Tuesday, December 26, 2017

Natural Disaster Preparedness: How to Stay Safe at Home

"Natural Disaster Preparedness: How to Stay Safe at Home" 

Find below some steps you can follow to make your home stand the toughest catastrophes like floods, storm, earthquake, and landslides.

This is a guest post by Keys90

Friday, December 8, 2017

How will Real Estate Regulatory Bill (RERA) help home buyers in India?

Real Estate Regulatory Bill (RERA) has been passed and is now being implemented at state levels. How will Real Estate Regulatory Bill (RERA) help home buyers in India? Here is quick look:

Thursday, November 30, 2017

GST – Simplifying Taxation in India’s Complex Residential Real Estate Sector

“One Nation, One Market, One Tax” was the driving principle behind the passing of the GST bill. GST has become one of the most revolutionary tax-reform India has seen in decades. It will almost certainly have a profound effect on the Indian economy; making it easier for businesses and retailers to comply and moderate overall taxation levels that will inevitably increase the collection of taxes. The real estate sector contributes to 5% of India’s GDP and is the second-largest employer in the country. However, indirect tax levies, such as VAT, service tax, excise, stamp duty and registration fees have been a significant hurdle in this sector. GST will simplify tax hurdles and minimize the scope for double taxation. This transparent way of taxation will benefit both the customer, industry and the tax collectors.

Under the ambit of GST, under-construction properties will be charged at 12%; this won’t include stamp duty and registration charges. Today different states impose different property taxes; GST will ensure the buyer pays one uniform rate across all states. To better understand the impact of GST on the real estate sector, let’s take a look at the current tax structure of some of India’s tier-1 cities.

Service Tax
Stamp Duty
Registration Charges
Total Taxation

The 12% rate on under-construction properties will likely bring down property rates. Developers will now be authorized to take input credits on the sale of property under construction against the taxes that are paid by the buyer. This will bring down the cost for the developers, and in-turn the developers will have to pass on this benefit to the customers. The anti-profiteering provision in the GST bill makes it mandatory for developers to pass on any tax benefits of GST to the customers.However, GST may not benefit luxury real estate. Top luxury apartments in Chennai, Mumbai, Bengaluru, Pune and other tier-1 cities are set to see a major increase in taxation as compared to affordable homes in the same locations because they aren’t given the full set-off in terms of the land component. As things stand, service tax is charged on 30% of the property value, but GST will be charged on the entire value of the property; making it increasingly taxing on luxury real estate. Notwithstanding the burden of taxation on premium furnishing, fittings, super quality of cement and other top-quality raw materials used in the luxury housing market will be significantly more than that used in the affordable housing segment.

The best possible advice for home-buyers and investors “is to wait”. Wait till the property rate on GST is finalized. Wait till the property rates on GST are finalized. At a time, when property prices are already not affordable in most suburbs, if the GST rate were to rise above 12%, the market will certainly take a hit. If you buy real estate when the markets are on the rise, it only benefits the builders. The right time to buy property is when the markets are down as this gives you the best rates, infinite choices, and loans with lower interest rates from banks.

This is a guest post by Dinesh Dhawde

Friday, November 24, 2017

How GST Implementation Would Be Helpful for Real Estate?

Why is the Goods and Services Tax (GST) a welcome change for realty? Read on if this topic piques your curiosity as a property developer or seller.

The Goods and Services Tax (GST) is an effort toward simplifying the process of taxation by bringing different types of taxes under one umbrella. As simple as it seems, the implementation of GST entails far-reaching effects across sectors. Real estate is indubitably part of this spectrum.

Real estate has evolved by leaps and bounds over the last 15 years and will continue this upward trend in the years to come. Properties have always been looked upon as a lucrative investment option. GST promises to reduce the cost of ownership if its rate is lower than the summation of all the existing taxes.

Tax management is a challenge in the dynamic domain of realty, as any property purchase transaction is governed by a number of indirect taxes such as Value Added Tax (VAT), stamp duty, and service tax. With GST, all indirect taxes pertaining to property deals would be absorbed into one large cover.

We are aware that the effects of GST implementation are not restricted to buyers; developers play a significant part in the story, as they are the ones who initiate projects. Be it procurement of land or a redevelopment project, taxes rule the roost at every stage of property development. In the current scenario, taxes are levied at two levels: center and state. The state taxes the goods and materials, and the center taxes the services. Such a taxation process adds to the complexity of real estate deals, and it is the end customer who bears the brunt of dual taxation. GST implementation promises to put an end to the woes faced by property buyers, as a uniform rate would make it easy for the buyers to interpret the nitty-gritty of property dealings. Even though buyers may need to pay a slightly higher price, GST is sure to simplify the process of compliance to a great extent.

What is the probable impact of GST on developers?

During the procurement of land, developers are required to pay a host of taxes, such as Central Sales Tax, Excise Duty, and Customs Duty. Developers’ expenditure on construction materials comes to be 20 to 25% higher owing to indirect taxes. If all these taxes were to be subsumed, the cost of procurement and development would drop. This would translate into reduced costs for the buyer, which would eventually lead to a boost in sales. However, the actual impact on property prices would be based on the final GST rate.

Given that interdependence is an industry norm, real estate has close relations with other sectors such as finance, IT, steel, and construction. Therefore, if any one industry was to benefit from GST implementation, all the related sectors would simultaneously reflect the positive impact.

Transparency is a major advantage of GST implementation; a unified tax structure makes tax calculation a more comprehensible process for not only the industry bigwigs but also the end customer. Tax evasion would reduce significantly after GST enforcement, as a unified structure leaves no room for manipulations.

How would GST influence the economy?

Considering the booming trend in realty, the contribution of this sector to India’s gross domestic product (GDP) would be 5%. GST itself is estimated to account for 2% of the country’s GDP. 

Is there any section that would not witness the impact of GST?

Indirect taxes are not levied on possession-ready property, so resale dealings would not be affected significantly by GST implementation. 

In conclusion, GST implementation would prove to be a boon for developers and buyers alike, provided the standard rate is low. Buying high-end luxury apartments in OMR, Chennai would no more be a distant dream, which is a good enough reason to cheer. 

This is a guest post by Pooja

Friday, November 17, 2017

Get the best revenue with real estate investment

We all wish to invest in avenues which give us better profit margins. But it is difficult to gauge them and finally invest. Investment is a matter of the right time you enter and the exact time to exit out as well. You need expertise for this kind of investment which comes only with experience. The best investment option available in the market today is the real estate. It is a booming industry and almost all the investors are pooling their money in this lobby. The developers keep on giving handsome returns to all the investors who help them in providing the investment to complete the projects.

  • How does the real estate work?

Real estate is a business of constructing properties for the end users. Since real estate is at a boom and is in the demand by every individual, it is a huge money-making business. But not all investors buy it for self-consumption. They invest when the project has just started or in the initial phase and get out of it when it nears completion or is completed. This way the holding period of the construction gives them humongous profits which is the fruit of investing while you can hold it for a while. The profits are just unimaginable. But do you need a huge investment for such a profit. Well it completely depends on the kind of investment you would like to do and the budget you have.

  • What you need to be careful of?

If you wish to invest for a goal then you need to be calculative. But if you need to do it just for investment purposes then a small amount of profit would also excite you. But you need to be very careful while dealing with real estate developers. There are many loop holes that need to be known by the investor. The basic thing to be done by you is to be sure on the paper work. Check on the property and the land it is built upon. The titles should be clear and the paperwork should be accurate. Also, if you are investing in a property then ensure you get all the rent agreement formats seriously and keep them updated as and when needed. Many times, your property needs to be sold to someone who wishes to use it for self-consumption.

All such things help you to be safe from any legal formalities or complications. It is a way to protect your property and investment amount. You would find many fraudsters who dupe you of the money and sell your property to multiple people to make more profits but in an illegal manner. This can be evaded if you are smart enough and know all the loop holes of the game. It is not easy to get into the act completely as it is just a side income you wish to generate for your better future. But if you wish to make it big in this game then I suggest you know all that is required.

You can get in touch with many real estate brokers who has immense knowledge about the property and the business to help you to take the right decision. These brokers should be registered with the real estate lobby and should have a good background. If they are not the right people then you would face challenges and losses as well if not paid much attention. Real estate is a huge pool of investors and you would need to be smart on all your actions to make a good profit out of your investment. So, ensure you have all that would make your investment profitable.

This is a guest post by Mukul Malik

Monday, November 13, 2017

Odd even rule has drawn public attention to the alarming pollution levels in Delhi. Now, we need a long term sustainable solution for curbing vehicular pollution and jams. Here is one – an App based public transport system.

By: Sachin Gupta | Find me on Twitter

1. The Problem

Last few months have seen heated debates among environmentalists, activists, policy makers, and public at large about the deteriorating air quality in national capital Delhi. Aam Aadmi Party Government in Delhi led by Arvind Kejriwal has announced some measures to curb the rising pollution levels. Notably among them has been the animatedly debated ‘odd-even formula’.  We wish them best and hope pollution levels reduce drastically in Delhi.

So, what contributes to Delhi’s Pollution? Let’s have a look:

Transport contributes 22.7% to overall pollution levels in Delhi. Out of which Heavy and light trucks contribute about 14.2%. Private vehicles that include cars (4 wheeler) & 2 wheeler contribute 6.6%. Public transport that includes buses and 3 wheeler contribute 1.9%.

Government of Delhi has announced variety of measures to curb pollution at all levels. One among them is ‘Odd-Even’ formula which intends to target 4 wheeler. Will it succeed? We will have to wait for the 15 day trial run.


2. Existing situation

But what is the existing situation as far as transport is concerned? With growing GDP, more and more people are able to afford their own private vehicles to commute in the city. According to Delhi Economic Survey, the vehicular population in Delhi registered a 135.59 % jump between 1999-2000 and 2011-12 to touch 74.53 lakh. As things stand today, Delhi adds 1400 cars a day on its roads. About 50% of these cars sold run on diesel. Despite the world class Metro Rail, the public transport has not been able to keep pace with growing demand.

Sumit Sachdeva, Who lives in Faridabad drives a petrol CNG car, says, “I have to go to my office on Lodhi Road from my home in Sector 21C in Faridabad. There is no door to door public transport facility. If I want to take Metro Rail, then, first I have to take an auto from home to Metro station and then another auto from Metro station to office. It’s too time consuming and at the same time expensive”.

Manish Sharma, who lives in Greater Kailash II drives a diesel car, says, “I am in a sales job and there is no way I can use the existing Metro Rail or other Public Transport systems. I have 3-4 meetings a day and all these public transport systems don’t connect me at all”.

Everyday there are Lakhs of such cases where people use their own private vehicles rather than using the public transport. This not only raises the pollution levels but at the same time chokes city roads leading to massive traffic jams.


3. Proposed Solution

It is clearly evident that unless government provides high quality public transport system with last mile connectivity, citizens will continue to use private vehicles.

It is in this context, we provide this solution with the motto that “Public Transport needs to compete with Private transport in terms of comfort, safety, and cost efficiency”.

With the existing infrastructure of Metro Rail, citizens can be made to use public transport more. All that is needed is the last mile connectivity. So, how do we get the last mile connectivity? By deploying ‘Metro Shuttles’ as shown in the picture below:

    3.1. Implementation of Metro Shuttles:

A high quality 14 seats electric shuttle costs about Rs 3.5 Lacs with following specifications:
  • Overall Dimensions:4650*1675*2020mm
  • Seat Capacity:14 Persons
  • Motor:5kw DC Motor
  • Body Color: Customized
  • Fuel: Electric
  • Emission Standard: 0 Emission
  • Maximum Speed(Unload / Full Load):30km/H
  • Battery:6V*8
  • Max driving distance (20km/h constant speed on flat road) (Km)    ~80

The idea is to connect people with Metro rail using these Metro Shuttles. Each Metro Shuttle will run within the radius of 5 km with multiple predetermined Metro Shuttle Stops. Metro Shuttle Stops will be created keeping in mind that no individual should walk more than 500 meters to catch a Metro Shuttle.

These Metro shuttles can be manufactured in India, thereby, giving boost to Make in India campaign.

           3.1.1. Financing

Let’s assume, there is a requirement of 100,000 Metro Shuttles to cover whole city.
Cost of buying these Metro Shuttles = 100000x350000 = Rs 3500 Crore.
Now, who will provide funding for buying these Metro Shuttles? Here is the plan:
  • Government of Delhi to announce the launch of Metro Shuttles system.
  • By just paying 10% (Rs 35000), an individual with a valid driving license can buy a Metro Shuttle to operate in the city. These drivers will not be on payroll of Delhi Government but will be guided by Delhi Government’s Rule Book of Public Transport system.
  • Remaining 90% (Rs 315000) to be financed by banks at subsidized interest rates of say 5% with Government of Delhi providing collateral support. Therefore, there is no risk for banks to give loans to Metro shuttle owners who normally don’t have necessary papers to get loan.

           3.1.2. App for Metro Shuttle Stops

An app will be developed with information about Metro Shuttle stops, drivers, and timings. Citizen can download the app on their Mobile phone in order to locate the nearest Metro shuttle stop with navigational capabilities. Any individual who wishes to commute within the city can use the Metro Shuttle to go to Metro station or vice versa take a Metro shuttle from Metro station to the nearest stop for his home. Metro Shuttle stops need to be created in such a way that any individual using the app shall not walk more than 500 meters to reach to Metro shuttle stop.

           3.1.3. Pricing

Ticket Price for using the Metro Shuttle will be highly affordable. And it needs to be fixed at say Rupees 5. People can pay in following formats:
  • Cash (If a user wishes to pay in cash, then, the ticket price could be Rs 10. This is to encourage users to use Metro Shuttle Card).
  • Metro Shuttle Card that can be charged at the metro station itself or Pre paid Metro Shuttle Card can be sold at super markets. A person using the Metro Shuttle card can swipe the card at the swipe machine attached to all Metro Shuttles. The money goes directly to the central authority and from there Metro Shuttle Driver can claim once every week or fortnightly.

           3.1.4. Real time tracking

Metro Shuttles will run in 2 shifts with only one shift allowed for an individual driver to operate.
  • 6 AM to 3 PM
  • 3 PM to 12 MID NIGHT
All the drivers driving Metro Shuttles will be registered by Government of Delhi and their behavior & capabilities can be tracked by the ratings provided by users on their Metro Shuttle App.

    3.2. Political Benefits:

Government of Delhi can draw huge political mileage by implementing this proposal. Indirectly, they will be providing jobs to over 1 Lac people (many of them can be women drivers). 

Can it be implemented? Yes, all it needs is a ‘Project Champion’ and in a matter of 2-3 years, the plan can be successfully implemented. And subsequently be adopted in other NCR cities.

We have to note that in many developed countries in Europe, Government provides last mile connectivity to people. In addition to trains, they have trams which take people from one stop to another within the city. However, In India, building trams is a futile and expensive exercise. Instead, we can easily implement Metro Shuttles.

    3.3. How to discourage use of Private Vehicles:

In addition to implementing the Metro Shuttle system, Government can tax the use of private vehicles in following way:
  • High cost of parking
  • More taxes on fuel

4. Conclusion:

In a nutshell, government needs to provide high quality public transport system. A system that is inexpensive, can be implemented fast, and at the same time strengthens the government’s political capital. Metro shuttle system can be the answer.

Thanks! Please comment and we can take the discussion further. Maybe we find some other ideas :)

Kindly share :)

Have any Questions?

Saturday, September 23, 2017

The Real Impact of the RERA Act

It’s been over four months since the Real Estate Regulation Act (RERA) came into effect in India. While the much-welcome move from the Indian parliament came as a boon for home-buyers in the country, there were (and still are) a lot of teething issues for developers and builders and the real-estate sector as a whole.

As is known, the RERA Act covers all projects that were still being executed and hadn’t received a Completion Certificate as on the date of commencement of RERA Act, that is May 1, 2017. Thus, many under-construction properties have come under the ambit of the RERA Act. All of these projects had to be registered with the housing regulatory authority, and the developers or builders concerned had to provide regular updates on the approvals at various levels. All these registered properties have to follow the rules of RERA.

  • The Much-Needed Respite

One of the highlights in the RERA guidelines is that any real-estate property, be it a luxury apartment in OMR Chennai or a simple 2BHK in a suburban location of Mumbai, will be priced on the basis of the carpet area, and not the super built-up area. As per a report in The Economic Times, BMR & Associates LLP’s Manoj N Kumar, who is a Partner in Direct Tax, has clarified that the carpet area is 30–35% lesser than the super built-up area of a project. The sale of projects on a carpet-area basis can lead to a significant increase in the per-square-foot price of the project, he adds.

  • The WIP Bane

The newly introduced rules under the RERA Act bring about a major transformation in the way real-estate dealings have been taking place in India. Switching to the new rules was expected to take some time, especially in the case of under-construction properties that have already seen a lot of paperwork. And, as can be seen, the shifting of gears has slowed down the growth of the sector in many states. The properties that were under construction at the cusp of the switch to RERA are bearing the worst brunt as their regularization and documentation had to be changed midway. And, until these properties get completed, their respective builders and developers are not willing to start off with new projects. This means, there is a lot of pressure on them to complete the ongoing projects and sell them, failing which there will be a pile-up of unsold inventory.

  • The DeMon-RERA Impact

Experts express unison in the opinion that the demonetization drive by the Indian government in November 2016 was a blow to the real-estate sector because of the unprecedented and heavy cash crunch that made an appearance without any warning. Add to that, the RERA Act has forced builders and developers to mend their ways and set things straight, and bring about transparency at every level.

The back-to-back moves by the Indian government have taken the businessmen in the sector by shock, and it is only natural that they will need time to ensure things are in order. Until then, the sector is expected to continue facing a slowdown. However, given the motive of RERA to ensure thorough regularization and accountability in real estate, it is believed that the sector will start looking up gradually and that the benefits of the Act will be here to stay.

This is a guest post by Dinesh Dhawde

Monday, September 4, 2017

Chennai Real Estate Crawls out of Lull; Witnesses Growing Demand and Cut in Inventory

The dampening effects of the demonetization policy on the real estate market in Chennai seem to have started to reverse. The policy, which was announced in November last year, coupled with the real estate bill and the devastating floods that shook the city in 2015, had a back-to-back blow on property rates in Chennai. The result was that the city started accumulating a lot of unsold inventory owing to paucity in demand, although, surprisingly, the rates were not going down.

Now, it seems, the rates of residential properties are coming down notably. And, taking advantage of this emerging trend of price fall, buyers are taking properties on rent instead of purchasing them. According to The Real Estate Management Institute, the average weighted rental value of residential properties in Chennai, as well as some other tier-I cities like Mumbai and Delhi,are on an upswing--somewhere in the range of 8% to 12%. Moreover, media reports suggest that banks and other financial institutions, too, are contributing to this positive development by bringing down lending rates for home loans.

Experts note that there has been about 15% increase in property sales in the first half of 2017 as compared to the same period last year. They attribute this growth to the demonetization policy of last year. A majority of the property rate hikes this year were seen in South Chennai, in relatively affordable places like Mahindra World City, Navalur, Padupakkam, Sholinganallur, and Thalambur.

The spurt in demand has brought about a major reduction in unsold inventory in Chennai, with a supposedly 30% drop in the past two years, according to Knight Frank India. Because there was a bulk of unsold inventory over the past 1.5 years, there were no new flats coming up in Chennai. The real estate consultancy believes that the unsold inventory in the city can easily be exhausted in another six years.

With the real estate market scenario getting better after the demonetization drive, commercial office space demand is slowly increasing. This, according to Knight Frank India, is a sign of employment prospects, which will lead to increasing incomes and housing needs, which means need for more residential properties. The vacancy levels of office space has come down to 10.8% in Jan-Jun 2017 from 22.5% in the same period in 2015. The highest rental growth has been witnessed in the Old Mahabalipuram Road or OMR Business District, in locations such as Guindy and Taramani.

The major contributor to the commercial real estate market in Chennai has almost always been the IT sector. This sector alone accounted for 0.7 million sq ft of office space in the city in this year. However, demand from the banking and financial sector is also increasing. With the limited office space now, and the increasing demands, the weighted average rental values of commercial real estate have increased to about Rs. 55 a month for one square foot.

This is a guest post by Dinesh Dhawde.

Monday, July 31, 2017

How Will Real-estate Buyers Benefit From the RERA Act?

After over a year since the Real Estate Bill was presented in the Rajya Sabha, the Real Estate Regulatory Authority (RERA) Act is finally here. The much-awaited Act, which was implemented nationwide on May 1st this year, is aimed at bringing about the required accountability and transparency in the real-estate sector, which has so far been unregulated. Buyers across the nation, including those investing in expensive properties such as villas in Electronic City in Bangalore, are expected to be in the know of projects, right from the get-go.

A day before the implementation of the Act, M Venkaiah Naidu, Union Minister for Urban Development, Housing and Urban Poverty Alleviation, Information & Broadcasting, had tweeted, "#RERA promotes accountability, transparency & efficiency in the sector. Buyer set to be King. Promoter benefits from king’s confidence."

Here are a few benefits that buyers of real estate are expected to gain from the newly implemented RERA Act:
  • The Act will regulate the development work of projects that were ongoing as on the date of commencement of the Act, that is May 1, 2017, and for which the Completion Certificate was not issued. Which means, all ongoing and upcoming real-estate projects will have to be compulsorily registered by the developers. And, the registrations will need to be done before the projects can be marketed.

  • The term ‘carpet area’ has been given a clear meaning in the new Act. It states that the term covers usable spaces, including all areas covered by the internal walls—such as the kitchen and toilets—and excludes areas covered by the external walls—such as balconies and open terrace areas. And, buyers will need to pay for only the carpet area.

  • Unlike earlier days when there was not much transparency in the development work undertaken by developers and promoters, under the new RERA Act, all project-related details, including layout, sanctioned FSI, and number of floors/wings/buildings will need to be shared with buyers.

  • Quarterly updates on the development of the projects will need to be posted by the developer or promoter on the RERA site. The updates will concern the government approvals granted, overall status of the project, etc.

  • In case the developer provides false information regarding the project or breaches any of the provisions of registration, he will be liable to pay up to 5% of the estimated cost of the project.

  • Developers cannot take more than 10% of the project cost as advance without entering into a written agreement for sale.

  • To prevent misuse of the money invested by real-estate buyers, developers and promoters will have to transfer 70% of the received money to an escrow account. This money will be withdrawn for covering construction and land costs, and that too after the necessary certificates are issued by the architect, engineer, or CA concerned, stating that the said repairs are imperative. This measure is aimed at curbing developers’ practice of using buyers’ money for a project other than the one for which the money was reserved.

  • In case the developer does not hand over the possession of the property to the rightful allotted person, the latter can withdraw from the project and seek 100% refund of the amount paid, along with interest.

  • Any structural repair costs in the property will be borne by the developer for five years, as against two years earlier.

  • Non-compliance with the RERA Act will lead to up to three years of imprisonment or a fine of up to 10% of the estimated cost of the project, or both.

This is a guest post by Dinesh Dawde.

Friday, June 30, 2017

World's leading architects - Series 1

Dear readers, from now on, we will be presenting a series of leading architects and their works spread across the world. In the first edition, we present Sir Norman Foster, a British born architect. Here is the info-graphic showcasing his projects.

Other leading design houses, architects, consultants looking to reach out to wider audience can submit their entries at nirrtigo@nirrtigo.com


Saturday, June 24, 2017

Is Investing in Real Estate a Good Investment Option?

Real estate is among the few investment options where the asset value is almost always on the rise. Unlike shares and stocks, the risk element in real estate is much lower. Also, the additional income that one can earn by letting out a property can give a major boost to one’s livelihood and lifestyle. Investing in real estate is definitely a wise way of using one’s money and multiplying it.

While putting money in shares and bonds are popular methods of investment, the returns on investment cannot be guaranteed always. Changing market and political scenarios can have a major impact on the value of these assets. The economic scenario at present is replete with uncertainties like fluctuating inflation and job-market instability. In times like this, it is important to find alternative means of taking care of your financial security. Real estate, unlike equity and debt markets, is far less affected by external factors like politics, and is, therefore, a much safer investment option.

However, investing in real estate implies a huge monetary commitment. Therefore, a lot of advance planning is necessary to zero in on any property. Moreover, your job doesn’t end at just buying a property. For example, if you’ve purchased a house for renting out, you need to first take adequate care to maintain it well and beautify it so that it finds takers. Thereafter, you need to keep checking on how the tenant is maintaining the house. After the tenant has moved out, you would need to hunt for another, and before that, renovate or repair the house as may be needed. And, the bigger the property, bigger is the responsibility and higher the maintenance expenses. These days one can also hire a Property Management Company in India. These companies take care of tenant management, maintenance issues, and timely payments of bills. Be it a budget villa in Bangalore or a duplex flat, the commitment to investing, earning, and maintaining is the same.

If you’re looking to rent out a new house property for some additional income, it would make sense to go for low-cost properties in areas that are fairly well developed. The idea is to offer attractive properties at decent localities that will generate interest in prospective tenants. This way, you don’t have to invest a very huge sum of money, and you can get a fixed income once all the relevant repair work and paperwork for renting out are done.

Before setting out on deciding on a property to invest in, it is important to check on certain basic criteria. Analyze options as you would if you were looking for a place to stay. Which aspects would you consider before deciding on a place for yourself? Proximity to basic facilities and amenities is a primary concern for those looking to buy a house. The same goes for those looking to take a place on rent. Similarly, locations where major infrastructural projects are being executed may not be preferred options during the time of construction. Prospective tenants would not go for places located in noisy and polluted areas. Eventually, however, once the infrastructural works are done, the same property may be in demand and fetch a good rent. So, you would need to think on more than just the price and your budget before deciding on a real-estate property.

This is a guest post by Dinesh Dawde.

Monday, June 5, 2017

The Effect of GST on Indian Real Estate

The implementation of the Goods and Services Tax (GST) is expected to bring about a major transformation in the taxation structure of India. Currently, the central and various state governments impose taxes on the manufacture and purchase of goods and services. The all-encompassing GST is supposed to do away with the various taxes that burn a wide hole in people’s pockets and prevent double taxation. At present, consumers bear a 25–30% of tax burden on purchase of goods. GST is scheduled to come into force on July 1st this year.

As much as the benefits of this new tax regime are widely spoken about, it is still not clear how GST will impact the real-estate sector, especially low-cost and affordable housing.

Real-estate experts across seem to be trying to get their heads around on how this sector is expected to get impacted by the implementation of GST. The three primary taxes that are levied in this sector are Service Tax, Value Added Tax (VAT), and Stamp Duty. GST is expected to replace the first two, while the third one remains as is.

To understand this GST - real estate conundrum, we shall break down the components of taxation in the sector. Firstly, let’s understand that Service Tax, which goes to the central government, is applicable for only properties that are under construction. This tax is levied on a percentage of the total price of the said property. Land cost is not included in the calculation of Service Tax. Hence, currently there is a 75% abatement on under-construction properties valued at less than Rs 1 crore and 70% on such properties that cost more than Rs 1 crore, like high-end luxury apartments in Bangalore. In both these cases, Service Tax is calculated on only the remaining 25% and 30% of the gross value of the property.

VAT too is applicable on properties that are being constructed, but are payable to the state government. This tax is levied on the sale of the house property and involves the transfer of ownership to the buyer. However, this tax structure varies from one state to another, in the range of 1–5%. Experts are of the opinion that the implementation of GST will not only simplify the tax structure in real estate, but also reduce the scope for litigation.

Stamp duty, which is not going to be included in GST, is calculated as a percentage of either the agreed value of the property or the minimum price at which the property can be transacted, depending on which value is higher. Some experts believe that stamp duty is a good revenue-generator for state governments and is therefore kept away from the ambit of GST.

Going by the understanding of GST vis-à-vis real estate, experts believe under-construction properties to be pretty expensive after July 1, 2017. Nevertheless, they suggest to wait and watch until the designated date to see the rate of GST to be implemented and its resultant impact on real-estate prices before making conclusions.

This is a guest post by Dinesh Dawde

Monday, May 15, 2017


 Image source: www.propertyportalwatch.com

Dealing with the real estate finance and property matters is an uphill battle. You never know which move will make or break your future plans. Especially for the first-time dealers or the new beginners, the real estate dealings are a learning road. The investors step into this new world of investments and weigh the pros and cons of various property deals against each other. Once they are fully satisfied and have talked to their agents and lawyers, it is only then that they get into a contract with the seller. Even then, the beginners and even professionals tend to make unforeseen mistakes at the time. But, through thorough research and learning, they can do their best to avoid the common pitfalls that can be disastrous.

Here are the common mistakes that can be avoided easily if one has some background of financial and real estate guidance. The mistakes are as follows:

  • Lack of research

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Most of the investors while dealing with property do not know everything that they should. The real estate agents take advantage of this fact and there’s a high chance that they’ll allure you into making less beneficial deals. This is where your knowledge and a good support system are required.
The lack of research can be in choosing the right location or in financing (discussed ahead). Many new investors ask very few questions regarding the property they are shown. This is a big mistake! You should ask everything about the place. How investing there is beneficial? What facilities does it offer and a lot of other things? Say if you are interested in investing in the property located on the Al Marjan Islands UAE, wouldn’t you ask about the other UAE islands and the other potential areas? You must approach every possibility that you can.

  • Not having a strong financial approach

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The property investors, home buyers, building renters, everyone must have a strong financial background. The dozens of mortgages offer, loan plans and financial funds are available in the market with the purpose of helping the investors purchase what they want. Here, sticking with the budget you have is very important. Some of the investors are attracted to homes and buildings with a higher price. As a lot of other expenses should be taken into account before expanding the budget, spending money on such a deal is a waste of your money and time. Other bad investments include those with a high-interest rate, high monthly payments, and balloon payments.

  • Giving up easily on negotiations

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Good communication and negotiation skills are a trump card in the real estate dealings. You need to have a strategic approach if you want to get a good deal and negotiations play a very important role here. To excel in this domain you need to learn the basic techniques and tricks of property dealings. What many investors here do is they give in easily to what the agent has said. Even if they aren’t satisfied with the deal, they fail to negotiate with the agent. Then the end results, in this case, aren’t good enough. This is why you need to learn how to negotiate or at least know the basics of the essential things and how to talk about them before signing the contract.

  • Miscalculating the repair costs

It’s not only the property land or the building that costs you your life savings but also the repair cost that most of us ignore to consider. The repair cost is the money one has to spend, after buying the property, on the maintenance of the building. Everything from the repair of the lost connections to painting, lawn care, the furnishing of the place and few other important tasks are included in the post-property buying expenses. A buyer must consider these and make sure he doesn’t go out of cash so that he could fix these issues as well.

  • Ignoring the due diligence period

A due diligence period is the right of every buyer and those agents who don’t give it or keep it short must be stopped. As the buyer, you are responsible for the deal you are making and you must keep a reasonable due diligence period before finalizing the deal so that you have a chance to end the deal if you find some problem in it. During the due diligence period, you should hire a third-party proper property inspector who looks into every aspect of the house and analysis it. Estimate the repair cost and check whether there is any other issue or not.

Real estate investment is tricky but not impossible. If you follow the proper guide and avoid the common pitfalls we have mentioned in the article, there’s a higher chance that you’ll succeed in making your very first potential deal. Keep your head high and be attentive during the whole process. This is what it takes to get a good deal.

This is a guest post by Rachel Stinson who has always had a knack for writing, food, fashion, and places. Blogging has combined all four for her with an added bonus of enthusiastic audiences. She expertly analyzes real estates and restaurants with respect to pricing and people involved and can express her opinions in an unhesitating, engaging manner.