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RERA May Revive Real Estate Sector In Second Half, Say Experts

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After May 1, when the Real Estate Regulatory Act (RERA) is in place, the realty sector will likely see an uptrend with slight price correction, say industry players and stakeholders.

This is likely as genuine buyers may pitch in on the back of an improved consumer climate and lower home loan rates.

“Considering the present scenario, the next three-four months are like the gestation period for the realty sector and after six months the sector is likely to gain momentum. We are hoping to see positive impact in the second half of 2017 itself after RERA comes into full effect,” real estate advisory firm PropUrban Founder and CEO Mir Jaffer Ali told IANS.

According to the Real Estate (Regulation and Development) Act, 2016, which came into effect on May 1 last year, every state is supposed to have a RERA in a year’s time.

It will thereon become mandatory for all real estate projects, commercial and residential, to register with RERA for transparent execution.

“At a time when the setting up of a Real Estate Regulatory Authority in each state is set to bring in increased accountability in the markets, we can expect to witness some amount of correction in real estate prices in markets,” property consultant Cushman & Wakefield Managing Director (India) Anshul Jain told IANS.

Ali concurred and said that the cash component in property transactions will see a significant drop, resulting in a fall in land prices, which could be anywhere between 15 and 20 per cent at some places.

On a positive note, almost all banks have also lowered the home loan interest rates post demonetisation which would automatically generate more demand for housing with the sops given to affordable housing in this year’s Union Budget being an added advantage.

The start of 2017 has seen buyer sentiment improve and the anticipation is that with a positive electoral result and encouraging budgetary reforms, the sector should perform better over the course of the year.

Large developers such as the Lodha Group have seen sales of 850 units in February 2017, which indicates a gradual upward trend in consumer sentiment across the segment.

More so, with the dust of demonetisation finally settling, buyers’ sentiments are looking positive in anticipation of higher transparency and efficiency. Genuine requirement for homes coupled with reduced interest on home loans can be attributed to this.

According to a survey by PropUrban, once RERA is fully in place, about 45 per cent respondents would be investing within the next six months, while another 26 per cent are likely to take the plunge within a year.

“Interestingly, now the market will see the return of ‘real buyers’. As for the RERA and Benami Amendment Act, the sector is likely to see positive impact in the short-term — within one-two years,” Ali said.

Moreover, with the deadline of implementing RERA fast approaching, developers are trying to focus on completing their existing projects rather than launching new ones, which is good for the sector and buyers, he added.

With RERA, there would be mandatory disclosure of project details, including those of the promoter, project, land status and clearances. This would increase the credibility of developers and would protect consumer rights as well.

Dharmesh Jain, President, Confederation of Real Estate Developers’ Associations of India — Maharashtra Chamber of Housing Industry (CREDAI-MCHI), told IANS that RERA “will help in bringing in higher transparency and will help the customer to get possession in time. Also, one will know what they are paying for and would be sure they will get what they are promised. In fact, the developers will have to be accountable on the dates and timelines shared”.

Additionally, buyers and developers will now finally be on a level playing field with respect to penalties on delays. Both parties will now pay the same rate of interest in case the buyer delays payment or the developer delays giving possession.

“RERA is a long-term policy measure whose effect will be pretty permanent, in the sense that it will drive unscrupulous or unorganised developers off the market and leave a level playing field for credible players in its wake,” Ramesh Nair, CEO and Country Head of leading property consultant JLL India, told IANS.

“We are now seeing evidence of a gradual revival on the back of pro-consumer measures like RERA coming in, decisive court actions against errant developers, price corrections and renewed confidence in the economy,” he said.

Shubika Bilkha, Business Head, Real Estate Management Institute (REMI), told IANS, “These initiatives will contribute to organising this sector that has been traditionally fragmented and unorganised, while improving consumer confidence.”

Source: Economic Times

Ahmedabad Real Estate News

Under Construction Flat Booking Finds Tax Deduction Under Time Constraints

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Tax Deduction

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.

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India Real Estate News

HDFC and Quikr Make A Deal

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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.”

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Retaining The Sustainability: GRIHA Launches Star Rating For Urban Homes

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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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