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West Bengal: Real Estate Regulation Act Gives a New Ray Of Hope To Many

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West Bengal: Real Estate Regulation Act Gives a New Ray Of Hope To Many

“It is a very important legislation. For a long time we have been hearing about a lot of projects which are not getting completed.” says a buyer.

High hopes are pinned on Real Estate Regulation Act (RERA) as it is yet to be implemented in West Bengal. However, several consumers, who have been facing problems in getting the possession of their property feel that they will soon see better opportunities.

Anshu Ruia (34) had put in his hard-earned money into DLF Galleria in the eastern part of Kolkata in 2008. The building was ready by 2013 and the company had asked him to sign an agreement stating a no claim police and wait for agreement.

However, Anshu refused to sign the agreement making it all the more difficult for him to acquire the property. He had paid all dues amounting to around Rs 1 crore for a commercial property that he brought for personal use. However, Anshu is yet to inhabit his property.

“I had booked this property in 2008 and in 2013 I paid the entire money including stamp duty and registration charges. But despite that they did not give me possession of my property,” he said. He added that he has been making frequent trips to get possession and the developer is taking advantage of his circumstances. “Such developers take the advantage of their might and our hard-earned money is lost. We still don’t know how to get justice,” he said.

Anshu even approached the consumer court but to no avail. The builders and developers of West Bengal have welcomed the Parliament’s move.

“It is a very important legislation. For a long time we have been hearing about a lot of projects which are not getting completed. A lot of buyers are facing difficulties in getting possession and lack of transparency in many documentations. This is intended to address the whole issue. Developers will have to be more transparent and more upfront with their proposals and the buyers will also have the rights to certain grievance management or grievance redressal mechanisms in case certain things don’t happen,” said Harshvardhan Neotia, Chairman of Ambuja Neotia Group.

“Earlier, there was a feeling that it would be difficult when you have already built something on the basis of a super built-up area, how do you now talk about carpet area? Or for that matter how do you now put the money into an account act. But obviously that needs to be done and it is pretty understandable that buyers of those under-construction units also have to be given some protection. They have given some time for the builders to be able to come up and be able to comply with that. It is certainly not easy, but I am sure it is possible. The impact of the RERA will obviously be a positive one. The serious builders of the developer community will experience a good profit and the casual people will face difficulties. It will also be difficult for the people who failed to maintain,” Neotia added.

But there are political layers also to dash the hopes by delaying the implementation in the state. Housing, Environment Minister of West Bengal and Mayor of Kolkata Municipal Corporation Sovan Chatterjee explains the reasons, “It is not an easy job to implement the RERA in West Bengal because of the situation and circumstances of this place, which is changing very rapidly. There are certain complications if this act needs to be implemented worldwide. We are not overruling the RERA system. We have taken their suggestions and have also discussed this issue, where various people were invited who were interested for the implementation of RERA.”

“It has also been discussed whether this act will be accommodated within the state law or the national law and we are still to decide and get into a conclusion. There are certain procedures which are inter-related which makes the act a bit hard to implement at this point. I am a part of the municipal board  for thirty three years and I have experienced a lot which gives me a view that how difficult it is to implement this act, but we are definitely working on the process so that the act gets implemented soon. There is also a lot of legal procedures which needs to be followed and many cooperative and packaging systems at the same time. Unless the whole procedure gets sorted, we cannot conclude the whole fact. We are looking forward to implement the act but will it follow the RERA system or the RERA spirit of the system we don’t know. We even need to look for the criteria of the West Bengal government and how does it match there,” said Chatterjee.

Despite the change, people like Anshu Ruia who have spent more than the principal amount on fighting litigations continuing to wait. Ruia has said that moves like RERA have come as a ray of hope.

“I am looking forward to RERA because I have gone through the act which was passed and is really beneficial for consumers specially when there loopholes in consumer protection act which this developer took  advantage of but they are very well covered in RERA,” Anshu said.

Source: India Today

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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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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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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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