Consumer redressal body directs BMC to make one free car parking compulsory in Mumbai

Apr 1,2019 / By Prahalad Singh / No Comment

To own a car has become the greatest need then the status symbol. The problem of car parking is constantly rising issue in the city of Mumbai as the numbers of cars are increasing day by day. And this increasing numbers of cars have given birth to the car parking issue in several cities.

The State Consumer Disputes Redressal Commission (SCDRC) has directed the Brihan Mumbai Municipal Corporation (BMC) to make it compulsory for builders/developers to provide one free car parking space with each apartment sold free of cost. Blog_Image Copy 3

The BMC is asked by The State Consumer Disputes Redressal Commission to amend its present Development Control Rules which currently allow a developer/builder to complete the sale of flats while providing few parking spaces. It has seen in the city that the builders charge an increased amount for the parking above the flat cost.

The commission has also mentioned a Supreme Court order which says that under the Maharashtra Ownership Flats Act (MOFA), a promoter or a builder has no right to sell any portion of a building which doesn’t come under the definition of a ‘flat’.

Calling car-parking an “essential amenity”, the SCRDC ordered the Mumbai Municipal Corporation, must take care of parking spaces while sanctioning a building plan to ensure that each flat purchaser gets one car parking space.

According to the existing Development Control (DCR) Rules in the suburbs, a builder is liable to provide only one parking space for four tenements each measuring over 35 sqm, among other terms.

The SCRDC panel also asked housing societies to frame by-laws accordingly to assure that each flat owner occupies a parking space. The panel also expressed that if car parking spaces are in excess, they can be reserved for visitors. In the case of less car parking space, by-laws should be formulated like a way that these are interchanged among flat buyers.

Builders who use part of the approved FSI to develop parking spaces will be, however, should be allowed to sell them at market rates or a high rate to new buyers.

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New Tenancy Act in Tamil Nadu

Mar 29,2019 / By Prahalad Singh / No Comment

New Tenancy Act in Tamil Nadu:

Last week, Chief Minister of Tamil Nadu has begun an exclusive portal www.tenancy.tn.gov.in under a new act called The Tamil Nadu Regulations of Rights and Responsibilities of Landlords and Tenants Act 2017 which is meant to balance the rights of the tenants and owners. It also aimed at replacing the old Tamil Nadu Buildings (Lease and Rent Control) Act. 1960, also known as the Rent Control Act.

As per the terms of this law, all tenancy agreements should be written and shall be compulsorily registered with the rent authority.

In 2017, the state government had submitted the bill in the assembly to execute the tenancy act that will cover all the metropolitan areas but it was passed a year later.

Who will be the rent authority?
In this portal, people can create a tenancy registration number under the tenancy act utilizing which they can register their agreements with the relevant rent authority. Rent authorities would be appointed in every district, supervised by a deputy collector rank officer to settle the disputes between tenants and owners.

Will they establish Rent courts and tribunals under this act?
Yes, Rent court and tribunals will also be established as part of the new act in each district.

Specifications and highlights of TNRRRLT Act, 2017
Immediate Execution of the Act: The TNRRRLT Act came into effect on the 22nd February 2019, and the act also governs and mandates those tenancy agreements executed prior to the enactment of this law. Moreover, even people who have already rented out places will have to register their agreements with the concerned rent authority within the next 90 days.

Compulsory registration: Although the old Rent Control Act directed registration of the tenancy agreements going beyond 11 months or over Rs. 50,000 in value, the new act directs all tenancy agreements to be registered with the Rent Authority, regardless the term and value of the tenancy. It covers both commercial and residential occupancies including the use of educational premises but does not include the premises registered under the Factories Act, 1948.

Who can fill the application?
The application may be filed by both landlord and tenant.

Why written agreement and registration Require?
As per Section 4 of the Act, all occupancies shall be made by way of an agreement. Also in respect of verbal occupancies formed before the start of the Act, the individuals shall modify the terms of the tenancy in writing within 90 days from the date of notification of the Act.

Requirements under the Stamp Act: It is also mentioned in the new act that all tenancy agreements are to be stamped as per Article 35 of the Indian Stamp Act, 1899.

Independent Registration: Registration is independent under this new Act of registration needed under the Indian Registration Act. Both parties are still responsible to register the agreements as per the Indian Registration Act excluding registering the agreement with the Rent Authority under the new act.

Would this act cover leave, license, property management agreements?
The act is aimed to be a complete code of tenancy. License agreements being of a similar nature are also covered. As the registration under this act is mandated for tenancy/lease agreements. Therefore, despite the agreement is titled or termed ‘license’ or ‘leave & license’, ‘Property Management Agreement’, if the terms or titled of the agreement form any right in the immovable property, then such agreement has to be registered under this Act. The ‘terms’ of the contract will define the nature of the agreement and not the ‘title’ given to such agreement.

Is registration required on renewal?
The rules drafted in this matter direct that any renewal is treated as a fresh tenancy demanding registration again. Contrary to the old law, the process of registration has been made online and there is no fee for registration of the tenancy agreement, though, nominal service charges be placed by the portal for registration.

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Properties to Get Costlier as Stamp Duty in Mumbai Hiked to 6%/commonfloor

Mar 5,2019 / By Prahalad Singh / No Comment

Stamp duty and registration charges in Mumbai continue one of the largest sources of revenue for the state government of Maharashtra. As a matter of fact, the government has been pitching on Mumbai’s real estate boom to encourage growth and development.

The Maharashtra government’s decision to raise a 1% surcharge on stamp duty for properties in Mumbai, could negatively affect the realty market and home buyers, nowadays when property deals are already charged with high tax rates.

It would be raised on the sale, lease, mortgage, and gift of real estate transaction, within the area of the Brihanmumbai Municipal Corporation (BMC). The existing stamp duty on houses in Mumbai is 5%, which will now increase to 6%, making properties more costly.

Stamp Duty CF

How the Stamp Duty Hike Will Impact the Homebuyers?

This move is particularly discouraging for the mid-segment homebuyers who are thinking of buying property due to easy availability of options and reduce interest rates currently.

Hence, if the ready reckoner rate for a property is Rs 2.75 lakhs and the agreement value is Rs 5,50,000,00 lakhs, then, the stamp duty will be calculated on the agreement value of Rs 5,50,000,00 lakhs.

A Comparative Study of Property Charges Before the Hike

Assume you buy a 200 sqm flat near Andheri where the Ready Reckoner rate for residential property is Rs 264200 per sq.mt. Considering the property’s agreement value is the same as the Ready Reckoner Rate in the locality, your property price calculation will be as follows:

Total Cost of the property before the hike
A. Area of the flat	200 sqm
B. Ready Reckoner Rate	Rs 2,75,000/sqm
C. Price of flat (AxB)	Rs 5,50,00,000
D. Stamp Duty (5% of C)	Rs 27,50,000
E. Registration fee (1% of C or 30,000, whichever is less)	Rs 30,000
F. Total cost (C+D+E)	Rs 5,77,80000

A Comparative Study of Property Charges After the Stamp Duty Hike

Total Cost of the property after the hike
A. Area of the flat	200 sqm
B. Ready Reckoner Rate	Rs 2,75,000/sqm
C. Price of flat (AxB)	Rs 5,50,00,000
D. Stamp Duty (6% of C)	Rs 33,00,000
E. Registration fee (1% of C or 30,000, whichever is less)	Rs 30,000
F. Total cost (C+D+E)	Rs 5,8330000

The above table is showing that before rate hike one has to Pay Rs.5,77,80000 for a 200 sqm flat in Maharashtra but after a rise of 1% as a surcharge, for the same property, people have to pay Rs.58330000 which goes Rs.550000 more.

But wait, this isn’t the actual cost of the apartment. There are many other un-advertised costs which are hidden and are calculated over and above the advertised price. And yes, do n’t make the mistake of underestimating these costs as they normally make up to 20% of the advertised cost.

Here are what all the costs a builder/developer will charge you when you actually buy the apartment/property and sign the buyer’s agreement in Maharashtra:

What Are the Hidden Charges a Homebuyer Have to Pay to Buy a Flat in Mumbai?

Nature	Amount in Rs.	Calculation Basis
BSP	3000000	1200 Sq. feet * 2,500
PLC	120000	4% of BSP. PLC location depends on buyers
EEC & FFEC	60000	1200 Sq. ft * Rs. 50 per Sq. ft.
EDC & IDC	120000	1200 Sq.ft. * Rs.100/ Sq.ft.
Open Car parking space	125000	Fixed amount (differ from project to project)
Covered parking space	200000	Fixed amount (differ from project to project)
Club membership	45000	Fixed amount (differ from project to project)
Power back-up	30000	Fixed amount (differ from project to project)
Electric Connection charges	3000	Fixed amount (Approximate value)
Water, Drainage, and Sewerage	3000	Fixed amount (Approximate value)
Stamp Duty	180000	6% of BSP. Need to be paid to the government
Registration Fees	30000	1% for every state
GST Tax	360000	12% of BSP. Need to be paid to the government
Total Advertise Cost	3000000
Total (Extra and hidden costs)	1276000
Grand Total	4276000

Please note that all the charges are calculated on the basis of Super Built-up Area and not Built-up Area. As per industry standards, the difference between the super area and built-up area is approximately 18-20%. i.e. while you pay the price for 1200 sq.ft. (super area), the actual built-up area in your apartment would be somewhat 960 sq.ft. (1200 – 20% of 1200) = 960 sq.ft.

Government’s Decision to Deduce the GST Rates

This is not the end. Recently, the GST Council has made a decision to reduce the Goods & Service Tax (GST) rates for under construction projects to 5% from the effective rate of 12%. Keeping in mind the objectives of “Housing for All by 2022”, the government has reduced the GST to marginal 1% for affordable housing. Apart from that, completed projects which have received Occupancy Certificate (OC) will not attract GST.

Rationalization of GST Rate:

Residential Segment Type	Existing Effective GST Rate	New Effective GST Rate	ITC Availability
Residential properties outside affordable segment	12%	5%	Without ITC
Affordable housing properties	8%	1%	Without ITC

Once the decision will come into force, the property rate will decrease and will benefit the homebuyers across the nation. The above property calculation table where the GST rate is taken as 12% on the BSP, the buyer has to pay Rs.3,60,000 as GST charges on their home. The purchase will be reduced by Rs.2,10,000 (Rs.360000 – Rs.1,50,000). We can say that homebuyers will save up to Rs.2,10,000 on their purchase.

How the Stamp Duty Hike Will Impact the Mumbai Property Market?

Property in Mumbai is remarkably overpriced and most of the demand is moving towards Navi Mumbai and Thane. Now, those who are moving from the suburbs to the Island City will be the ones who would be most affected. If the surcharge is imposed, homebuyers will move to Thane and Navi Mumbai for their housing needs more actively.

Buying property Real Estate Real Estate News Smart Residential Living

Land Conversion Became Simpler Through Online in Karnataka/commonfloor

Feb 28,2019 / By Prahalad Singh / No Comment

The State Government took a significant decision of cutting down on procedures and made the end-to-end process online. Conversion of agricultural land for non-agricultural use will now happen within a month as the government has simplified the process and launches affidavit-based online land-use conversion.

This move has been taken to approach the increasing complaints from the landowners and took after the unnecessary delay made by the authorities in the process of land conversion. The new process will not only speed up the process of land conversion by reducing unnecessary delays and paperwork but also will help to control the widespread corruption in the entire process.

This online system will speed up activities such as housing, solar projects, infrastructure, development, tourism projects among others need lands. This move will enhance the ease of doing business in Karnataka.

Earlier, a citizen seeking conversion of his land/plot of agriculture land had to submit about 20 documents including a host of NOCs including those related to land acquisition and tenancy laws along with the application. In many cases, they would run from one place to another trying to get these documents or bribe to get these services or just quit their attempts showing unwillingness.

State Cabinet accepted a proposal from the Revenue Department and decided to reduce the number of documents to be submitted to 2-3. An applicant will now have to submit RTC copy for the current year, a copy of mutation record, an 11E sketch (only if the land conversion request falls within the same survey number) along with an affidavit. After getting the required documents, the Revenue Department will collect the rest by communicating with other departments through its online process. If a department doesn’t submit its comments within one month from the date of the receipt of the document, then the revenue department will assume that they have no objection, and initiate the process of conversion.

What is Agricultural Land?

Agricultural lands are mainly for agricultural activities. Law doesn’t allow to build houses, industries, factories, etc. on the agricultural land despite the ownership of the property. Non-farmers are not able to buy agricultural land in India.

What is Non-agricultural land?

If any activity in the nature of development is carried over on the land which makes land unfit for cultivation is known as Non-agricultural land. You can develop on the said land provided only after obtaining all the necessary permissions from the local authority.

Things to know about Land Conversion?

Lands that have been declared as agricultural cannot be used for residential, commercial or industrial purposes; without conversion of the same into non-agricultural land. The process of converting agricultural land into a non-agricultural land is called land conversion, or in other words, DC Conversion as the conversion is generally endorsed by a Deputy Commissioner.

Online process of land conversion

Under the online system, the applicant needs to submit a request with land details as well as information like the survey number and an affidavit. For half-done conversion or if the RTC has multiple owners or in case of Pyki RTCs, the applicant must submit an 11E sketch.

The software will forward the application to the concerned Urban Development Authority (UDA) and the officials will verify the details after confirming if the request is in compliance with the master plan of the area.

Once the details are verified, the officials will ask the applicant to pay an online fee and fine, if any. The authorized deputy commissioner will digitally sign the conversion order which could be downloaded and printed by the user.

For online process applicants can visit the official website: www.bhoomi.karnataka.gov.in

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GST Update: New GST Rates For Real Estate

Feb 26,2019 / By Prahalad Singh / No Comment

The Goods and Service Tax (GST) Council in its 33rd meeting has been conducted on Wednesday, 24th February 2019. The discussion on real estate related issues have been discussed and The lower tax burden on home buyers is expected to push demand in the segment which will, in turn, will keep developers committed to building more affordable homes. The decision will provide relief to the middle-class homebuyers in metros as well as non-metro cities. At the same time, the decision is expected to help the govt’s move towards achieving its target of “Housing for All by 2022”.

Demand for residential properties is expected to receive a major boost following GST the government’s decision to reduce the Goods & Service Tax (GST) rates for under-construction projects to 5% from the effective rate of 12%. Keeping in mind the objectives of “Housing for All by 2022”, the government has reduced the GST to marginal 1% for affordable housing. Apart from that, completed projects which have received Occupancy Certificate (OC) will not attract GST.

Rationalization of GST Rate:

Residential Segment Type	Existing Effective GST Rate	New Effective GST Rate	ITC Availability
Residential properties outside affordable segment	12%	5%	Without ITC
Affordable housing properties	8%	1%	Without ITC

3. New Definition of Affordable housing – A residential house/flat of carpet area up to 90 sqm in non-metropolitan cities/towns and 60 sqm in metropolitan cities having a value up to Rs 45 lacks.

Both conditions will have to be met – house having a carpet area of 50 sq mtr valued at 50 lacs will be taxable at 5% and not 1%.

As per GST Council, Metropolitan cities are Bengaluru, Chennai, Delhi NCR (limited to Delhi, Noida, Greater Noida, Ghaziabad, Gurgaon, Faridabad), Hyderabad, Kolkata, and Mumbai (the whole of MMR).

4. Builders for the above types of residential projects will not be eligible to claim the input credits. As a result, the elimination of Input Credit Tax benefit may hit profitability for the supply side.

5. Transferable Development Rights /Joint Development Agreements / Long term lease premium and FSI(Floor space index) transfers shall be exempted only in case if it pertains to a taxable residential project, in other words, TDR(Transfer of Development Agreements) for commercial projects will be taxable @ 18%

6. Above changes will be effective from 1st April 2019 after notifications are issued

How will the new GST Rate Benefit the Homebuyers?

Now the homebuyers will get a fair price deal. Earlier, the GST Tax rate was 8% for affordable housing properties and 12% for regular housing projects. But in the GST Council Meet that happened on Feb 24, 2019, the GST rate was cut down to 1% for affordable housing projects and 5% for regular housing projects, with no input tax credit.
Affordable Housing plans will get attracted to GST at 1%.
The interest of the homebuyers/consumers towards buying a property has been increased.
Input Tax Credit not being passed on home buyers/consumers will not be an issue.
Un-utilized ITC(Input Tax Credit), which has been used as the cost of the project should be removed and should lead to a better price.
Tax structure and tax compliance should become simpler for builders.

Note:
TDR – Transfer of Development Rights
JDA – Joint Development Agreements
FSI – Floor Space Index
ITC – Input Tax Credit

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