COOPERATIVE HOUSING SOCIETY vs APARTMENT ASSOCIATION

AN IN-DEPTH COMPARISON BETWEEN A CONDOMINIUM AND A SOCIETY


    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.

Source-TOI

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

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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.

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. 

STAMP DUTY 

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 

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 (ST)

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.

For knowing more about the real estate please call me on 9823116000/9158400500 or wrote to me on hitendra2309@gmail.com

Source: TOI and internet.

1 and 2 BHK becoming dearer in west Pune

Hey guys, I am posting after a long time, I will write about a very general topic today.

I came across many readers and buyers asking me to find properties in the west region of Pune for 1 BHK for sub 30 lacs budget and 2 BHK in sub 50 lacs budget, and that to in locations lile Baner along side the NH-4 bangalore highway, Wakad,  Balewadi, Pashan, with new Projects or resale in ready possessions recently completed projects only. Frankly speaking there are very few propejcts which have the matching properties as mentioned above and mostly cost somewhere around 35-40 lacs for 1 BHK and 60-75 lacs for 2 BHK apartments. But the answer is also a YES as there are Developers who have projects offering apartments in these ranges but they are not reputed ones or developing for the first time. But then the risk factor comes in play like will he complete the project or not, quality, etc.

Now with the price for apartments in these locations is from 4800 to 5500 per sqft it is difficult to have choice of apartments in budget apartments.

Now people ask whether the price rise will be creeping up and up for ever or what. The answer is absolute YES as there will always be a demand for houses and the properties will always be finding the required buyers, altough there may be a correction in the coming future but it wont affect the buying spree. As you do not know when is the correction going to come because it does not give you any warning like in case of a Natural calamity or weather changes etc. Some people wait for this to happen and then buy but these guys have lot of patience.

So to sum up there are apartments available in sub 30 lacs for 1 BHK and sub 50 lacs for 2 BHK but the locations are different and farther away. So these buyers should shift their priorities in the newer areas like Punawale, Kiwale, Talegaon, Dehu road, Wadgaon Maval, Kanhe, Sus, Maan, Ghotawade, Pirangut, Urawade, Farther end of Paud road etc.

Advice for those who want to buy Real Estate now, Today is the best day and there is nothing like "Got Late". It is like a running train and you need to catch it at your nearest station.

Please get in touch with me for any query and sale transaction.

Regards

Hitendra Choudhary

9823116000 or 9158400500

hitendra2309@gmail.com

Undri- The next Property Destination of Pune

Undri has always been a logical residential property destination in Pune, but for many years it lacked the required infrastructure. However, as NIBM Road became increasingly saturated, Undri started to come into focus. The revival of demand from the city's manufacturing and IT sectors helped to encourage developers to concentrate more on this area. Locations like Undri are ideal for offering residential options to these segments and at the same de-congesting the main city. The area, which is also temptingly close to Pune Camp, is now developing rapidly, and it is becoming a hotspot for residential property investment.

Undri has the advantage of being well connected to various key localities in Pune via various local and interstate highways and expressways while retaining its serenity. It has dense green cover protected by Government regulations. Proximity to Wanowrie and NIBM gives ensures that residents in Undri have access to all necessities of daily living. It is an ideal residential real estate location, and one of the few in the more central part of Pune which still offer the city's laid-back natural charm at affordable rates.

Home buyers as well as investors are very enthusiastic about this location, which offers cost-effective housing options to employees from the close-by IT/ITeS companies. with the widening of the The Katraj-Kondhwa-Phursungi-Solapur highway, Undri's all-round connectivity is going to increase dramatically. Moreover, it will soon be completely included within the Pune Municipal Limits, which will boost infrastructure development even further.