, Wagholi has been witnessing a capital appreciation of five to seven per cent annually.
Wagholi offers a wide variety of projects from affordable to high-end. It is strategically located on Pune-Nagar Highway and enjoys the benefit of being located close to the Kharadi IT hub. The locality is still in the initial phase of development. It is witnessing social infrastructure development and is attracting buyers looking for both affordable as well as premium options. The place allows its residents to live away from the hustle and bustle of the city. Wagholi is an upcoming area in eastern Pune. Being close to Kharadi IT hub, new malls on Nagar Road, schools and colleges offer an added advantage to residents of this locality.
Wagholi has several educational institutes such as Dhole Patil College of Engineering, Lexicon Institute of Management, Moze College of Engineering, Joshi's Kohinoor Technical Institute, and several other international schools such as Lexicon, Sharad Pawar International School and Jyotirmay International School. Kolte hospital and Nathshree hospitals are also close by. Several other components of social infrastructure including popular hotels and the multiplexes and malls like Phoenix and Inorbit, are present in close proximity to Wagholi, which gives confidence to the flat buyers.
Over the years, there has been a phenomenal development in the belt and it has emerged as a commercial, retail and residential market. The Nagar road has developed into a sixlane road. Also, Wagholi will be tangent to the ring road which will be surrounding Pune. A new flyover connecting Wagholi to Shikrapur is proposed on this road which will be of four lanes. There are several roads under construction. For instance, the one directly connecting EON IT park to Wagholi is under construction. Due to these numerous upcoming developments, the area has a good potential to develop further into a major residential and commercial hub in future.
Wagholi has seen development from unorganised players to now organised and reputed players. There are numerous new and upcoming properties including residential projects and commercial buildings in Wagholi by leading developers. With so many residential and infrastructural developments in pipeline, it is all set to become a prominent location in the near future.
It's a housing hub
Wagholi has turned out to be a good combination of affordability and easy connectivity. The locality is set to witness new projects across categories
This is the area that now tops many realtors' priority chart. Wagholi is all set to match the increasing demand for smaller units, with almost 50 new projects coming up here, all in different phases of construction.
It is hard to find property that is a true blend of well-developed location and availability of smaller unit at affordable prices. Wagholi is a good combination of affordability and easy connectivity.
The area more than 50 new residential projects coming up which are offering maximum smaller units of 1BHK and 2BHK. Many of these projects will be ready for possession by this year, while the remaining are scheduled to be delivered by 2017-18. So, if you have a timeframe of one to two years before moving in, then you have a number of property options. One can get a 1BHK unit at a starting value of Rs 35 lakh and above, while a 2BHK apartment is available in a budget range of Rs 50 lakh and above.Upcoming projects in the area offer a variety of basic to high-end facilities.These include features like power backup, lifts, clubhouse, swimming pool, gymnasium, parks, reserved parking, security, private terrace garden, vaastu compliance, visitor parking and RO water system.

The area is preferred by buyers looking for affordability and easy access to work spaces, entertainment zones and stores for daily needs The locality is witnessing a rise in demand for smaller units with multiple affordable housing projects coming up, catering to the needs of the middle class homebuyers Property within the same budget is not available in the nearby areas such as Koregaon Park, where apartments are priced high, therefore Wagholi comes across as a better and smart location for investment Connectivity is another major reason which makes it an attractive location. It is well connected to other parts of Pune via the Khandala-Loni Road. The locality will soon witness a swift and quick connectivity to the Eon IT Park through the under construction road connecting it to the IT hubs The Nagar Road connects Wagholi to significant parts of city, as it starts from the Yerwada Bridge and passes through Yerwada, Kalyani Nagar, Viman Nagar and Chandan Nagar, reaching Wagholi. A four-lane flyover is also proposed on this road which will directly connect Wagholi with Shikrapur The area has been gaining attention of property seekers owing to the affordability and the well-equipped social and physical infrastructure. With new stock coming up here, the locality is expected to attract more home buyers.It is expected that going forward the demand from IT professionals is likely to be diverted here more.
In short, Wagholi, is a good choice if the buyer is ready to go in for smaller units.
Wagholi has witnessed good appreciation for realty investors over the years
It's one destination that would never let you down. Do you desire an enviable lifestyle in large homes with all kinds of fancy amenities? If yes, Wagholi can be an option to consider.
This east Pune locality offers maximum number of villa options across Pune at reasonable rates. This cost may even go up to some crores, depending upon the size of the unit, distance from the main road, features offered, quality of interiors and the furnishings.
The area offers 2BHK villas, with 1,500-2,000 sq ft area between a price range of Rs 70 lakh and Rs one crore and above. Bigger units of 4BHK and 5BHK with built-up area of 2,200-2,600 sq ft start over a crore onwards. These villas have ultramodern amenities such as private swimming pools, ultra modular kitchens and bathrooms, which cater to all the requirements of luxury-seekers.
Due to its premium offerings, Wagholi is home to senior management professionals who are also natives of the city and want to upgrade their address. Since this area is clean and unpolluted till now, because of limited occupancy and minimum commercial activities, like Kalyani Nagar and Koregaon Park, the locality remains in the preferred list of homebuyers.
“Wagholi is selected for investment as buyers need to pay less service tax, registration and stamp duty charges to the Gram Panchayat as compared to the Pune Municipal Corporation. Hence, buyers who want to save more on government charges choose it over other locations,“ says a broker active in the area.
Wagholi is at a 15-minute drive from the Pune international airport, when traveling through the Patil Vasti Road and the Pune Nagar Road. The Nagar Road, which has been widened, connects the locality to Viman Nagar, another premium locality in the city. The Khandala-Loni Road is an arterial road connecting Wagholi to other areas of Pune.
There is a proposal to connect Wagholi to the Ring Road. A flyover is also proposed on this road, which will connect the locality to Shikrapur, in the opposite direction.
As per some reports Wagholi appreciated 34 per cent in past two years and 11 percent in the past one year. So if you are considering buying a luxury home for yourself, you know where to look!
Zooming in on Nagar Road
The real estate boom continues to unfold on this stretch of Pune where Wagholi is considered an established market
Consistency and sustained growth are the two pertinent aspects of a growing real estate market. The property market on Nagar Road and its periphery area have demonstrated a robust performance over a period of time. The Nagar road is a long stretch commencing from Yerwada going up to Wagholi and beyond. Along the way are prime locations of Kalyani Nagar and Viman Nagar, recently established sub-market of Kharadi and the upcoming market of Wagholi.
Nagar road continues to be a sought-after destination as it is a well-developed stretch of road with social and retail infrastructure in abundance along the road. Also, there are schools in the vicinity. The presence of jobs in the IT parks in Kharadi further makes this area attractive. The highway goes up to Ranjangaon where there is substantial industrial development. Travelling straight down this road is easier than travelling across town and therefore the Nagar road belt continues to show potential for the long run.
Experts pointed out that only a few real estate micro-markets in the Eastern part of the city have been able to match the outstanding success of Nagar Road. The success is not limited to this region alone.As a direct result of the relentless demand for properties in this belt, nearby locations such as Dhanori, Charoli and Wagholi have become the new watchwords on the city's real estate market. Their proximity of the Pune Airport adds a decisive ingredient to the overall growth recipe that drives this region.
Nagar Road is one of the pioneering real estate boom areas in Pune to emerge following the city's emergence as an IT ITeS hub. This is where many of the first call centres and medical transcription units opened up shop in Pune. It became the venue for more and more BPO, KPO and software development firms, entrenching this belt's value to the city's economy. Nagar Road offered these firms affordable properties to establish themselves. At the same time, they have sufficient land parcels available for the development of residential projects to house their employees. Nagar Road has gone on to become a prime hub for commercial spaces. Already established as an ITITeS magnet, it also attracted massive interest from the top-notch hospitality and retail developments. Today, Nagar Road has the highest concentration o five-star and business hotels as well as high visibility malls in Pune.
From 2006 onwards Nagar Road micromarket started to witness large to medium size developments starting from Yerwarda Kalyani NagarViman Nagar Kharadi Wagholi. In the short span of six to eight years, Nagar Road turned into a hot spot for retail, entertainment and hospitality sector with retail operators like Phoenix Market City, Inorbit Mall to star rated hotels like Hayatt, Novatel, Four Point, Ibis, PARC Estique et al. With the majority of the population being intra city population who moved in from other metropolitan cities Nagar Road provided them with a perfect cosmopolitan environment.
“Nagar Road catchment has become one of the most popular residential locations in the city with prime commercial properties throughout the Nagar Road has completely changed the skyline.
Today, Nagar Road has the highest number of five-star business hotels as well as malls with presence of renowned schools and educational institutes like Bishop's, St Arnold, Billabong, Aman Setu School, Victoria Kids, Symbiosis International, Symbiosis Institute of Media and Communication, Dhole Patil College of Engineering, Raisoni College, Lexicon Institute of Management to name a few; with the Metro Plan and BRTS on Nagar road the connectivity to rest of the city is for sure going to improve further. Its IT and BFSI support services which have been the major contributor to the growth in Nagar Road followed by Manufacturing because of Ranjangaon MIDC, which is Five Star rated MIDC.
Experts believe that with the perfect blend of various real estate segments and continually cross-pollinating demand across residential, commercial and retail segments, the rapid depletion of developable space in this region was inevitable. With demand being driven into the adjoining areas, Dhanori and Wagholi quickly rose to prominence and saw a significant influx of projects by Pune's leading developers. Charoli, the next location to receive the spillover demand from Nagar Road, is now poised to receive Pune's largest integrated township. The arrival of this massive project coincides with the approval for the proposed 170-kilometer Ring Road which encompasses Pune and Pimpri-Chinchwad.The fact that Charoli lies squarely along this major infrastructure project will result in massive major investments into the area over the next five years.
Equidistant from leading eastern suburbs, Wagholi is a commercial, retail and residential market
The city has many localities to watch out for. Pune's real ty market is spreading its wings to the city outskirts, which are top investment destinations today. Located strategically on Nagar Road, Wagholi is a happening realty hub, which is equidistant from leading eastern suburbs.
Several star hotels and prominent malls, educational institutes, banks, entertainment destinations and interesting restaurants are all close by.
A short drive from the airport and with easy access to areas like Hadapsar, Manjri and Ranjangaon, Wagholi is also close to Kharadi, an emerging large-scale IT hub. The development of Wagholi has made eastern Pune a sought-after residential location. Proximity to areas like Kalyani Nagar, Koregaon Park and Viman Nagar has given them an added advantage. Located on the eastern side of Pune, Wagholi is one of the peripheral areas of Pune gaining limelight presently due to various developments mushrooming here.The eastern areas of Pune have been in demand since the growth of the commercial sector. Major IT and other business companies are also increasingly setting up their base here. Earlier a sleepy town, Wagholi has an important place in the history of Pune. It used to be famous for mining and stone quarries. The vast stretch of Wagholi along the Nagar Road has attracted developers and residents alike.
Wagholi is an extension of Kharadi. Connectivity is good, as it gets access through Nagar Road to various places in Pune. There are certain restrictions in town planning while the development is different under the Pune Municipal Corpora tion (PMC). Wagholi is not completely exploited and is still in its initial phase of development. The social infrastructure is getting developed and new developments will promote the suburb. People looking for affordable housing and working in industrial areas of Nagar Road can find solace in Wagholi.
Social infrastructure here is growing with schools and hospitals in the area. The connectivity is excellent since the area has easy access to Bund Garden, Shikhrapur-Chakan road and Solapur highway. The airport is 30-minute away. As Pune ends at Wagholi, people from locations like Aurangabad, Ahmednagar find it good for investment as it is close to them. Information Technology (IT) professionals find it comfortable. The current real estate market conditions are good and it is the right time to invest in Wagholi as the rates are cheaper here.
Apart from land availability and affordable rates, the other advantages for Wagholi are the commercial establishments planned in various lo cations in Pune reaching saturation level. The cosmopolitan atmosphere of the eastern side is attracting buyers here. Either IT professionals mi grating for jobs or international expats coming to Pune find the eastern zone better due to presence of airport and cosmopolitan lifestyle.
Even the non-resident Indians (NRIs) find this place better for investment.
Wagholi is strategically located on Pune-Nagar Highway; it also enjoys the benefit of being located close to the Kharadi IT hub. It is witnessing social infrastructure development and is attracting buyers looking for both affordable as well as premium options. The place allows its residents to live away from the hustle and bustle of the city. It also has several educational institutes.
Over the years there has been a phenomenal development in the belt and it has emerged as a commercial, retail and residential market.

Monday, 26 May 2014

Property prices may not go up for 6-12 months

Buyers who are currently hunting for a property shouldn't worry too much about prices rising--at least in the near term while the stock markets, the corporate world and a large section of the country's citizens are celebrating the election verdict. Now there is a fear that in the euphoria generated by the Bharatiya Janata Party's (BJP) decisive victory, real estate prices may start rising again, making the purchase of properties more expensive.
Realty experts are of the view that while there might be some euphoria-driven rise in transactions and a marginal rise in prices, this will dissipate soon. “It will take another 12-odd month before prices begin to rise within the sector. And that will happen only if the new government has a successful first six months and its initiatives put the economy on a higher growth path. One reason why prices may not rise immediately is that they are already very high in most major metros. The economic slowdown has had an impact on salary revisions, and hence on urban buyers' purchasing power.
“Economic activity has to pick up and purchasing power has to rise before we see more demand in the housing sector. High interest rates are another deterrent. In the near term, the new government can't down interest rates, especially with inflation reining high.
Urgently needed reforms while the new government can't engineer a quick revival of the real estate sector, it can take several steps that would have a salutary impact in the medium to long term. One, it could expedite the process of granting approvals to real estate projects. “We expect the new government to be more efficient in granting approvals to real estate projects. Developers complain that the authorities too should be made accountable for not granting timely approvals.
But remember that since real estate is a state subject, the central government can at best create a model of best practices for offering quicker clearances and persuade state governments to adopt it.
The new government also needs to get the Real Estate Regulation and Development Bill passed. By making developers more accountable, the Bill will revive trust in the sector. Low trust in developers' ability and intent to deliver a quality product on time is one reason why buyers are staying away. However, some of the harsher provisions of the draft Bill need to be modified. Currently it says that if a developer doesn't comply with certain rules, he could be jailed.
Experts feel that it would be more prudent to punish an economic offence with a penalty rather than treat it as a criminal offence.
The slowdown in sales has caused a severe cash crunch among developers, forcing them to borrow from non-banking financial companies (NBFCs), private equity players and private lenders at high rates, thereby making housing more expensive. “Fund flow to real estate from banks and housing finance institutions needs to improve. This will happen only if the RBI relaxes the provisioning norms and caps applied to realty lending.
The Securities and Exchange Board of India had released the draft SEBI (Real Estate Investment Trusts) Regulations, 2013. “Making REITs a reality will make more funds available to players. The new government needs to give the required tax exemptions to REITs at the earliest.
A couple of tax benefits would provide an immediate fillip to the real estate sector. The UPA government had allowed an additional tax deduction of `1 lakh to persons taking a home loan of up to `25 lakh. This benefit, however, expired on 31 March, 2014. Also, the government had introduced the provision of tax deduction at source (TDS) at 1% on transfer of immovable property priced at `50 lakh or more. “Extending the tax deduction by another year and levying TDS on properties priced at `1 crore or more will provide immediate fillip to the sector.
The new government could provide an indirect but strong fillip to the real estate sector by improving urban infrastructure. Providing urban infrastructure will release more land for real estate development, increase supply, and thereby help cool prices in the major cities.
So if you too are hunting for a property, the general elections and the formation of a new government at the centre don't change the situation much for you in the near term. Unlike the stock markets, which are liquid and nimble, a turnaround within the real estate market takes time. So keep looking diligently and don't lose sleep over prices rising immediately.

Source: TOI

Saturday, 19 October 2013



    Though the condominium is more than a forty year old ownership concept for buildings in Mumbai, it is the cooperative society model which has been the most popular so far. However, in recent times, the concept of a condominium is slowly gaining momentum. Buyers who purchase premises on an 'ownership' basis require to come together to manage the building and for that purpose, one of the ways is to form a cooperative society, which is governed by the Maharashtra Cooperative Societies Act, 1960.
    An alternative to a cooperative society was introduced by the Maharashtra Apartment Ownership Act, 1970, which provides for the formation of a condominium. The buyers of premises in a condominium are called apartment owners who form an association known as an 'association of apartment owners', in case of both, residential as well as non-residential premises.
    Although the basic purpose of both the models is similar, there are many differences between a society and condominium, some of which are:
    FORMATION: To form a society, generally 10 persons, each from a different family who reside in the area of operation of the society (within the same city) and who have taken premises in the building, would be required. However, even one person who owns the entire building can form a condominium, provided there are at least five apartments in the building.
    OWNERSHIP: In the case of a society, the title of the land and the building is conveyed to the society, which becomes the owner thereof. Persons who have purchased premises are made members of the society and are allotted the particular premises. In the case of a condominium, the title of each apartment rests with the apartment owner, who also has a proportionate undivided interest in the land on which the building stands, the common areas and facilities of the building.
    BYLAWS: A society adopts the model bylaws in which little can be changed. While adopting the bylaws in a condominium, suitable changes can be made, so long as the provisions of the Act are not contravened.
    SHARE CERTIFICATE: A society issues certain shares to its members, as per the bylaws and the share certificate becomes an important title deed, since the allotment of the premises are related thereto. This is not so in a condominium.
    MANAGEMENT: The affairs of the society are managed by the managing committee, which is elected by the members of the society. The managing committee elects a chairman, secretary and a treasurer. Similarly, the affairs of a condominium are managed by the board of managers, who are elected by the members of the apartment owners association. The board also elects a president, vice-president, secretary and a treasurer.
    TRANSFER FEES: Under the model bylaws, a society can charge only Rs 500 as transfer fees and a maximum of Rs 25,000 as a premium. In case of a condominium, the bylaws can be more flexible and the amount of transfer fees can be provided therein.
    PERMISSION TO LET: In a condominium, the owner can give his apartment on lease or leave and license basis without the approval of the board of managers, while in a society, permission is required.
    VOTING RIGHTS: In a society, every member has one vote, irrespective of the area of his premises. In a condominium, every apartment owner has a voting right in proportion to the value of his premises, which is generally as per the area of the apartment owned by him and which is defined while forming the condominium.
    DISPUTES: In a society, disputes are generally referred to the registrar appointed under the Act or to a cooperative court, depending on the nature of the dispute. In the case of a condominium, the court having jurisdiction over the area in which the condominium is located, hears the disputes.
    EXPULSION: A society can expel its member under certain extreme circumstances. In case of a condominium, there is no such provision. However, if an apartment owner fails to comply with the bylaws or the rules and regulations, either damages or injunctive relief or both can be claimed against him.
    NOMINATION: In a society, a member can nominate a person in whose favour shares of the society should be transferred upon the member's death. No such facility is available in a condominium. An apartment can be transferred to a person to whom the apartment owner bequeaths the same by his will or to the legal representative of the apartment owner's estate.


Thursday, 17 October 2013

Stamp Duty Hike in Pune and MMR Mumbai by 1%

The state government has decided to hike stamp duty on property transactions in Pune as well as the Mumbai Metropolitan Region (MMR) by another 1 per cent to fund major urban transportation projects like the proposed Metro and monorail corridors.

Construction projects — including the ones for redevelopment — will be doubly hit with the government citing the same reason for proposing hike in development charges from such projects. A senior state official said the move to mobilise revenue from these sources comes after a decision to avoid public-private partnership model for infrastructure projects.

The government has also decided to collect a betterment charge from construction projects within 500 m of a transport corridor while offering them additional FSI on payment of premium on 100 per cent of ready reckoner rates. The government has already levied additional 1 per cent on stamp duty for imposition of local body tax in Pune.

The proposed hike will raise stamp duty payable in property transactions to 6 per cent in Mumbai and 7 per cent in other areas of MMR and Pune. Highly placed sources said the state has prepared a proposal seeking Cabinet approval for implementing these in MMR. They said these would be a part of a proposal for a nod to the revised plan for the 33.5-km Mumbai Metro-III route, which will connect Colaba to Bandra, the international airport and Seepz.

The Cabinet gave in-principle nod for these proposals for the Pune region two weeks ago.

The underground metro service was earlier meant to be built under PPP but the plan was scrapped as it was deemed financially unviable. Under the new model, about 57% of the project cost (Rs 23,136 crore) will be raised through loan. The state and Centre will contribute Rs 2,403 crore each (10.4%) in equity. Another 1,650 crore will be raised through subordinate debt and taxes. The revenue collected through hike in stamp duty, development charges and betterment charge will be used to raise another Rs 1,000 crore for the project.

Metropolitan commissioner U P S Madan said there was a case for levying a development or impact fee in a manner that such investments would benefit citizens in the region and lead to increase in property prices. Sources said the government had plans to double the development charge while offering an FSI of up to 4 for projects within 500 m of transport corridors. Madan, however, said these limits were yet to be fixed.

The plan is to set up a dedicated urban transport fund from revenue collections to act as a "permanent source of revenue" for transportation projects. The same model will also be applied in Nagpur, where a Metro service is planned following the Cabinet nod, a senior government official said.

The government is yet to consider levying a cess or surcharge to discourage private transport. Madan said this could be considered once the public transport infrastructure is upgraded. State chief secretary Jayant Kumar Banthia endorsed the plan to hike stamp duty and development charges.

Courtesy: The Indian Express

Friday, 13 September 2013

Wednesday, 31 July 2013

Will the New Real Estate Bill reshape Real Estate in India?

How new real estate bill could re-shape the realty ecosystem?

The new real estate regulation bill, approved by the cabinet last month, will make significant interventions in the builder-buyer relationship, tilting the balance of power in favour of the latter.

Project Registration

When the Real Estate (Regulation and Development) Bill 2013 comes into effect, all projects will have to be registered with a real estate regulatory authority.

Promoters will have to disclose details about the project (name, type, plans, partnership companies, names of persons involved with construction etc). Will have to specify what kind of area is for sale (based on standardised markers).

All brokers and agents will have to be registered with the regulator before they can practise. Builder will have to provide a list of agents who will represent each project.

Once the project is registered, all details will have to be put on the website and updated every quarter. This includes disclosing the extent of project completion.

Take informed decisions

A) Buyers can take informed decisions. Today, it's impossible to compare properties because square footage, amenities, floor-space index consumed and even delivery schedules are different for different builders.

B) Which standards to follow? "The Bureau of Indian Standards has laid down standards for the construction industry, and clearly defined things like carpet area, plinth area or how to calculate the difference between the balcony and room area,and  if the bill brings in a new set of definitions, it will create a conflict."

C) Having access to the relevant information will help de-risk lending. At the moment, buying a house is like groping in the dark, he adds. Even with the most trusted builder, you don't know what you will get. This kind of transparency will boost buyer confidence.

All-Round Clearances

Builders will not be able to sell — or advertise — a project till it receives the requisite approvals. These range from land titles and amenities, to provisions for water, electricity and sanitation. This means pre-launch sales are out.

Brokers will be barred from trying to sell an unregistered project, or one that has not received the necessary approvals.

The regulatory authority will get 15 days — after receiving an application for registration from a promoter — to either clear it, or reject it. Reasons for rejection will have to be put down in writing. If the regulator fails to do either of these, the project will be considered as registered.

Right now, the bill appears to only hold the developer responsible, Developers will be penalised for delays, but what about the delays created by government departments in providing clearance for projects? If there is a delay in giving approvals, the government official should also be made accountable for it.

Approvals in phases

Approvals come in phases, and never all at one go. If a developer has to wait to launch a project only after all the approvals are in, this would only mean further delays in handing over the house.

There should be an automated registration process so that there is no human interface, and therefore no chance of corruption.
Smaller builders will be hit harder. After putting down money for all the clearances at one shot, they may not have much left over to start construction right away - especially since pre-launch sales are discouraged. "This will only mean delays in launching projects and escalated costs.

Funds From Buyers

Builders have to open a separate bank account for every project and set aside 70 % (or less, as designated by the local authority) of buyers' money, to be channeled only into the construction of that property. While builders are okay with setting aside a certain amount in a separate account, they feel fixing a sum is unrealistic, since the land-to construction-cost ratios vary from place to place.

Completion Schedule

As per the proposed Regulatory Bill, Builders will now have to give homes on time. In case of delay, buyers are entitled to full refund of their investment, with interest at a pre-determined rate. Builders will face penalties and jail term for sale based on misrepresentation of facts, for failure to update details about project and so on.

The Bill has provision of Jail term for the builder, But in case of builders who have multiple projects going, this means an inordinate delay for all of them." Who is going to make sure the projects are completed while the builder is in jail? So why can’t there be financial penalty instead of Jail so that his other projects do not suffer. This kind of approach is already taken by SEBI and IT department.

Disclaimer: The above content is searched from internet, leading new papers and research etc.

Thursday, 20 June 2013

Taxes on property purchase in Maharashtra

Property Buyers, do you really know how much you pay to the government apart from what you pay to the developers while buying a property?

The real estate industry is one of the most heavily taxed industries in the country. The taxes, both, those paid directly by the home buyer while buying a property, as well as those paid by the developer during construction, constitute nearly 35 to 40 per cent of the cost of the property. Let us examine the various taxes a property buyer has to pay while buying a property. 

In order to give legal status to the property purchase transaction, one has to pay stamp duty on the sale agreement. Under Section 3 of The Indian Stamp Act, stamp duty is payable on instruments by which any right or liability is, or purports to be, created, transferred, limited, extended, extinguished or recorded. The instruments (sale agreement) which are not properly stamped, are not admissible as evidence in court of law. 
Generally, stamp duty is to be paid on or before the date of registration of the agreement. Delay in payment of stamp duty would attract a penalty of two per cent per month, subject to the maximum of 200 per cent of the proper stamp duty amount. In Maharashtra, stamp duty is payable at five per cent on the agreement value or the stamp duty ready reckoner rate, whichever is higher. 

Registration is the process of recording the contents of a document with a registering officer. The documents are registered for the purpose of conservation of evidence, assurance of title, publicity of documents and prevention of fraud. Under Section 41(1) of the Maharashtra Ownership Flats Act, 1963, the agreement with respect to flats to be sold by the owner/promoter/developer to the flat purchaser requires, compulsorily, to be registered under the Registration Act. If not registered, it cannot be produced as evidence in a court of law. The registration fee varies from state to state and in Maharashtra, it is one per cent of the agreement value but subject to a maximum limit of Rs 30,000. 

Value Added Tax (VAT) 
Some states also levy VAT on under-construction property. Currently, in Maharashtra, VAT at one per cent of the agreement value is payable at the time of registration of the sale agreement. However, VAT is not payable in case of purchase of a property from the developer, after the construction is completed and completion certificate is received. There has been a lot of criticism and controversies regarding the decision of the state government to levy VAT on under-construction property. The main argument against the levy of VAT is that if the construction of property cannot be considered as goods (on which VAT is payable) and stamp duty is already payable on property transactions, then why VAT

Service tax is another controversial tax levied by the central government on under construction property. The current rate of service tax is 12 per cent. Education cess and secondary and higher education cess is calculated on top of the service tax rate, which takes the effective service tax rate to 12.36 per cent. 
The calculation of service tax is quite complex. The cost of the property includes the cost of the land and cost of the construction. Service tax is payable only on the construction component and not on the value of the land. Since in most cases, it is difficult to ascertain the cost of land and construction cost separately, the government has come up with the abatement scheme. Under this, abatement (relief) is given for 75 per cent of the value of the property, and service tax is levied only on the balance 25 per cent. This effectively brings the service tax rate down to 3.09 per cent. However, this abatement is not available in case of preferred location charges, floor rise charges, internal and external development charge (like infrastructure development charges), club house charge, etc., in which case service tax at flat rate 12.36 per cent is payable. It is to be noted that in the union budget 2013, it was proposed to reduce this abatement from 75 to 70 per cent, in case of flats having a carpet area of more than 2,000 sq ft or where the property value is Rs one crore or above. Hence, in such cases, service tax of 3.71 per cent would be levied. Service tax is payable as and when the installment payment towards the purchase of property is made to the developer. Like VAT, service tax is not payable, in case the property is purchased from the developer after the construction is completed and the completion certificate is received. A home buyer has to pay nearly 10 per cent of the value of the property, as taxes to the government. There are indirect taxes, like excise, VAT, service tax, etc., on materials and other inputs and services used in construction, which constitute between 25-35 per cent of the cost of the property. Though, these taxes are paid by the developer, they are built into the cost and passed on to the buyer. There is a dire need to rationalize the taxes, particularly on the purchase of residential properties, to make housing more affordable. 

Local Body Tax (LBT) in Corporation areas in Pune
Additional 1% of the agreement value is to be paid as LBT on registration of your agreement, which is the new form of indirect octroi to be paid to the PMC and PCMC.
So the overall tax comes to around 11% of the agreement value which is paid to the government which is ridiculously very high.

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Source: TOI and internet.