This is one among several controversial clauses in Maharashtra’s draft Real Estate (Regulation & Development) Act 2016 (RERA) rules notified last week.
MUMBAI: A builder can terminate a flat purchase agreement by giving just a week’s notice on email to the buyer who defaults on an installment. But the developer can refund the money without interest to the purchaser at leisure, within six months.
This is one among several controversial clauses in Maharashtra’s draft Real Estate(Regulation & Development) Act 2016 (RERA) rules notified last week. On the other hand, RERA rules framed by the Centre say the builder must refund the money within 45 days (with or without interest, depending on the situation) and does not stipulate cancelling the agreement within seven days in case of default. Many such loopholes in the state draft have been culled out by the city-based consumer rights’ group, Mumbai Grahak Panchayat (MGP).
Housing experts and groups like the MGP have accused the state government of diluting provisions of the stringent Act, which they said now favour the industry . The state has allowed only 15 days for the public to file objections suggestions on the draft instead of the mandatory 30 days. The state’s draft RERA Act has several controversial clauses that favour builders, said housing experts.MGP chairman Shirish Deshpande said the earlier state law, MOFA, permitted the developer to cancel the agreement after giving a 15 days’ notice, and the builder could resell the flat only after refunding money to the original buyer. “Under the new draft rules, a builder can immediately sell the flat after terminating the agreement,’ he said.
The state draft has also proposed to increase the burden on flat purchasers; it says a buyer must pay 30% of the total cost while signing the agreement and 45% when the plinth of the building is constructed. The earlier state law stipulated 20% payment when the agreement is signed with the developer. The Centre’s rules do not stipulate any payment schedule; it left it to the states to formulate it.
The state draft says builders can pay for the registration fee at Re 1per square metre, which means for a 1,00,000 square feet project, he has to pay approximately Rs 10,000.However, the Central rules prescribed fees of between Rs 5lakh to Rs 10 lakh for residential and commercial projects.
Central rules proposed a fee of Rs 1,000 for filing complaints before housing authority; the state draft has proposed to hike this fee to Rs 10,000.
“This clearly shows that the state draft RERA rules are biased towards the builder and are diametrically opposite to the very essence of the act where the buyer was supposed to be king,“ said Pankaj Kapoor, MD of Liases Foras, a real estate research firm.
“RERA at the Centre aimed at transparency by including a fair share of disclosures. But the Maharashtra notification has eliminated most of these clauses,“ said Kapoor. According to him, key disclosures under Section 4 (2)and Rule 3 (2) have been excluded to be put up on the website of the Authority . These include carpet area of flat, encumbrance certificate (this would have disclosed encumbrances in respect of the land where the real estate project is proposed to be undertaken), copy of the legal title report and sanctioned plan of the building.
“The lack of transparency and exclusion of disclosures have left enough room for corruption. The buyer will not be privy to information about the project, and it will be easier for builders to manage higher authorities and change the plan as per their convenience,“ said Kapoor.
The Central rule requires a builder to submit an annual report including profit and loss account, balance sheet, cash flow statement, directors’ report and auditors’ report for the preceding three fi nancial years, among other things. However, the Maharashtra draft rule is silent on such a requirement. Sudip Mullick, partner in the law firm Khaitan & Co, said one should not make a “big fuss“ over this. “Does this mean that if a builder is a new entrant not backed by a parent entity, such a promoter cannot develop or do business under RERA? According to me, one must look at the present financial capabilities of a promoter to undertake a project and its tie-up with the concerned financial institutions,“ he said. Mullick added, “I don’t think there has necessarily been any dilution of the provisions of RERA Act by such rules. Whatever dilutions have been provided, cannot be read in isolation but will have to be read keeping in mind the scenario prevailing in the state.“
A prominent builder, who did not wish to be identified, said although he had not studied the draft rules, he thought the law was already tough. “Any more and it would be strangulatory ,“ he said. Builder Rajan Bandalkar, state vice-president of NAREDCO, a body representing developers, said the new law is for “black sheep“ in the industry .“It should ease problems of the industry , not hinder it,“ he said. He supported the state’s draft rule, which does not make it mandatory for builders to submit I-T returns. “Why should it be made public? It can be misused,“ he said.
The loopholes pointed out by housing experts in the draft rules make it evident that the state is more concerned about safeguarding the interests of the building industry rather than flat purchasers. RERA was meant to protect consumers, but the new draft is littered with gaps which will make it smoother for builders to circumvent the law. The Fadnavis government plug them immediately.
Source : Economictimes
Under Construction Flat Booking Finds Tax Deduction Under Time Constraints
If a buyer makes a transaction to book an under-construction flat and if he acquires it within the three-year period of the sale of his old house, then he is entitled to a tax deduction, says a ruling from the Mumbai bench of the Income-tax Appellate Tribunal (ITAT). If an apartment is booked in an under construction project than it must be viewed as a method of constructing residential tenements, says the December 18 judgment.
That means if the buyer uses the entire gain from the transaction to buy another house within two years or construct another house within three years. The two- and three-year period applies even if the buyer bought another house a year before selling the first one. But the property should have been bought in the name of the seller.
It is mandatory that within a period of two years after or one year before the date of transfer of old house, the taxpayer should construct a residential house or acquire another residential house within a period of three years from the date of transfer of the old house. The date of receipt of compensation will determine the period of acquisition or construction in a case of compulsory acquisition.
This exemption is effective and can only be claimed in respect of one residential house property purchased/constructed in India. In the case of multiple house purchases or constructions, the exemption under section 54 will be available in respect of one house only. Any purchases made outside the country does not fall under any kind of exemption. Section 54 gives relaxation in such cases by providing relief to the taxpayer who sells his residential house and acquires another residential house from the gained capital.
After the sale of an asset, the difference between the buying price and the selling price is a capital gain or a capital loss. These are further classified as long-term or short-term. If a property is held for 24 months or less, with effective from 2017-18, then that asset is treated as Short Term Capital Asset. Then an investor can make
treated as Long Term Capital Asset. Then only a Long Term Capital Gain (LTCG) or Long Term Capital Loss (LTCL) can be made on that investment.
ITAT agreed that booking of a new flat in an under-construction apartment should be considered as a case of “construction” and not “purchase”, hence following the earlier decisions of the Bombay high court and the tribunal itself. Further ITAT allowed the fact that the construction can began prior to the date of sale of the old asset. Same was stated in the earlier judicial decisions of the Karnataka high court and Ahmedabad ITAT, that the date of commencement is not relevant but it is the completion of construction that comes in relevance to section 54.
HDFC and Quikr Make A Deal
According to a deal between HDFC and Quikr, a stake of more than 3 percent will be given to the mortgage giant in return to its transfer of offline and online real estate brokerage business to the classified ads platform.
After acquiring Commonfloor in 2016 Quikr already has a major presence in online real estate broking.
“Most of the searches for real estate are moving online. Quikr has a much bigger presence online. Through this deal, we are partnering Quikr in the broking business,” said HDFC MD Renu Sud Karnad. According to her, this deal will strengthen Quirks position with offline support.
The deal suggests that HDFC will transfer to Quikr its entire shareholding in HDFC Realty, a real estate brokerage platform, and HDFC Developers, which runs the HDFC RED online platform.
Karnad added that the deal expects Quikr to generate home loan leads for HDFC. The transaction consists of a co-branded alliance between both parties and the HDFC brand will continue to be used online for a year.
The e-real estate classifieds platform HDFC RED has around 7,000 project listings and generates traffic of over 80,000 unique visitors per month. HDFC Realty has a 300-member, in-house sales team, and 7,000-strong nationwide broker network. Avendus Capital was the exclusive financial adviser to Quikr while Kotak Investment Banking acted as the exclusive financial adviser to HDFC on this.
30 million monthly users make Quikr India’s largest classifieds platform. It runs multiple vertical businesses across real estate, automobiles, jobs, services, and goods. The Quikr Home, its real estate vertical generates 3.5 million monthly unique visitors.
Both companies intend to work closely and conduct analytics and identify potential homebuyers, and therefore home loan customers, early in their home-buying journey. Quikr founder and CEO Pranay Chulet said, “We see great synergies between Quikr and HDFC as we start working together to bring a seamless online-to-offline platform to developers and consumers.”
Retaining The Sustainability: GRIHA Launches Star Rating For Urban Homes
Green Rating for Integrated Habitat Assessment (GRIHA), is the National Rating System of India, a Sanskrit word meaning – ‘Abode’. Human architecture has always consumed resources in the form of energy, water and material from the environment. From their construction to operation, these habitats absorb the resources throughout their life cycles, emitting wastes in the end. This emission could be direct in the form of municipal wastes or indirect emission into the atmosphere, such as from electricity generation. Hence GRIHA was formed to reduce an architecture’s resource consumption, waste production and overall environment impact up to certain national acceptable limits.
In attempt to quantify all these aspects, like energy consumption, waste generation etc. GRIHA tries to manage, control and bring down the respective to the best possible limit. Being a rating tool, it helps people to assess the performance of their respective projects against the national benchmarks.
Hence it becomes an evaluation of the environmental performance of an architecture on a holistic level. Covering its entire life cycle, this evaluation provides a specific standard for a ‘green building’. This rating system aims to strike a balance between established institutions and emerging concepts, on a national as well as the international level.
The process starts with an online submission of documents according to the criteria. Then a team of professionals and experts from GRIHA Secretariat takes a site visit for the evaluation of the building. There are four different sections categorized by 34 criteria in GRIHA rating system. Some of them are site selection and site planning, conservation and efficient utilization of resources, building operation and maintenance, and innovation.
Sanjay Seth, CEO, Green Rating for Integrated Habitat Assessment (GRIHA) Council says, “A rating between one and five stars is being provided, helping the costumers to know about the sustainability of the houses”.
According to the Union Minister, Hardeep Singh Puri, the climate resilient and sustainable buildings are the need of the hour. As the government is aiming to construct around 1.2 crore houses for the urban poor under the affordable housing scheme.
In one of his keynote addresses, Andreas Baum, Ambassador of Switzerland to India and Bhutan said that the Indo Swiss collaboration is operating with the Indian Bureau of Energy Efficiency in the development of guidelines for energy efficient housing.
“At present India is witnessing a rapid urbanisation, if each building becomes greener than the last one, then we have a huge opportunity and hope for our country. We need to look beyond the conventional methods of building, in order to provide our citizens with a good quality of life. Hence, GRIHA gains important in meeting our national goals with respect to a sustainable society”, says Dr Ajay Mathur, director general, TERI & president, GRIHA Council.
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