Supreme Court says buyer can’t wait endlessly for a flat on a 7-year delay

Apr 2,2019 / By Prahalad Singh / No Comment

Supreme Court decision on the delay possession:

Delay in the delivery of flat possession by the builder is an extreme and habitual problem faced by the buyers in India. Delay in the delivery of possession is when the builder does not transfer the property to the buyer within the specified time period (even after the extension period).

A property buyer, who invests his hard-earned money in buying a home and does not get its possession on time, not only leaves to get a roof over his/her head but also ends up losing money, in the form of EMIs on the home loan and paying for rented accommodation.

As a person who has paid money to a developer or builder who has then not delivered the property, you have the right to a solution to your problem. Under a new act passed by the government known as the Real Estate (Regulation and Development) Act, 2016, you have the right to file a grievance before a special body establishes for real estate projects known as the Real Estate Regulatory Authority (RERA). You can also reach consumer courts or file criminal complaints. In certain conditions, you can also start an ‘arbitration’ action or file a complaint before the Competition Commission of India.

Recently, the Supreme Court has assisted orders of a state consumer commission and the national commission to refund payment with interest to a homebuyer for over 7 years’ delay in offering possession of the flat he had booked with a Kolkata-based builder. In its judgment, the Honorable Supreme Court ordered the developer to refund the buyer.

As per the Supreme Court judgment, a buyer can’t be asked to wait endlessly for possession of his house. A period of 7 years is ahead of what is reasonable. Therefore, it would have been considered unfair to non-suit the buyer only on the basis of the first request in the relief asked before the state consumer disputes redressal commission.

A builder is also a service provider, the process of filing a consumer court complaint against them is the same as with other service providers.

Hope, this judgment will set firm arbitrary orders being passed by RERA authorities refusing refunds on their own even though RERA terms there for refunds.

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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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MahaRERA decides on new SOP to remove builder for delays.

Apr 1,2019 / By Supriya Mogarala / No Comment

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MahaRERA to bring major relief for homebuyers with new Standard Operating Procedure (SOP) to remove builder for delays

Maharashtra Real Estate Regulatory Authority (MAHARERA) on Thursday issued an SOP (standard operating procedure) to permit homebuyers to remove a developer if the project is delayed. The completion of the project then would be handed over to an expert panel. The authority has made it clear that it could initiate such action only against non-litigated projects.

In case of annulment orders, the developers will lose the rights to the project his bank accounts will stay frozen adding that the authority would then set up the cabinet of experts to prepare a project report within four months to decide on future course of action then the panel would prepare a blueprint for project completion. The blueprint would consist of financial details and the particularized roadmap towards arranging the finances.

The SOP has been circulated under section 37 of the RERA Act, 2016, with reference to sections 7 and 8. MahaRERA officials said the authority will only acknowledge the complaints received from an association of allottees and not from single homebuyers for such action. They also announced that the complaints should not be less than 51% of the total allottees.

MAHARERA will serve a notice to the promoter with a 30-day deadline to showcase his case.

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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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34th GST council meeting highlights.

Mar 25,2019 / By Supriya Mogarala / No Comment

34TH GST Council meeting in INDIA Highlights:

Decisions captured by the GST Council in the 34th meeting held on 19 March 2019 concerning GST rate on Real Estate Sector at New Delhi has discussed the details for implementations of the proposals made by the council in its 33rd meeting for lower efficient GST rate of 1% on affordable houses and 5% on the construction of houses except affordable house. The council has made a decision that the approach of the transformation is as follows:

Option in that respect of ongoing projects:

• The promoters shall be given one time option to pay tax at the previous rates (8% or 12% with ITC) on ongoing projects (projects where the construction and booking have started before 1st April 2019) which have not been finished by 31st March 2019.

• The option shall be operated once within the prescribed time frame and where the option is not regulated within the prescribed time limit, the latest GST rates shall be applied.

New Tax Rates:

New tax rates shall be appropriate to new or ongoing projects which have operated the option to pay tax in the new government are as follows:

New rate of 1% without ITC (input tax credit) on the construction of affordable housing will be available for all houses those who meet the description of affordable houses as determined by the GSTC and affordable houses being established in ongoing projects existing under the central and state housing schemes presently eligible for compromising rate of 8% GST (after 1/3rd land discount)
The new rate of 5% without input tax credit shall be suitable for the construction of all the houses other than affordable houses unless the affordable houses are booked before 1st April 2019. New rates shall be available to pay on installments on or before 1st April 2019. Also, commercial properties in which the carpet area is not more than 15% of the total carpet area of all the properties.

Circumstances for the new tax rates:

The new tax rate of 1% (on affordable housing) and 5% (on other than affordable houses) will be available under the following conditions.

The input tax credit may not be available

80% of input services can be purchased from recognized and registered personalities on the shortfall of purchases from 80%. Tax should be paid by the builder at 18% on RCM basis. However, tax on cement purchased from the unregistered person should be paid at 28% under RCM and RCM under capital goods at applicable rates.

Conversion for ongoing projects electing for the new tax rates:

• Ongoing projects and projects that have not been completed by 31st March 2019 opting for new tax rates shall changeover the ITC according to the prescribed method

• The changeover formula approved by the GST Council for residential projects to deduce the ITC taken for percentage completion of construction as on 1st April 2019 is to arrive at ITC for the entire project and then based on the percentage booking of flats and percentage invoicing the ITC eligibility is the determined transition would thus be on the pro data based on a formula that credit in proportion to the booking of the flat and invoicing done for the booked flat available to subject to a few safeguards.

The following analysis that will be applied to TDR/FSI and Long term lease for those projects those originate after 1st April 2019:

• The supply of long term lease of land by the owner to the developer will be an exempted subject to the condition that the constructed flats are sold before the issuance of completion certificate and tax paid on them. The exemption shall be withdrawn in case of flats that are sold after the issuance of completion certificate, but such withdrawal will be limited to 1% of value in the case of affordable housing and 5% of the value in case of those other than affordable housing. This will achieve fair taxation between the under construction and ready to move property.

• The accountability to pay the tax on TDR, FSI, and long term lease will be shifted from the landowner to the builder under the reverse charge mechanism (RCM)

Modification to ITC Rules:

• ITC rules will be modified to develop the clarity on the monthly and final determination of ITC and reversal theory of Real Estate projects. The change would clarify the procedure for accounting the input tax credit to commercial units that would continue to be eligible for input tax credit in a mixed project.

• The decisions of the GST Council have been presented in the simple language for better understanding and the same would be effective through circulars which alone shall have the force of law.

The progress for the implementation certainly of the new tax structure is acknowledged as it will give enough time to adapt operations to the latest structure. Justifying GST on under construction properties has been one of the Real Estate sector’s foremost requests. The move to reduce GST, combined with the implantation of RERA, will boost the demand and firmly renovate the sector.

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