Repo rate and its impact on bank's lending rates to home loan customers for buying property in India

Author: Sachin Gupta | Find me on Twitter Follow @sach_gupta

To control inflationary pressures, RBI increases repo rate. And it is quite evident from the short term and long term graphs; whenever repo rate is increased, it impacts growth of the industry. And in recent times, one can correlate the slowdown in real estate transactions with increase in repo rate.

Latest short term repo rate changes by Reserve Bank of India

History of repo rate changes by Reserve Bank of India

Whenever, repo rate is lowered it encourages individuals and companies to invest because of lower cost of borrowing.

For example, the debt on balance sheet of 11 real estate listed firms on BSE stands at Rupees 42000 Crores. Even a drop in repo rate by 1% reduces the debt servicing by Rupees 420 crores per year. That’s massive for real estate developers given that other input costs are rising.

Similarly, for a home loan seeker who has taken 50 Lacs rupees of home loan, drop in repo rate results in substantial savings on EMIs.

Loan amount – 50 lacs
Bank interest rate – 11%
Tenure – 20 years
EMI – 51609

Loan amount – 50 lacs
Bank interest rate – 10%
Tenure – 20 years
EMI – 48251

Which means, monthly savings of rupees 3358.

Therefore, just like any industry, real estate sector including the developers and customers are keeping an eye on RBI’s monetary policy and are batting for lowering of interest rates.

Repo rate and its impact on banks lending rates to home loan customers from Green Realtech Projects Pvt. Ltd

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3BHK Available for Sale in Madhuban Bapudham, Ghaziabad
Size - 152.62 square meter
Price Expected - 60.89 Lacs
Silver Oak, Madhuban Bapudham, Ghaziabad

Fill the below form to buy this apartment at best prices.

Madhuban bapudham yojana 2019 from Green Realtech Projects Pvt. Ltd

Using Tech in the Home - A Video Wall in your Home

Video walls can be an amazing addition to your home decor, as those in the world of business have known for a long time. This is because video walls have been utilized by business people for a long time but they are just starting to catch on in a home setting. Below we will discuss ways in which you can use a video wall in your home.

First, think of the game nights that you can have with a video wall in your home. You and your buddies can play video games on a screen that makes the action truly immersive and will make your game nights the most popular if not in your city then definitely in your neighborhood. Even if you are alone, your gaming experience will surely be at a higher level.

Next, movie night. Family movie nights watching the latest Hollywood blockbusters or even a more highbrow art-house film will be an experience like going to the cinema, with crisp visuals and immersive sound if you invest in speakers and perhaps surround sound. You won’t even need popcorn, as the wow factor of the screen size and visual presence will keep you interested.

Next, your home office. As we have said, those in the world of business have long used video walls. They can facilitate team working, as you and your team will be able to work on a project whilst tracking any changes and ideas on the screen in real time, and the interactive elements of a video can be utilized to improve your business's performance. Having one of these in your home office will also send out the right message to your business competitors.

Of course this is not an extensive list of ways in which you can use a video wall in your home. You probably have other ideas. After all it is your home, not ours!

What are the Real Estate and Property market Terms and Definitions in India?

Author: Sachin Gupta | Find me on Twitter Follow @sach_gupta

Looking to buy an apartment in a builder project or a piece of land, Or for that matter, looking to buy/lease office space property? We are sure you will come across many terms and definitions which are new to you and therefore comprehending them is essential to make sure that you are not overpaying.

Take for example, the distinction between carpet area, built-up area, and super area. Most of the builders in India will charge you on the basis of super area. However, in some locations, they may charge you on the basis on carpet area. But the prices will be adjusted accordingly. For example, some builders in Mumbai charges on the basis of carpet area of the property and therefore their base selling price is higher as compared to the builder who is charging you on the basis of super area. Super area is the entire area of the building which includes carpet area, lobbies and corridors, walls, lifts, staircases basements, and other atrium and utility areas. Carpet area is the actual usable area within the walls of the floor. Since, you will using the lobbies, corridors, lifts, and other common areas, therefore, a builder will take all of these into consideration before rolling out the final base price. Whether you pay by carpet area method or by super area, all the charges will be included in the final price.

Similarly, when you go to the local registrar office to register your property, there will be terms like circle rates or market value that will be used to arrive at stamp duty and registration charges. In the below document, one can find all the terms and definitions that are used in Indian real estate and property market.

What are the real estate and property market terms and definitions in india from Green Realtech Projects Pvt. Ltd

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What are the parameters that I should pay attention to in order to maximize my returns on Property Investment?

Author: Sachin Gupta | Find me on Twitter Follow @sach_gupta

Real estate is a complex business to be in. Not only one needs to understand the market (supply and demand element), but at the same time, one should be aware of tax laws, registration processes, title conveyance, planning the development of project, rent laws, and state government’s land policies. Therefore, as an individual investor, what is it that one should take primary note of in order to maximize his/her returns on investment made? Let’s explore below:

• Micro market trends

Although not foolproof, the market trends with respect to movement of property prices present an insight into the gains and losses of micro markets within a city. If a micro market or locality is showing downward trend for 3-4 consecutive quarters, then it is a clear signal that there is something wrong with the locality that investors are wary of. However, if whole city is showing downward trend because of slow down of economic growth or political instability, then, one needs to be patient before investing in any locality within that city.

There are 3 to 4 major property indices in Indian real estate market. Analyze them in detail before investing in a property. The most talked about property index in India is released on a quarterly basis by National Housing Bank. One should definitely pay attention to this residential index.

• Master plan of a city

Master plan of a city is another key indicator as far as maximizing returns on your property investment. Master Plan is developed by town planning authorities or city civic bodies. It is a plan that takes into consideration city’s existing population, future expansion in population, need for infrastructure, and industrial development within a city. To accommodate population growth and facilitate industrial development, civic authorities earmark or zone the city. Certain pockets or sectors are demarcated for residential development, and some other for industrial or commercial development. Therefore, what master plan tells you is that how the city’s development would pan out for coming 10-20 years. Pay considerable attention to this aspect before investing in a property. Here are the links of civic bodies across India that deal with master planning.

• Where are builders building the new projects?

Once master plan is prepared, civic bodies then invite applications from private developers to develop the land. Therefore, it is no surprise that builders are allotted land in one cluster or certain specific clusters of the city. Which are these clusters? In addition to finding it out in master plan, one can simply analyze the market and see the launch of new real estate projects.

In addition, one can find below the detailed document comprising the Guidelines for achieving maximum returns on real estate investment in India.

Guidelines for achieving maximum returns on real estate investment in india from Green Realtech Projects Pvt. Ltd

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DIYs that can increase the value of your home

Every home once in a while has to go through some improvisations to increase the value of the house. It is more so if you are looking to rent or sell your property. Some physical changes and improvements can add to the appeal of your house and make it look more attractive. A fresh coat of paint, some new wood work inclusions etc. can be a good start to home improvisations. But if you are looking to do some value additions without spending much, you can try some of the DIYs listed below.

To make a house look more elegant and bright, light color drapes paired with white upholstery and white based furniture pieces are the key. So you can start off by changing the curtains. De-stain any old wooden pieces and re-stain them according to the color tone of the room. Few other economic changes would be to either steam vacuum the carpets or change over the carpets to lighter shades. Lighter shades of carpet make the house look big and elegant. Symmetrical patterns on the back-splash of the kitchen counter, stairway railing and verandah railing will make the house look organized and high fashioned. Keeping the kitchen counter top clear of unwanted items will make the counter seem big and attractive.

Bedrooms are the biggest appealing points when considering a home. Big beds with neatly laid white and fresh linens are biggest attractions. Symmetrical arrangements of the bed with side tables and other furniture pieces in the room gives the room a sense of space. At the same time, one must make sure that bedrooms are free from Mosquitoes and flies. That can be a real turn off for potential buyers or renters. There are variety of options such as Mosquito Net, Mosquito Killer Machine, Mosquito Repellent that can be used to eliminate mosquitoes from the bedrooms. Similarly white sheer curtains and drapes make the room seem brighter. You can customize the door and cupboard knobs by painting them all in a same tone of metallic shade. These metallic shades make the home appear custom made and add value to the property. Landscaping in the backyard or merely adding some greenery to your terrace garden will show detailed touch in the house. Every buyer or renter want to see a personalized touch in the house they are looking. Creating a specific purpose for each space in the house will show how each space can be efficiently utilized. Even if it is not utilized the same way as yours, it throws opportunities and ideas for much more use to the space.

Use of energy efficient fixtures and appliances adds as a huge advantage when trying to put the house on the market. Energy efficient incandescent light bulbs, power saving smaller appliances will be looked up as a huge saving on a long run. Adding additional storage outside of the house in the garage will also be considered a value addition. Leaving these additional storage half empty will make the storage space seem more and will help the buyer visualize how much the storage space can accommodate. Every home improvement once started must be completed to satisfaction. Refrain from taking bigger home renovation projects if the deadline seems too tight. Or hire a professional Home Renovation company which can provide you end-to-end solutions including modular kitchen, wood work, steel or iron doors, electric & bath fittings, flooring, walls, interiors, and exteriors. Consider the use of the particular update or renovation in the long run and foresee how it will add value to the house before implementing any changes to your home.

This is a guest post by A. Ramya

What are your Rights as a Home Buyer?

Are you planning to buy a home of your dreams? Well, buying a home is a bit tedious task. It involves many complex legal processes. Buying a home is perhaps one of your largest financial investments. Isn’t it? Particularly, if you are a first-time home buyer, your mind would be filled with hundreds of doubts and questions.

For instance, if someone is looking for flats in Calicut, he/she would be concerned with his /her rights over the property, terms and conditions offered by the builders, delays if any and other problems. As a home buyer, you might have many questions.

Before diving into what the home buyers’ rights are as per the Government norms, let us first analyse the process of buying a home in India.

1. First analyse your financial situation and requirements.
2. Find a property that caters to your specific requirements.
3. Inspect the property and seek professional help if needed.
4. Get into an agreement with the seller. Ensure that details like price and also personal details of both buyer and seller are highlighted before signing the same.
5. Find a reliable lender. It is always recommended that you associate with reliable financial institutions like the SBI while applying for a home loan. Play it safe.
6. Perform a thorough analysis of your property to avoid any loopholes in the agreement.
7. At the time of closing, ask seller for all the legal documents associated with your property and get it registered in your name.

These are some of the common steps that one follows while buying a home. Now, let us shift the focus on the rights of a home buyer. As a home buyer, there are several rights granted to you that include mortgage loans, the rate of interest on loan and several others. Awareness of such rights protects you from being duped.

Here are some of the rights that you are entitled to as a home buyer:

Right to obtain information
The home buyers are eligible to know the details of sanctioned layouts and plans of the building. They can also claim for the specifications which are approved by the construction control authority.

Right to know the stages of construction
Under RERA, the home-buyers are entitled to know the stage-wise schedule of the construction of the project. It includes the provision of water, electricity, sanitation and other amenities promised by the builder.

Right to possession of the property
The home-buyer has the right to claim possession of the building, plot or apartment. It is the duty of the builder to provide all the legal documents to the buyer.

Rights to document
It is the duty of the real estate builders to handover all the legal documents related to the property to the home-buyer. Under RERA act, allotted can claim documents and plans of the common areas.


These are some of the rights one should take advantage of as a home buyer. So, if you are looking for your dream home, exercise your rights and make an informed decision. Let me know if you have any doubts or your feedback in the comment section below.


This is a guest post by Sreekanth, who is a digital marketing expert at Webdura Technology. He enjoys experimenting with new techniques in both print and the web. He also loves to explore roads less traveled. Reach him by writing in your details in the comments sections.

What are the things one should notice before taking possession of the property or new flat in India?

Sumit was finally relieved that he will be getting the possession of his flat in Noida. Sumit had bought this under construction flat in 2009. After many delays due to environmental clearances and slow progress by the developer, the flats were finally ready for possession for flat owners. Sumit and other flat buyers in this group housing project had several rounds of discussions with the builder and environment ministry for speedy delivery of flats. Because on one hand, many of these flat buyers including Sumit were paying monthly rent and on the other hand, EMIs on these flats had started. That was double whammy for Sumit and others.

Now that, flats are ready for possession, what shall Sumit and other home buyers like him verify in order to make sure possession of flats is legal? Before handing over the final payment and taking possession of the property, Sumit and other flat buyers in this group housing project shall ensure that:

1. Property is vacant
2. Title certificate to be handed over by seller to buyer
3. Buildings plans, approved layouts, and other supporting documents (original) to be handed over by seller to buyer
4. In case of new group housing project (as is the case with Sumit), it shall be verified that building has been given the occupancy/completion certificate by the concerned authority
5. Mutation is done to reflect the name of the purchaser

Find below detailed document highlighting what needs to be checked before taking over the possession:

Vaastu tips to place decorative items in home

Buying a new house is considered a monumental job in today's world. When we buy our dream home we start decorating it to make it reflect our liking and personality. While most of us follow Vaastu Shastra to design and build our house, we don’t take much care of internal arrangements and using decorative accents inside the house. Following vaastu tips in our home is believed to offer prosperity, wealth, health and happiness. Vaastu Shastra tells that placing things at right position and arranging the internal things according to Vaastu will help in creating a peaceful and happy atmosphere at home. Here are few tips to make internal arrangements inside your house.

Always have storage or console in the south and west wall and do not have storage in the eastern and northern wall. If you have heavy furnishing and other heavy items in the southern and western side of the house, Place TV and electronic items in the eastern and northern wall. Crystal decorative accents should be placed in north or east side. If the decorative items at house are heavy weighted then one should place them in the south and western walls.

Here are few tips to design your home with respect to different directions of home.

• North-east corner:

North-east corners are always considered as a place of wealth and prosperity. Do not place any heavy statues, heavy decorative objects, and holy shrines in this corner. Also when you are constructing your house, do not have any overhead water tank or septic tank in this corner. Do not dump many things in this corner. It is very important to keep north-east corner of a house clean and tidy to have wealth and prosperity in house.

• South-west corner:

This is the best place to store valuable things, documents, cash, and jewels. You can place cupboard in this corner as it is considered a corner of wealth. Place the cupboard in this corner facing east or north. You should open the cupboards towards north.

• South-east corner:

If you wish to bring good luck and wealth to your house, then you can place money plants in purple pots in this corner.

Having discussed about importance of different corners of the house, let us take a look on where to place certain decorative items at home according to Vaasthu Shastra.

• Never place the statue of lord Ganesha in the north-east corner of the house
• To attract wealth to your house, you can keep active fishes in clean and ventilated aquariums
• Always keep the entryway of your house clean and free from clutter
• You can place mirror in cash drawers or incorporate mirror into the design of your cupboard and cash drawer to multiply wealth
• Place painting depicting natural scenes, waterfalls, gardens and flowers in home
• You can place flowering plants inside your house and avoid placing cactus and thorny plants inside your home

Following Vaasthu Shastra while constructing you home is always vital as it is believed to bring wealth, peace, prosperity and health to your home. Apart from building your home according to Vaasthu, placing certain decorative objects in proper place and directions will bring all good luck to your home and creates a harmonious balance.






This is a guest post by Pratheepa who writes for indiaproperty.com – the online portal that meets the requirement of sellers, buyers and real estate professionals in the real estate space of the country.

How can NRIs-PIOs-OCBs open and maintain the NRE-NRO-FCNR-bank accounts in India to buy, sell, rent out immovable property?

Author: Sachin Gupta | Find me on Twitter Follow @sach_gupta

Foreign exchange management act (FEMA) of 1999 allows Non Resident Indians (NRIs), Person of Indian Origins (PIO) to buy, sell, rent immovable property other than agricultural land or plantation property or farm house in India. One can invest in a piece of land and construct it or buy an under construction property directly from the real estate developer. Overseas Indians can invest in commercial or residential property of their choice. The acquisition of immovable property by person resident outside India is governed by terms of Section 6(3) of the Foreign Exchange Management Act (FEMA), 1999, as well as by the regulations contained in Notification issued by RBI vides Notification No FEMA. 21/2000-RB dated May 3, 2000, as amended from time to time.

Persons resident outside India are categorized as Non- Resident Indians (NRIs) or a foreign national of Indian Origin (PIO) or a foreign national of non-Indian origin. A person resident in India who is not a citizen of India is also covered by the relevant Notifications.

To carry out this entire process of buying, selling, renting out the immovable property, NRIs/PIOs are allowed to repatriate an amount up to USD 1 million per financial year (April-March) out of the balances held in NRI account subject to tax compliance. This amount includes sale proceeds of assets acquired by way of inheritance or settlement. Thus, NRIs can purchase property and transfer money earned in India to their country of residence through authorized banking channels.

How can NRIs/PIOs/OCBs open and maintain the bank accounts in India? Find below the detailed document:

NRI-PIO-OCB opening and maintaining NRE-NRO-FCNR-bank accounts in india from Green Realtech Projects Pvt. Ltd

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List of Housing Finance Institutions of India

Author: Sachin Gupta | Find me on Twitter Follow @sach_gupta

Owning a House is a dream for every household in the country. The new government has also set an ambitious target of ‘Housing for all’ by 2022, a challenging yet achievable task. To fulfill this objective, providing housing finance at affordable rates is paramount. Therefore housing finance companies will play an extremely important role in this noble endeavor.

Who are the major players in this area currently? Can the list be expanded given the enormity of task? Things will unfold as we move along.

There are 2 kinds of housing finance companies, one, which accepts public deposits, and the second kind do not accept public deposits. Housing finance companies are regulated and supervised by National Housing Bank. Housing finance companies offer loans for purchase of commercial and residential properties. Find below the detailed list of Housing finance companies in India:

List of housing finance institutions of india from Green Realtech Projects Pvt. Ltd

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5 Home Projects That Are Best Left To Professionals

If you’re remodeling your house, there must be a number of things you want to change about it. And if you want your house to be a particular way, you might think that it’s always better to make these changes yourself. But remember, you are still an amateur and some things are better left to the professionals.

Professionals are called so for a reason.  They survey your house, understand your requirements, negotiate the price, and most importantly they get the work done according to your tastes and preferences. They make even the toughest work look effortless. Needless to say, for the following home improvement activities, hire a professional.

• Plumbing

Plumbers have a lot of experience up their sleeve and they usually carry out their work flawlessly. But mind, if you ever get so adventurous and try plumbing by yourself, there is a definite chance that you might end up flooding your house. Remember plumbing is no child’s play. One wrong move and it can bring down your house, literally!

• Electrical Work

Flipping a fuse switch and checking for faulty wiring is hardly the same thing. Electrical work is pretty serious business and there are more things that can go wrong than right, if you don’t know what you are doing. You obviously don’t want to electrocute yourself or your family members, right? That’s exactly what could happen. This work requires precision and most of all, a license.

• Tree Removal

This is no joke. You might think that you are well-equipped to uproot a few trees, but this clearly is not your stage to rock. Even hardened pros can go wrong with this process. Tree cutting and removal is a dangerous task and professionals have a lot of training that they have racked up for majority of their life. So it’s better to stay away from this as it also requires dangling from extreme heights with dangerous tools.

• Water Proofing Your House

Seen many water proofing home videos on YouTube or random DIY sites in your time? Think you got what it takes to go about waterproofing your house single hand? You really won’t be able to pull it off. This is another area where you should stay away from, as this process is both time consuming and confusing.

• Flooring

How hard can laying some tiles or spreading carpet across your living room be? Pretty easy right? Wrong! You will need precision equipment to cut through the tiles or the carpets to the exact length as required. Also these things take a lot of hard work so it wouldn't help if you fizzle out while doing it.

It only takes a fair amount of cash to get this work done. As enthusiastic as you are, hiring a professional will save you so much trouble, tension, and time.


Yogendra is a content strategist at commonfloor.com. He is knowledgeable and familiar with the Indian real estate market. He blogs on Indian real estate properties, news, price trends, home decor, home loans, etc.

Typical Property Registration Process in India

Author: Sachin Gupta | Find me on Twitter Follow @sach_gupta

Buying or leasing a property requires that one has to go to through the process of registration at district’s Registrars/Sub-registrar’s office. Under Section 28 of the Registration Act, documents relating to immovable property should be registered in the office of Sub-Registrar of sub-district within which the entire or some portion of the property is situated.  Under Section 30(1), a Registrar is empowered to accept a document which can be registered with the Sub-Registrar who is his subordinate.

Any property that is sold, bought or rented, under certain circumstances, requires to be registered inclusive of:

1. A valuable sale or purchase of immovable property.
2. If a property is rented for a period of more than 11 months, then the agreement needs to be registered.

Buyer and seller of a property enter into a sale agreement. This sale agreement typically defines the guidelines and conditions that govern the sale of an immovable property. The sale agreement will also include the details of buyer and seller, property details, location, price, payment structure. Once the sale agreement has been created and signed by both the parties, then this agreement is registered with the registrar according to India’s registration act of 1908.

Once the sale agreement is registered with the registrar, the buyer will also have to pay the applicable stamp duty. Find more about stamp duty and registration charges in various states across India.

Here we present the step by step procedure for registration of property. The procedure remains same whether you buy the property from an individual or from a real estate developer.

Property registration process in india from Green Realtech Projects Pvt. Ltd

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Why making quick bucks in real estate is far from reality?

Author: Sachin Gupta | Find me on Twitter Follow @sach_gupta

Many of us invest our savings in various investment instruments such as stocks, bonds, fixed deposits, real estate, gold, etc. There is always this great desire that our investment runs smooth and yields highest possible returns. Of all the investment class, real estate has become a much bigger asset class in India. Within real estate investment, there are different categories of investors. One, who would buy a home for end-use which effectively hedges them against inflation, second category of property investors would primarily buy offices or commercial spaces to make money on rentals. There is however, the third category of investors who would indulge in property trading. These investors would invest in under construction residential projects and sometimes would book multiple apartments, hoping to sell them at higher prices to other buyers or end-users. These short-term investors would be betting that property prices will appreciate substantially as happened from 2003-2007 and they would be able to make windfall profits. However, things don’t always turn up as one imagines:

Here is why?

Liquidation issues:
Real estate is one such asset class that is always prone to liquidation risks. During our survey with some of these short term investors, we noticed that, majority of them are finding it increasingly difficult to sell these apartments within their desired time-frame. Due to this, these investors would end up selling the apartments at much lower price. In Delhi NCR, especially in Gurgaon, an apartment that is available at Rs 6000 per square feet from the developer is being sold at Rs 4400-4500 Rs per square feet in the resale market from these short term investors. Now, why would an investor sell at low prices? Most of them would book the apartment in early stages of an under-construction project as per construction linked plan. And accordingly, they would make initial payments equivalent to 10-12% of the property value. However, as construction advances and there is demand for the next installment from the builder, these investors would have no other option but to sell the apartment at much lower prices.

Capital Gains Tax:
Now, having sold the apartment within a short period (less than 3 years) of booking it would attract capital gains tax. The short term capital gains tax stands at 30% of profits booked.

For example, an investor buys an apartment at Rs 3000 per square feet in early stages of an under-construction project. And he paid the booking amount of 10%. He sells the apartment at Rs 4500 when the builder is charging Rs 6000 per square feet. In this case, the investor would be liable to pay 30% of Rs 1500 per Square feet as capital gains tax.

Now, many of you would question that who pays capital gains tax in India? Right… and all of this lead to rapid influx of black money into the real estate sector.

Transfer charges:
Having identified the next buyer, the investor would now transfer the apartment in the name of this new buyer. Transfer charges are costly and would range from Rs 50 to 100 per square feet.

Transaction charges:
Identifying the next buyer is always difficult and one would have to pay a transaction fee of about 1-2% of property value to real estate agents. Let us assume the apartment size was 1000 square feet and since it was sold at Rs 4500 per square feet, the transaction fee at 1% of property value would come out to be Rs 45000.



Here is the illustration:

Therefore, as shown in the picture above, the returns are not as expected by the short term investor. There are many factors that one should look into before jumping into the business of property flipping.

As the saying goes, invest for a long term and cherish the rewards that come along with it.

Cheers

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What is Land use Zoning in India? What are the uses that are permitted for various types of zones?

Author: Sachin Gupta | Find me on Twitter Follow @sach_gupta

While developing the master plan for a particular city, the town planning officials make use of zoning regulations. So, what are these zoning regulations? Based on the city’s geography, the land use is zoned by town planning officials. For example, in flood prone areas, the land use may be restricted to parks, gardens, playgrounds. The construction activity in these areas/zones may be restricted. Similarly, in hilly areas, construction of residential premises may be prohibited. Therefore, in essence, zoning regulations are tools used by town planning officials to clearly demarcate land use for the purposes of development, welfare, and safety.

In cities, Zoning is done to earmark residential, commercial, industrial, recreational development. Certain zones within a given city are demarcated as residential zones, some as industrial zones, and some as institutional zones. All of these zones are clearly highlighted within a master plan of a city. The town planning department then invites private developers to bid or buy the piece of land within these Zones. Some developers may buy or bid for residential land, while some may opt for institutional land.

Zoning is a complex subject because it involves the optimum usage of limited land available to city officials. Zoning regulations are in operation in all major cities and towns of India to regulate the use of property within their jurisdiction. Agricultural, industrial, residential, commercial, recreation and forest areas are clearly marked on city maps.

Find below the ‘Types of Zones’ and the uses permitted for these Zones.

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Be wary of the hidden charges while buying property in Delhi

Description: Hidden Charges increase the actual cost of the property; therefore, it’s better to keep in mind these charges while preparing the budget for a new property.


Buying a property in Delhi is one of the most important decisions for those who want to settle in the capital. The buyer goes out of his or her financial capabilities and prepares the budget to buy the property. But often, the buyer ends up paying extra which he or she does not realize. There are a number of extra charges in the form of extra taxes and other fees which comparatively makes the property much costlier than its actual price. This extra amount other than the actual cost of the property hurts the buyer’s pocket as it gets out of the buyers allocated budget for the property. Hence, the buyer needs to be aware of these hidden charges to prepare the budget accordingly, before investing in a new property.

1. Stamp duty and registration fees: 
Getting a property in Delhi registered is an important aspect in the property buying process. It is a final agreement between both the parties that indicate the change in ownership of the property. In order to get the registration done, one has to pay a certain amount to the government. The registration form costs a particular amount, depending on the total property value. Though the charges for stamp duty and registration for Property in India varies from state to state, but usually it is between 4% to 10%. Typically, in a majority of the states, this registration and stamp duty fee adds up to 5% - 14% of the cost of the property. In addition to this expense, there is another registration fee that is payable to the court which differ from state to state and varies between 1% to 2% of the value of the property.  And, above all, there are additional costs that include lawyers and notary fees, who get the agreement done in the court.

2. Service Tax and VAT:
The service tax is applicable on the purchase of any property in India that is under construction while the VAT is charged over the value of the construction of the project. The imposed service tax is 12.36% of the 25% value of the under constructed property. Whereas the imposed VAT is between 1% to 5% of the under constructed property value. Altogether, the service tax and VAT can add up to 8% to 10% of the entire property value.

3. Preferred Location Charge (PLC):
The term Preferred Location Charge, commonly known as PLC refers to the extra charge that is levied from the buyer to buy property in Delhi in their choice of location. This is applicable specifically in a housing complex, layout or residential community. Though this charge differs from builder to builder and project to project. Lavish villas, penthouses facing the sea or garden are most likely to have higher PLCs.

4. Utility Charges:
The charges referring luxury amenities or those linked with the building come under utility charges. This includes parking in open or closed space, clubhouse membership for a lifetime or yearly, firefighting provision, electrical and various other charges associated with Government utilities as well. Apart from these there are other charges involved while buying property in Delhi such as maintenance, security charges, and others also. Security charges refer to the expense for employing security personnel, installing and maintaining security arrangements like CCTVs camera, intercom among others. These extra charges add up to the initial cost of the project in a huge way and become a burden on the shoulder of the buyer.

5. External Development Charge (EDC):
EDC is usually meant for the maintenance of roads, water, sewage, electric supply, lights and development of the surrounding area. It varies from location to location and adds up to 10% of the entire cost of the project. Sometimes the government also levies development charge on the developer. These charges also are also charged in the form of maintenance fees in advance for a longer period of time. This is a great disadvantage the buyer as he has to shell out extra amounts for which he does not prepare himself.


This is a guest post by Seema Chauhan

What are Real Estate Investment Trusts and why do we need them badly in India?

Author: Sachin Gupta | Find me on Twitter Follow @sach_gupta

Recently, Securities and Exchange Board of India (SEBI) has put up Real Estate Investment Trusts (REIT) for public comments in order to draft the final set of guidelines.

So, what are REITs and what benefits can they provide to small investors with 2-3 Lacs of invest-able income? Can these investors invest small amounts in REITs? We explore here.

A real estate investment trust is basically a creation of the internal revenue code. It is a real estate company or trust that has elected to qualify under certain tax provisions to become a pass-through entity that distributes to its shareholders substantially all of its earnings in addition to any capital gains generated from the sale or disposition of its properties. Because the individual investor has the opportunity to pool his/her resources with those of persons of like interests, funds are assembled to permit purchase of buildings, shopping centers, and land in whatever proportion seems to offer the most attractive returns. Investments must be approved and management activities reviewed by a board of trustees who are accountable to shareholders and are ordinarily well qualified to make such decisions.


Following are the requirements to qualify as trust in countries where REITs are in existence for years:

Asset requirements:

1. At least 75% of the value of a REIT’s assets must consist of real estate assets, cash, and government securities.
2. Not more than 5% of the value of the assets may consist of the securities of any one issuer if the securities are not includable under the 75% test.
3. A REIT may not hold more than 10% of the outstanding voting securities of any one issuer if those securities are not includable under the 75% test.
4. Not more than 20% of its assets can consist of stocks in taxable REIT subsidiaries.

Income requirements:

1. At least 95% of the entity’s gross income must be derived from dividends, interest, rents, or gains from the sale of certain assets.
2. Minimum of 75% of gross income must be generated from rents, interest on obligations secured by mortgages, gains from the sale of certain assets, or income attributable to investments in other REITs.

Distribution requirements:

1. Minimum of 90% of REIT taxable income must be distributed to shareholders.

Stock and ownership requirements:

1. Be taxable as a corporation
2. Board of directors or trustees should manage the REIT
3. Fully transferable shares
4. REIT shares must be transferable and must be held by a minimum of 100 persons

REITs that are not listed on an exchange or traded over the counter are generally called private REITs.



Various types of REITs:

Industrial/Office: 
These REITs are further subdivided into those that own industrial, office, or a mix of office and industrial properties. Some analysts further segregate these REITs by property location (i.e., whether they are in CBD or suburban locations). For example, if REITs were to become reality in India, the REIT with focus on Office Space in Gurgaon can result in attractive returns for investors.

Retail:
These REITs are further subdivided into those that own strip centers, regional malls, outlet centers, and free standing retail properties.

Residential: 
These REITs are further subdivided into those that own multifamily apartments and manufactured home communities. Some analysts further segregate those REITs that own student and military housing.

Diversified: 
REITs that own a variety of property types.

Lodging/resorts: 
REITs that primarily own hotels, motels, and resorts.

Health care: 
These REITs specialize in owning hospitals and related health care facilities that are leased back to private health care providers who operate such facilities.

Self storage: 
These REITs specialize in ownership of self storage facilities.

Specialty: 
These REITs specialize in numerous types of properties, including prisons, theaters, golf courses, cellular towers, and timberland. Specialty REITs have been a rapidly evolving segment of the industry.

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What are the various way in which I can raise funds to buy house?

Author: Sachin Gupta | Find me on Twitter Follow @sach_gupta

Now that you have decided to buy a home, you need to determine the home affordability and sources of home finance before you actually approach the developer to buy your dream house.

First thing first, what is the value of home that you can afford? Well, home affordability is derived by taking into consideration your current household income levels, and monthly expenditures. Here is the detailed example of calculating home affordability.

Now, the crucial aspect in home buying is sources of funds.

Let’s say, based on your current income levels and monthly expenditure, it is determined that value of home that you can afford is Rs. 6000000

As per banking norms, you can avail 80% of this as home loan from banks or housing finance companies. However, check your loan eligibility from the local bank. Your loan eligibility depends on host of factors such as nature of loan, amount of loan, income of the applicant, financial status of the applicant, his/her age, qualifications, number of dependents, spouse's income, assets, liabilities, stability and continuity of occupation, income, expenditure and savings history.

Home loan = 60 lacs x 80%
                  = Rs. 48 lacs

How do you source the remaining Rs. 12 lacs?

• Cash savings

Firstly, Pool in the cash that you and your spouse may have accumulated over a period of time. Additionally, if possible, you can borrow the money from your close relatives or friends. The benefit of borrowing from family sources is that you will be paying zero or low interest as opposed to borrowing the same amount from commercial lenders.

• Fixed deposits

If your fixed deposits are nearing maturity, unlock them. Or one can also avail loan against fixed deposits. Banks normally lend 70-80% of the total value of fixed deposits.

• Savings in the form of shares or mutual funds

Shares and mutual funds are highly liquid asset class. You can trade your stocks and generate the money that is needed to make the down payment for your home. Some banks also offer loan against these securities. Check with your bank about the eligibility for loan against your stocks or mutual funds. The interest rate charged (10 to 14%) will be in direct proportion to the nature of your stocks and mutual funds.

• Personal loan

This is probably the easiest way of making down payment for your home. If you are employed, approach your company’s bank for personal loan. Your company’s official banking partner will certainly have attractive interest rates schemes for the employees. We have noticed in past when employees were given personal loan at 11-12% as against the market norm of 17-18%.

• Loan against gold

Indians are the largest consumer of Gold. Your gold collections may be lying idle at home or in your bank locker, instead why not unlock the value of gold? It will definitely be handy towards your down payment. Gold is relatively a safe asset class and therefore, banks will charge relatively low interest rate when sanctioning loan against gold. Approach your bank for loan against gold and you will be surprised at ease with which banks will provide you loan against gold.

• Provident funds

Provident funds can also be a reliable source of generating funds towards down payment. One can also avail loan against his/her provident funds.

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Shock absorbers using aerospace technology for making buildings earthquake proof in India

The earthquake tremors of Nepal have not only caused extensive damage to the reinforced concrete multi-story buildings in Kathmandu, but have also shaken the confidence of people in India and ignited the fear of a magnitude 8 or higher earthquake striking North India as per statements made by the National Disaster Management Authority (NDMA).

The prohibitively high repair costs for buildings designed and built as per the building code earthquake standards has prompted Taylor Devices Inc., to launch a unique and one-of-its-kind solution for the Indian realty market. The Indian subsidiary of Taylor Devices Inc., Taylor Devices India Pvt. Ltd., has launched its brand certified earthquake resistance by the name of “Taylor Protected”, which far exceeds the minimum code criteria. Buildings vying for this certification will need to comply with extremely strict and high international standards. These buildings will have giant shock absorbers installed which will stay hidden in walls and these will act just like the shock absorbers in a car absorbing the earthquake shocks so that the building structure remains unharmed.

According to Mr. Sandeep Donald Shah, Managing Director, Taylor Devices India, “India has yet not seen this premier earthquake protection which is extremely popular in countries like US and Japan. These brand certification marks will enable the consumers in India to be rest assured that the apartment they are purchasing contains premier earthquake protection which is much ahead of its times and much higher than the minimum protection as spelt out by the building codes. “It makes great business sense for us to allocate this brand certification as our dampers are built using aerospace technology and come with 35 years warranty.” 

Presently there is no way to identify if a building is earthquake resistant, other than take the word of the seller that the building he is selling is earthquake resistant. Also there are four distinct categories of earthquake resistant buildings – Category A, B C & D - and the difference between their earthquake performances is so huge that merely saying that the building is earthquake resistant has no meaning. Category A and category B buildings stay operational even after a major earthquake whereas category C and category D buildings need to be abandoned/vacated and structurally repaired before being reoccupied.

The building code in India requires a minimum compliance to category D standard, which is “collapse prevention”. “Taylor Protected” and “Taylor Earthquake Protection” brand certification will only be given to Category A and B buildings (Operational and Immediate Occupancy buildings).

To get this state-of-the-art brand certification the building will need to meet numerous stringent earthquake resistant criteria, firstly it would need to be designed to Category B or above seismic performance standard (operational or immediate occupancy) and will have to have Taylor Devices aerospace technology dampers, that are maintenance free and come with a 35 years warranty. 

Proactively divulging the earthquake resistance category of the building will set precedence in upholding the two most important consumer rights on India i.e. “Right to Complete Knowledge” and the “Right to Awareness” which presently is being flouted by one and all in the real estate industry.

This is a press release by Neha Kaushik

6 steps that can make real estate efficient and corruption free in India

Author: Sachin Gupta | Find me on Twitter Follow @sach_gupta

We have been writing a lot about the inefficiencies and mal practices in real estate sector in India. A lot of focus of our writing has been on highlighting the issues that plague the industry and how those issues can be tackled. While other ideas such as RTI; Aadhar; and recently Jan Lokpal bill has seen the light of the day, issues in real estate sector still remains unresolved. There is no denying that implementation of RTI, Aadhar, and Jan Lokpal bill will help in eliminating corruption from the government-public interface. But, what about real estate, where most of the cash finds its way? Why is the government not bringing in policy measures to cure the sector? We list some of the measures that can help in eliminating corruption from the real estate sector. In no way, these are the only measures, but, we are confident that implementation of the following measures will certainly help the sector.

• Equalize market rate and circle rates

As the name suggests, market rates are determined by the economics of demand and supply equilibrium. Buyers and sellers participate in the market and transactions take place fairly & without any stimulus. Circle rates are the minimum rates fixed by the state government and a buyer of the property is entitled to pay stamp duty charges on these rates whenever a transaction takes place. For example, in Gurgaon, the market rate of an apartment in a multistory building is 7000 Rs/sqft, while the circle rate for the same apartment as fixed by the state government is 4000 Rs/sqft. For a 1000 sqft apartment, the stamp duty charges as per the circle rate would be Rs. 320000. While the stamp duty charges as per the market rates would be Rs. 560000. Therefore, it presents an opportunity for the buyer to under report the apartment value on papers in order to save on stamp duty charges. Equalizing market rates and circle rates would eliminate the practice of under-reporting of the property value. However, this may affect the growth of real estate sector because of fewer transactions between buyer and seller. And this can lead to an adverse impact on GDP of the state as well as the country. Well, the move to equalize market rates with circle rates should also be complemented with reduction in stamp duty charges.

• Reduce stamp duty charges:

Stamp duty charges are exorbitant in most states across India. Stamp duty charges are least in Madhya Pradesh at 0.5%, while they are about 8% in states like Haryana, Punjab, Rajasthan, UP. Now, let’s say stamp duty charges are brought down in all states to a uniform level of 1%. Therefore, one would now pay Rs. 70000 as stamp duty charges on a flat of 1000 sqft with a market price of Rs 7000 per sqft. This move will not only encourage buyers to report market value of the property but will also lead to more and more transactions. Research based on past transactions can result in the optimum value of stamp duty charges which incentivizes true reporting as well as increased velocity of transactions across states in India.

• Cap on property transfer on government sponsored schemes

On government sponsored schemes such as the recent DDA flats scheme, there should be a tenure cap. In other words, people who applied for the scheme and got allocation should not be able to sell the allocated apartment in secondary market for a fixed time period (say, 5 years). This happens in many countries in EU. The tenure cap will drive away speculators and only the real needy people will participate in the whole process. Can you imagine for 15000 DDA flats, some 15 Lacs application came. But this one looks impractical because banks, government bodies, and agencies all made money by issuing a lottery system. And then, they would say, we are pro-poor and these schemes help poor of the country. We came across a property dealer in Delhi who filled 8 forms for the DDA scheme. He called in various relatives and friends from his native Bihar and he made sure that at-least 8-9 forms were filled. He paid for the whole process and in return if a flat was allotted to any of those 8-9 members, he would share 50% of the proceeds. Everyone knows what a big lottery this whole flat allocation system is, yet government is not changing the policy. And who is benefitting? Government bodies by charging a fee for every form sold; banks for providing upfront money to the customer at an interest; and the rich who already owns multiple properties.

• Cap on home ownership in certain cities

Certain cities such as Mumbai, Delhi, and other major metros have become unaffordable for the masses. A basic 2BHK is virtually out of the reach for a salaried person and he/she has to go to the outskirts of the city to fulfill his/her dream of home ownership. People with deep pockets own multiple properties in these cities. Housing is considered an investment vehicle first and then the basic need. In China, the government has moved in recent years to quell home price amid worry that surging costs could lead to social unrest and has set Home-Ownership Curbs in Shanghai and Beijing. Can it be done in India?

• Computerization of property titles across the country

E-governance is the need of the hour. When there is no dearth of talent in the country when it comes to software development and technology, why don’t we see the computerization of property records? In many instances, a single property is registered under 2 or 3 names and this leads to disputes. Computerization of property titles will not only eliminate property disputes but it will also help in land acquisition processes for mass urbanization.

• Make it easy as far as capital gains tax are concerned

An individual is liable to pay capital gains tax whenever there is significant gain over the buying price. Applicability of long term and short term Capital gains taxes should be made simple. In order to reduce or avoid being liable to pay capital gains tax, an assessee can either purchase a house within a period of one year before or two years after the date on which the transfer took place, or construct a house within a period of three years after the date of transfer. Why can’t we have a common wealth tax instead of so many complicated tax structures?

Is it desirable as far as real estate is concerned or are we just getting too ahead of ourselves?

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