It’s been almost three decades since the first National Housing Policy came out in 1988 but there are hardly any changes in the policy which completely ignores those who cannot afford to buy a house, despite of flexible policies, subsidies and tax rebates. The National Urban Rental Housing Policy Draft 2017, which is currently awaiting the Union Cabinet’s approval, is expected to bring some relief to tenants or will it be just another policy without much attention to existing concerns.
There is a huge influx of migrated population in the urban areas and according to the 2007-08 National Sample Survey proportion of migrants is almost 35%. Even though the latest census data on migration is not available, the rural to urban population increased from 10.98 million in 1971 to 21.74 million in 2001. On the other hand, the urban to rural population has only increased from 5.33 million in 1971 to 6.58 million in 2001. The increased population has expanded slum areas in cities, due to lack of affordable rental housing in the cities.
It’s been a while since there has been any major improvement in rental housing at the mass level. The last time it happened was during the pre-independence era where townships were created by mill owners for migrant workers. Since then all policies, such as UPA’s Rajiv Awas Yojana and NDA’s Pradhan Mantri Awas Yojana, are more focused on homeownership rather than rental accommodations. The recent draft policy acknowledges this fact as well, as it stated that the focus of most policies of the government is oriented towards home ownership which will not solve the problem of the housing shortage for Economically Weaker Sections (EWS) and Low Income Groups (LIG) in urban areas. Even in the budget, there are incentives for home ownership by offering a greater tax deduction on interest paid while there are no such incentives to improve the rental market in India. The draft National Urban Rental Housing Policy 2017 attempts to address this concern, however with loopholes and limitations.
The Ministry of Housing and Urban Poverty Alleviation, which has drafted the policy, defines its role as that of a facilitator or enabler. There is hardly any possibility of fiscal and non-fiscal concessions for rental market created by state or through Purchasing Power Parity (PPP) and under Corporate Social Responsibility (CSR).
The draft classifies the rental housing in two categories:
- Social Rental Housing – Social rental housing for urban poor targets EWS, LIG as well as section defined as ‘tenants by constraint’ that includes urban poor who belong to SC, ST, OBC, migrants, trans-genders and senior citizen.
- Market-Driven Rental Housing – Market-driven rental housing includes hostels for students and working men and women, accommodation for the 17.5 million public sector undertakings (PSUs) employees and government departments and private rental housing for everyone else.
The policy doesn’t have any provision neither does it address the issue of homelessness, as the government still considers homelessness as livelihood issue, so any policy related to it comes under the umbrella of National Urban Livelihood Mission instead of including it in the National Urban Rental Housing Policy Draft 2017.
Unlike many schemes by the central government which has budgetary support for construction of homes, the rental housing policy in its current form doesn’t have any central funding. So, the attempt to formulate a rental policy is undoubtedly a great move, however, the biased approach towards schemes or policies that promote home ownership is still evident. The policy ignores any fiscal responsibility by simply stating that housing is state subject and it is the responsibility of state governments to ensure housing for everyone. The only good proposal in the policy is to make some budgetary arrangements for setting up funds for rental vouchers to be distributed on a pilot basis in few selected smart cities. These vouchers will be equivalent to cash and are expected to reduce the rent incurred by urban poor. However, the rental accommodation itself will come from private players who largely control the market rates. The role of central government is limited to intervene only on the demand-side while there is more need to increase the supply of rental housing, where there is no intervention at all. In regards to supply, entire responsibility has been put on the market.
Also Read: RERA Effect On Real Estate Agents
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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