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RERA : Property brokers get their acts together to ensure compliance

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The legal teams of brokerage houses will have to be strengthened to meet with the compliance requirements of the new regulator, according to Anuj Puri, chairman and country head, JLL India.
NEW DELHI: The real estate broking sector is set to witness consolidation after the new real estate regulatory Act gets operationalise and big companies, both online and offline, are bracing up to live up to the challenge. From hiring consultants to beefing up legal team, big property brokers are putting their house in order to avoid complications.

While online transaction platform PropTiger is seeking advice from consultants, international property consultants such as Knight Frank India is planning to train their transaction managers to ensure compliance and JLL India has tied up with management institutions to ensure the requisite skill-sets are imbibed into new recruits.

The legal teams of brokerage houses will have to be strengthened to meet with the compliance requirements of the new regulator, according to Anuj Puri, chairman and country head, JLL India.

“The real estate sector will become an untenable marketplace for freelancers and part-time operatives, because property brokers will no longer be able to afford to operate without an institutional framework,” he said.
hishir Baijal, chairman and managing director, Knight Frank India, feels the law will benefit the end users and will affect errant and non-compliant consultants and brokers.

“We are tracking the rules shared by various state bodies with regard to RERA and will impart adequate training to our transaction managers to ensure compliance,” he said.

The real estate brokerage industry has till now been highly unorganised, with no benchmarks or certifications for becoming a broker. However, the Real Estate (Regulation and Development) Act, 2016 (RERA), that was notified last month, aims to bring accountability and transparency in the business.

Property brokers will now have to register themselves with the real estate regulatory authorities of their respective states and the fees paid to brokers will get accounted for.

They will now have to comply with proper documentation requirements in all communication with home buyers and builders in order keep records of all legitimate information that has been exchanged with them.

While international property consultants may already be compliant, local brokers need to accept the real estate regulation process, according to Saacketh Chawla, deputy managing director, Colliers International India.

To incentivise registration of real estate agents with regulatory authorities, the government has halved the fee for the same to Rs 10,000 for individuals and Rs 50,000 for other entities, against Rs 25,000 and Rs 2,50,000 proposed in the draft rules.

Ankur Dhawan, chief business officer, resale transaction, PropTiger, said the company is trying to avoid any future liability are seeking advice from consultants to prepare the processes for RERA compliance.

“We are trying to avoid any future liability. We are making sure whatever promises are being made are done in writing and not just verbal,” he said.

Source : Economic Times

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Regulations

373 Maharashtra Cities To Fall Under PMAY Scheme

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The state of Maharashtra has added 232 cities to the existing 142 which makes it 373 cities under the Pradhan Mantri Awas Yojana Scheme (PMAY).

The officials at the housing department feel that this step will aid the government take up more projects under the PMAY scheme.

Sachin Kulkarni, Builder shared his concerns over the lack of coordination between the department in executing PMAY projects. He said, “This is a good sign. However, the PMO’s seriousness in promoting HFA is diluted by the time it reaches the authorities. Apart from collecting application from interested beneficiaries, nothing has moved on the ground in urban centres. I hope that this initiative moves on fast track”.

Maharashtra CM Devendra Fadnavis recently states that the in order to create more housing stock the state’s Slum Rehabilitation Authority scheme be brought under PMAY so that it can receive the subsidy to create more affordable housing. He clearly mentioned that the government intends to create more housing stock and it was taking various initiatives and making policy changes for it.

Also Read- Affordable Housing To Get A Boost With PMAY’s Scope To Be Extended To Private Lands

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Regulations

Real Estate Sector May Fall Under GST What Does It Mean For Buyers?

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One after the other the real estate sector has witnessed massive policy and law changes in its systems. Nonetheless, the tide has not passed yet. The GST council will take up a proposal to bring it under the uniform nationwide levy.

As the industry is still recovering from the RERA Act, the finance minister, Arun Jaitley said that there is a strong case to include real estate in the new indirect tax regime. He said this last week and also mentioned that GST Council will discuss it in November.

At present, the home buyers are paying 12 percent GST on under-construction properties. This percentage includes two taxes which are stamp duty and registration. The rate of which varies in each state but GST will make them uniform.

Santosh Dalvi, KPMG India partner (indirect tax) said, “If the entire real estate is brought under GST, they would have to abolish the stamp duty and we don’t know how the government plans to compensate the states for their loss.”

The stamp duty with registration and GST comes to approximately 18 percent for under construction properties. He further said, “So, it’s important to look at what rate it will be taxed at. We can then look at consumer prices”.

While agreeing, Bipin Sapra, EY partner (indirect tax), added, “It’s going to be a test for the government”.

Developers also pay taxes on raw materials. However, unlike other businesses, they don’t get any tax refunds through input credit. GST taxes every stage of the business activity to better compliance and compensates for it by permitting refunds.

Anuj Puri, Anarock Property Consultants chairman, said “By including real estate under GST, builders can get a fair amount of input credit, helping bring down costs,” He added that it would make homes cheaper for buyers.

According to Sapra, it will depend on the tax rate applicable.

Niranjan Hiranandani, co-founder of Hiranandani Group said, “Real estate under GST ambit means consumers will only have to pay one final tax.” He stated that with the commencement of RERA it brings transparency and GST would reduce the burden in terms of taxes payable while buying the home. He concluded, “Not only will this create positive sentiment but it should also boost actual sales”.

Also Read: Affordable Housing Is The Changing Face Of Indian Real Estate

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Regulations

Home Buyers Will Be Covered Against Builders Who Are Going Bankrupt

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In a move to protect home buyers from builders declaring their bankruptcy, the Insolvency & Bankruptcy Board of India (IBBI) has amended rules which make it necessary for any company to showcase how they have dealt with interests of all stakeholders. This is directed towards companies like Jaypee Infratech and some of the entities of Amrapali Group.

The regulator has informed about the revised rules last week. This will ensure that banks and other creditors do not get away by protecting their interests at the expense of others who are impacted by the action.  Banks are part of the creditors’ committee. They become an important decision-making body after a company is admitted for bankruptcy.

An expert bankruptcy lawyer said, “The change in the rules has plugged a gap as flat buyers are of the view that there is nothing to protect their interests.”

According to the new law that was enacted last year intends to speed up the resolution process in a period of 180 days, with a possible extension of 90 days. This will be done by appointing insolvency resolution professionals who will take charge of the company’s operations and prepare a plan. As per the law, an information memorandum will be finalized if the creditor’s committee is willing to take applications from other interested companies to take over the company.

The insolvency experts say that the law providing for the plan binds corporate debtor (the company) and its members, employees, guarantors, and creditors, other stakeholders involved in the resolution plan. However, there are no obligations mentioned in the rule to give any treatment to the stakeholders other than the financial creditors (banks) and operational creditors, which includes vendors and others who may have dues.

The National Company Law Tribunal, based on the comfort provided by the revised rules, will choose the final resolution plan based on bids that are received. The lawyer further said, “The tribunal will not clear the resolution plan without giving notice to all stakeholders and the flat buyers can raise objections at that point of time.”

Also Read: Tanvi Group Fail To Deliver Homes And Declare Bankruptcy

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