CREDAI advocates more sops for realty sector in Union Budget 2012

The Confederation of Real Estate Developers’ Association of India (CREDAI), a private realty body, has come out with serious of measures that the Union Budget 2012 should include to benefit the real estate sector in India, which has been in negative growth for the last few years. 

T Chitty Babu

From years the real estate sector has been facing problems like slowing economy, delay in decision making process and hike in interest rates. The Body’s Tamil Nadu chapter has demanded for single-window clearance for real estate development projects, granting of industry status to real estate, since the sector is a major driver for economic growth and the second largest provider of employment after agriculture and relaxing norms for repatriation of FDI in real estate.  

The realty body also recommended to hike the housing loan interest tax deduction from the existing limit of Rs 1,50,000 and also accounts the principal as separate entity not to add to the 80C section.

CREDAI also urged to amend legislation on REITs to provide exit opportunities to real estate investors as the market environment should be more investment-friendly.

“I strongly believe that reforms need to be ushered in our sector and amendment to the housing policy in order to address this huge demand is the need of the hour. Affordable housing sector should continue to grow based on the incentive given for borrowings from banks for homes and the same should be further enhanced,” said T Chitty Babu, CREDAI, Tamil Nadu.

CREDAI has the following recommendations to be incorporated in the budget 2012:

·         Government should roll out a incentive based IT Policy for Tier 2 and 3 cities ( like STPI ) to promote IT and generate more employment

·         The Government has 1% interest rate subsidy provided for loans towards affordable housing. The scope of this subsidy should be increased to include a wider price band of budget housing to benefit home buyers, especially in lower income groups.

·         Allocate more funds  to the Rajiv Awas Yojana (RAY) for urban housing targeted at the EWS and the LIG sections

·          Enact provisions for Special Residential Zones (SRZs) to incentivise the growth of housing stock at targeted locations

·         Relax FDI upto 51% into multi-brand retailing

·         Increase infrastructure spending in urban areas  in order  to unlock the value of  hidden land assets in suburban and peripheral districts

·         Increase outlay to Jawaharlal Nehru National Urban Renewal Mission (JNNURM).

•          All Pending Applications applied under the original Industrial Parks Scheme of 2002 should be cleared both under the Automatic and Non Automatic Route.

•          No Service tax should be applicable on transaction between developer and land owner

•          The real estate developers should be allowed to continue making payment of Service tax on `receipt basis' instead of `accrual basis' as prevailing now.

Deduction for principal repayment / interest of a housing loan 

 Present limit for deduction under section 80C is INR 100,000

•          Increasing the threshold limit for the deduction would provide relief to the middle class

•          Increase disposable income in their hands

•          In addition to the present deduction upto Rs  100,000, a separate limit up to Rs 300,000 deduction be permitted for repayment of principal portion of housing loan for self occupied residential property

Present limit for deduction of interest against “Rental income” under section 24(b) is INR 150,000 for self occupied property

•          Increasing the threshold limit for the deduction would provide relief to the middle class

•          Increase disposable income in their hands

•          Limited to be enhanced to INR 300,000 for self occupied property  Capital Gains

•          36 months holding period for qualification as a long term capital asset

•           Encourage investment in real estate and to provide liquidity to investors

•          Reduce the holding period for qualification as a long term capital asset to 12 month.

•           Tax @ 20 percent on long term capital gains on transfer of house property

•           Rate of 20 percent introduced when the maximum marginal rate was 50 percent

•          Reduce the tax rate on long term capital gains  on transfer of house property to 10 percent

India throws hat on Israel's Red-Med project

JERUSALEM: India on Friday shown its keenness to participate in the construction of the first-ever rail link between the Mediterranean and Red Sea coasts which offers a new Asia-Europe trade route that will compete with the key Suez Canal freight route.

Dismissing claims that India has lost yet another infrastructure project of interest to China, Minister for Urban Development Kamal Nath said that he has expressed India's interest in participating in the project as part of New Delhi's efforts to enhance engagement with Israel.

"Once this project is formed and the road map is clear, Indian companies will evaluate their participation, but I do see good Indian interest in this," visiting Urban Development Minister Kamal Nath told PTI here.

He made the comment after meeting Israeli Transportation Minister Yisrael Katz and Minister for Trade, Industry and Labour Hsalom Simhon.

The proposed rail link was unanimously approved by the Israeli cabinet last week.

The Indian minister brought up the issue of Indian companies' participation in the ambitious project during his discussions with Israeli ministers, who are said to have promptly welcomed India's involvement.

"That's not correct because I have discussed this with the Minister of Transport this morning and it's in a formative stage," Nath said, reacting to some media reports.

"They are in fact welcoming India's participation in this and no country has taken over anything. This will be pursued by the Indian companies. I think this is an area of potential for enhancing our engagement," the minister further said.

The media reports had claimed that the state-owned infrastructure companies could have been benefited from the opportunities in the project, but Indian government's lethargy and inertia in decision making led China walk away with the bid.

The 350-km-long Red-Med railway will run from Eilat, on the Red Sea, to Ashdod, on the Mediterranean some 30 km south of Tel Aviv.

CSP Today India 2012 to be held in Delhi on March 14

The two-day 3rd Concentrated Solar Thermal Power Conference & Expo (CSP Today India 2012) will be held from March 14 in New Delhi. 

To be attended by Gireesh B Pradhan, Secretary, Ministry of New & Renewable Energy, on the first day of the event some of the topics to be discussed include:

    * Consider the impact of phase I bids on CSP market growth in India, and look ahead to the future direction of solar development in phase II’s tender.

    * Get an exclusive overview on whether phase I has built the foundations for successful project execution and achieving grid parity for CSP

    * Hear how government subsidies and future regulations will impact the evolution of the Jawaharlal Nehru National Solar Mission ahead of 2013-2017.

Tarun Kapoor, Joint Secretary, Ministry of New & Renewable Energy  will speak on the first day along with Sachin S Patel, VP & Business Head, Reliance Power, V. Saibaba, CEO, Lanco Solar, TVN Mahesh, General Manager - Solar, Corporate Ispat Alloys ltd, Siddharth Agrawal, Managing Director, Godawari Green Energy Limited and K.S. Popli, Director, Indian Renewable Energy Development Agency Limited.

How to buy a resale property?

Buying a home is anybody’s dream and those who achieve this without much hassle, are the luckiest lot. While buying new or old property, there are certain procedures should be followed to ascertain the genuineness of the documents supplied by the seller. Unlike new property, where we can, to certain extent, go by the reputation of the builders or developers, buying old properties involve more risks and depends entirely on the buyers’ knowledge to check the veracity of facts written in the documents. 

There are a million things to look into when one chooses to go for resale property. In Tamil there is a pro-verb saying “both buying or building a home and marrying off one’s daughter, are the daunting tasks on earth.’  

There are three things one should look into when decide to buy a second-hand property – selecting a good advocate who has good reputation of checking property papers, checking the structural strength of the building by engaging a structural engineer and before finalizing the deal, one should make a building survey to understand the cost of repair or renovation work and cost involved.

Choosing a lawyer

It is always better to go by the popularity or through referral while choosing an advocate. “I have to check a property - a land on the outskirts - as I was not sure about the genuineness of it. I wanted to consult an advocate. As I did not know any one, I asked my colleague who has recently purchased a 10-year-old flat and consulted a lawyer to check the papers. He, not only gave proper advice, also educated me what to check while buying a non-approved land from promoters,” said Ramkey, an IT engineer from Chennai.  

Resale real estate market is full of cases where a single property is sold to multiple buyers at the same time. For this it is advisable to run a check on the property title before enter into an agreement. Hiring of reputed or genuine property lawyer who could check records of the past 12 years verifying the authenticity of the seller is a prudent move. 

The charges for checking the property papers run between Rs. 5,000 to Rs. 15,000. The lawyer should give their observation in writing and also help complete other paperwork related to property registration and stamp duty.

Repair or renovation cost

Generally flat or home as old as five years will not have much repair work as compared to the one which is ten years ole. However, rarely one would find a resale property that does not need some amount of renovation work as buyers always feel that the property should be make according to their taste and style. There could be a leaky roof, or pealing paint that needs to be fixed. At times, the buyer may need to renovate the entire house, from scratch. So deciding the cost factor before going in for the deal would be ideal. This will avoid last minute tension and heart-burn.

Engage structural engineer

It’s a belief that old buildings are always strong compared to the new buildings. But one should make sure that the flat he is purchasing is built on a strong foundation and free from any structural defects. Resale properties may look strong from outside, only a technical expert like a structural engineer would be able to confirm its stability. 

Keep in mind that getting a good report card from the structural engineer is important, especially if you are taking a loan to fund the property purchase, this will help the bank to sanction the loan faster.  Usually, the lender ensures that it recovers this cost somewhere or the other via your loan. If one plans to buy the property with own funds, he or she will have to pay for this survey cost out of their own pocket.

Checking for dues

Checking for dues, if any, is a small but important checking process. Check all documents are on the seller’s name and that he has paid all the bills. These could be electricity charges, water tax, property tax, society charges, parking space charges and the like. If the previous owner hasn’t paid any of these bills, the buyers have no option but to settle the same once the house is sold and name change happened.

Other costs

Some residents’ associations charge a hefty sum to transfer the ownership of a property. So do include this cost as well. The real estate agent who helped you to locate the property will need to be paid once the entire transaction has gone through. One should enquire the market rate of commission before settling the account. This could be a percentage of the buying price of the property.

15000 new houses for slum-dwellers in Chennai

In a move to resettle families living along Adyar, Cooum rivers and Buckingham Canal, the Chennai Metropolitan Development Authority (CMDA) has cleared the proposal for construction of around 15000 tenements by the Tamil Nadu Slum Clearance Board at Perumbakkam (TNSCB).

The clearance follows the TNSCB fulfilling the requirement of constructing an 18-metre-wide road near the multi-storeyed buildings. The move seeks to facilitate the resettlement and rehabilitation of 15,000 families from the city, a Hindu report said.

However, the TNSCB is planning to reduce the number of tenements proposed in the project. The construction of 27,000 tenements at Perumbakkam was proposed under the Jawaharlal Nehru National Urban Renewal Mission (JNNURM). 

The first phase of around 6,000 tenements in Perumbakkam is nearing completion, a TNSCB official told the Hindu. The multi-storeyed buildings are being constructed to resettle and rehabilitate residents of slums located on ‘objectionable' lands in the city. There are around 40,000 slum households that are categorised as ‘objectionable' and most of them are found encroaching the Adyar, Cooum and Buckingham Canal in the city.

Of the 40,000 families, around 33,000 families are along the Adyar, Cooum and Buckingham Canal.

The remaining families have been identified by the Chennai Corporation on areas on which habitations are not permitted such as government land, poromboke land, waterbodies, footpaths and canals. Improvement work such as removing encroachments and widening roads would follow the rehabilitation work.

The Corporation will soon start issuing Smart Cards to all residents of 6,000 encroachments along micro-drains such as the Mambalam Canal and Captain Cotton Canal to facilitate resettlement. Other drains along which encroachments have been identified are the Vyasarpadi, Kodungaiyur, Jawahar, MGR, Egankipuram, Jafferkhanpet, Guindy Estate, Chellamal, Nungambakkam, Trustpuram, Raj Bhavan, Reddikuppam and TVS canals.