Looking to sell your property? Know more about Capital Gains Tax and Exemptions!

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

If buying a property requires proper due-diligence to avoid unwanted hassles at a later stage, selling a property requires you to focus on Capital Gains Tax and Exemptions.

Under the Income Tax Act of 1961, Sections 45 to 55A deals with Capital Gains.

Capital Gains Tax are categorized as:

• Short term Capital Gains (Holding period - 36 months or less)
• A short-term capital gains/loss will be treated and taxed in the same manner as any other income/loss.
• Short-term Capital Gains from Property sale are included in the investor's income and are taxed as per the slab rate.

• Long term Capital Gains (Holding period - more than 36 months)

Long-term Capital Gains is computed as below:
LTCG = Full value of consideration received or accruing - (indexed cost of acquisition + indexed cost of improvement + cost of transfer + Expenditure incurred wholly and exclusively in connection with such a transfer)

Long-term capital gains are taxed at a flat rate of 20 per cent for individuals and foreign companies, and 20 per cent for domestic companies.

An example of Long Term Capital Gains Tax on Property in India:

Cost of purchasing a property in November 2008 - Rs 50 Lacs

Cost of selling the property in August 2013 - Rs 1 Crore

Inflation Index for fiscal year 2008-2009 – 582 and for fiscal year 2013-2014 - 939 (see from the attached cost inflation index chart*)

Purchase Cost after adjusting for indexation – 50 Lacs x (939/582) = Rs 80.67 Lacs

Long Term Capital Gains = 1 Crore – 80.67 Lacs = Rs 19.33 Lacs

Tax on Long Term Capital Gains = Rs 19.33 Lacs x 20% = Rs 3,86,597.90

Education Cess = 386597.90 x 3% = Rs 11597.94

Total Tax on Long Term Capital Gains = Rs 3,98,195.90


Tax exemption on Long-term Capital Gains under the following conditions:

• If the sale relates to a property other than one residential accommodation and is reinvested in any residential property within a period of one year before or two years after the date of transfer.
• Alternatively, such re-investment may also be in construction of a residential house within three years after the date of transfer to be eligible for claiming this benefit.
• The house so purchased or constructed should not be transferred again within three years after the purchase or construction. Quantum of exemption will be the amount invested in the new property or the long-term capital gains, whichever is less. 

Or

If only the capital gains (and not the total sale proceeds) is invested for a period of three years in specific Bonds of National Highways Authority of India or Rural Electrification Corporation Limited or bonds redeemable after three years issued by National Housing Bank or Small Industries Development Bank of India or NABARD, as may be specified by the Government from time to time (Section 54 EC) within a period of six months from the date of transfer of the asset.

Quantum of deduction:

If the amount of capital gains is equal to or less than the cost of the new house, the entire capital gains shall be exempt.
If the amount of the capital gains is greater than the cost of the new house, then the cost of the new house shall be allowed as an exemption.

* Cost Inflation Index chart for calculations of Long Term Capital Gains Tax in India

Cost inflation index for calculations of capital gains tax in india from Green Realtech Projects Pvt. Ltd


However, Budget 2014 has altered the definition of Capital Gains Exemption. If you own a property such as ancestral home or a bigger home, and if you sell it and buy more than one smaller apartment, then, in that case, you will be exempted from Capital Gains tax on the first apartment and you are liable to pay capital gains tax on second or third apartment.

As an example, let’s say, you own a property worth Rupees 2 crores in July 2014. And you want to sell it to buy 3 smaller apartments.
Assuming, the cost of buying this property in May 2003 was Rupees 20 Lacs.
Inflation Index for fiscal year 2003-2004 – 463 and for fiscal year 2013-2014 - 939 (see from the attached cost inflation index chart*)
Purchase Cost after adjusting for indexation – 20 Lacs x (939/463) = Rs 40.56 Lacs
Long Term Capital Gains = 2 Crore – 40.56 Lacs = Rs 1.59 crore

However, if you wish to purchase 3 apartments of 65 lacs each, then, according to Budget 2014, capital gains tax exemptions will be applicable only for one residential apartment.

In other words, your Long term capital gains will be = 2 Crore – 40.56 Lacs – 65 Lacs = 94.44 Lacs
And long term Capital Gains tax will be = 94.44 Lacs x 20% = Rs. 18.89 Lacs

However, after selling your property, you invest the amount in one bigger property worth Rupees 2 crores or more, then, you will be exempted from Capital Gains.

Until this Budget, anyone in India selling immovable property, or other long-term assets and using the money to purchase a residential house within three years of the sale was not required to pay capital gains tax (20 per cent) on the sale proceeds.

But the Finance Minister has now tweaked this section to specify that only “one residential house in India” would be eligible for the tax break, instead of “a residential house”.

Source: National Housing Bank

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Can an NRI Take Personal Loan in India?

Yes, NRI’s can take personal loans in India. The NRI personal loans are accessible from various banks in India. No matter what purpose is the loan offer, there are many prominent banks that offer personal loans to NRIs against fixed deposits while private part banks give NRI personal loans that might be unbound. In fact, the personal loans for NRIs are a decent alternative to get speedy financing for diverse prerequisites.

The NRI personal loans are intended to help Indians who are living abroad to profit from the advantages of a personal loan in India. Some of the most famous banks which provide loans for NRI are State Bank of India, HDFC Bank, ICICI Bank, Canara Bank, Axis Bank, Standard Chartered Bank, Citibank, etc.


1. Eligibility: 

• There are some requirements an NRI is supposed to meet in order to qualify the process of getting a loan. They are:
• The applicant applying for the loan should be a citizen of India.
• The applicant must also be at least 21 years of age.
• It is important for the applicant to be a professional with a consistent salary or to run a business and be self employed.
• The salary or the income of the applicant should be enough to qualify for the loan.
• A number of documents which are required to be submitted as a formality.

In addition to all these things, it is possible that there may be some additional criteria dependent on the bank rules. The best to gain a better understanding of all the prerequisites is to go through the website of the bank you’ve chosen and be clear about everything that is required to get a personal loan.


2. Documentation: 

• Coming to the documents required for NRI loans, the process is pretty simple to get any other personal loan. Salary details and KYC details need to be shown while applying for a loan. If a person is an NRI then reports which affirm the residential status are also important. Other important things are a passport and a VISA of the country the candidate is living in currently. In addition to all these documents, some other important documents are:
• A photocopy of passport and VISA of the candidate. 
• A certificate of salary determining the name, date of joining, designation and compensation details in English. 
• Bank statements of both domestic and International banks throughout the previous half year. 
• In the event that the candidate isn't accessible in India when the application of loan is submitted, at that point a General Power of Attorney should properly bore witness from the Indian office of the NRI's occupant nation. In the event that the candidate is available in India, the Power of Attorney can be privately legally approved. 
• A duplicate copy of the appointment letter of NRI just as the contract.

You might be required to present some extra documents, so the best approach is to recheck the formalities of the bank that you have chosen for a personal loan.

3. Personal loans for NRIs: 

There are many banks in India that offer both rupee and foreign currency personal loans to NRIs who have FCNR or NRE term accounts. These personal loans are accessible against the sum in the FCNR or NRE accounts at highly competitive international rates. The loans are usually accessible up to 90% of the sum in the account with each bank having its own maximum limit on personal loan amounts.

4. Some highlights of personal loans are: 

• The NRI loans have a wide scope of highlights as talked about below:
• The NRI loans are actually accessible for a higher amount of money. 
• The rates of interest involved in these loans are pretty competitive.
• Time frame involved in the reimbursement of these loans ranges between one year to as long as five years.
• An NRI can get a loan to fulfill almost any purpose.

5. Advantages of NRI loans:

• The NRI personal loans offer many advantages of quick financing and many other things, for example,
• Simple financing for individual credit prerequisites. 
• The loans can be obtained from many other banks of your choice. Each bank has its own rules and advantages.
• Extremely simple documentation and the application process. 
• Bother free and quick preparing of all the important applications. 
• The loans are accessible for both the salaried employees and people who are self employed.

This is a guest post by Shipra Aggarwal

Detailed Guide: Finding and Moving to a New Home

Are you in your 20s or early 30s? And starting your master’s degree or settling in a new job or just got married, chances are, you have encountered this massive hunt. Yea hunt and we are talking about finding the right place to stay and live in a city of your choice. While real estate prices have boomed in major metros across India, and therefore, only option you are left with is to find a decent 1BHK or at most 2BHK apartment near your workplace or institute.

As easy as it may sound, the whole experience of settling in a new home is tedious to say the least. And when we talk about new home, what we mean is renting a home which is of right size, located close to your workplace and is in close proximity to commercial & institutional centers such as malls, hospitals, schools, etc.

So, what are the things one should pay attention to while looking to rent a home in a metro across India? How should I as a home seeker go about the whole experience? We list down the steps based on true experience.

• Finding the right place
• List down your ‘wants’ and ‘needs’
• Search on Internet
• Preparing to Move
• Sign the Lease Agreement only after consultation
• Hire a mover, it’s always worth it
• Identify your unloading zone in advance
• Packing Your Bags and Boxes
• Setting Up
• The Décor

Or

One can subscribe to the below Guide “The Most Jugaadu 1 BHK Ever” by Voucher Cloud that has tips and tricks for the young population in India which can help them select/buy/transform their 1 BHK into an awesome crib. Hope you will find this useful.

What are the landlord’s rights and what precautions a landlord shall take before renting out a property?

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

Real estate is a lucrative investment class. Not only it gives you capital appreciation gains but at the same time one can earn rental income from his/her property. Whether the property you own is commercial or residential, one can rent the property to earn stable monthly income. However, as easy as it may sound, there are always issues when it comes to renting out a property. What if the tenant does not pay the rent on time? What if the tenant mishandles the property? What if the tenant doesn't pay the utility bills on time? These are some of the questions a property owner is confronted with and therefore taking precautions at the beginning of renting out a property will make sure that the property is rented out to good quality tenant.

At the same time, a landlord enjoys legal rights as laid down by the Transfer of Property Act, 1882. These are ‘Right to timely accrual of lease amount’, ‘Right to know about the condition his property is in’, ‘Right to know of any changes that the tenant might want to make’, ‘Right to notify the tenant of an intention to increase the rent’, ‘Right to be informed of any disclosures’, ‘Right to get back his property on repossession’, ‘Right to repossess the property complete with all fittings and furnishings’, ‘Right to claim all the charges for supplies’.

Therefore, before one rents out or leases his/her property to a prospective tenant, make sure to go through the following document about ‘Precautions before renting out’ and ‘landlord's rights’.

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Growth of Housing Finance in India

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

In order to provide housing for all by 2022, the government needs to develop the housing finance sector. In its current avatar, the housing finance sector is able to provide loans to borrowers working in the formal sector with proof of income and banking transactions. However, about 99% of the total shortage of housing in urban areas belongs to the Economic Weaker Section and Low Income Groups of the society.  (Overall housing shortage in urban areas - 18.78 million units till 2012).

Over a period of time, housing finance has evolved considerably. In the initial days, people either self funded their housing needs or participated in schemes launched by government owned institutions in the real estate sector like state housing boards and development authorities. Launch of HUDCO in 1970 represented a paradigm shift and for the first time housing finance was formalized. However, private sector participation in housing finance took shape only when HDFC was setup in 1977. In the late 1990s, commercial banks also got involved in housing finance.

On August 28, 2014, Prime minister launched the ‘Pradhan Mantri Jan Dhan Yojna’. The objective of the program is financial inclusion for all. Can this program cater to the housing finance needs of the BPL or marginalized Population in future? There is possibility of directly transferring interest subsidies on housing loans to the EWS and LIG categories.

In this section, we highlight the various steps taken by the successive governments to facilitate the need for housing and housing finance in India.

Growth of housing finance in india from Green Realtech Projects Pvt. Ltd

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Must-ask Questions Before You Finalize on a Luxury Apartment

Now, that you have decided to buy a luxury apartment, it’s important to invest your time and carry out the necessary homework around the luxury real-estate market. Firstly, the easiest way to do research is using the internet. There are many real-estate discussion forums and groups in social-networking sites such as Facebook or Quora, where you can post questions related to the luxury home market. All you need is basic networking skills, and you can easily evoke informative answers from “virtual” friends.

Apart from posting online queries, it’s important for you to have in-person interactions with people in real estate. For example, you can set appointments with sales people from various real-estate companies and get a quick view of the prices and deals.

Besides, it’s important to draw impartial advice from people who are experts in the market. In that respect, you may meet real-estate advisers, brokers and agents who are known to enlighten many on the market and share a few tips on finding the best deals in the city.

All the interactions, be they virtual or in person, will help you to avoid apprehensions about the big investments you’re about to make. However, there are ways in which you can prepare yourself and ask better questions to understand the market of luxury apartments.

Before the final plunge, let's quickly run through some common questions that come to everyone's mind…

1. Is the project title clear? 
2. Has the project got the required approval? 
3. What is the total cost of ownership? What is the monthly maintenance cost?
4. Which other costs are included along with the registration fee?  
5. What are the highlights of the project? 
6. How great is the aesthetic value of the building? Is the building design in sync with your concept of a luxury building? 
7. What are the key amenities showcased by the builder? 
8. According to you, what are the most desirable amenities of a luxury apartment?
9. How good are the views from balcony and living room?
10. Are concierge services available? 
11. How far are the conveniences?
12. Is the price affordable for you? 
13. What’s the overall reputation of the builder in terms of deliverability, quality and finish?
14. What’s the actual size of the house? 
15. Is there a model apartment or an occupied flat that you can visit?  
16. What is the compensation offered if the possession gets delayed?
17. Is there an option to customize the interiors when the building is in construction phase?
18. What are the luxury amenities provided by the builder? Are they at par with amenities in luxury projects being built by other builders?
19. What is the overall prospect of the price trends in the given locality?
20. What is the probable return on investment for the given project?
21. If the apartment is already occupied, can you check the opinion of current owners about the property?
22. How is the locality connected to other parts of the city? 
23. Is there easy access to public transport facilities?
24. Apart from the main features, what are subtle aspects of the project which make it unique? For example, the floor-to-ceiling height, common wall sharing, number of apartments in each floor or block, number of elevators in each block, fire safety precautions, etc.

Closing note...

Here is one suggestion to prospective luxury home buyers – don’t believe everything that sales reps say. Try to go beyond their words and the glossy brochures. Carry out a good research on your future home as the pay-out is big and it’s an important decision in your life.

This is a Guest post by Seema Mohta, who has over 7 years of experience within Real Estate Industry. She has worked with Various Real estate companies and has Good knowledge about property trends, Investment, Apartments in Sarjapur

What is Property Tax / House Tax in India?

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

Municipalities across all cities in India charge a levy from local residents to maintain the city’s infrastructure such as sewerage, park, roads, other civic amenities, lighting, etc. The property tax shall not be confused with income tax payable on income generated from the property. While income generated from the property by renting it out comes under the ambit of income tax authorities and is calculated as per the income tax guidelines, the property tax is a municipal level subject. Income generated from the property is a central subject whereas property tax is a local subject. Property tax is also sometimes referred to as ‘house tax’.

Some municipalities do not charge property tax and instead bill separately for the services rendered to the residents. There are municipal bodies who charge residents for water and drainage facilities, maintenance charges. Moreover, MLA (Member of Legislative Assembly) and MP (Member of Parliament) funds are also utilized for the upkeep of the city.

How is property tax calculated? The tax is computed on the basis of rental income that the property under consideration may generate by way of letting it out. Usually, the property tax or house tax is a small percentage of the yearly rental income that the property can generate if it is rented-out. And it varies from state to state and from city to city. The property tax / house tax in India is to be paid once every year or every 6 months.

Below are the types of properties that are liable to be taxed under property tax / house tax provision in India:

• Residential house (self-occupied or let out)
• Office Building
• Factory Building
• Godowns
• Flats
• Shops

More details about property tax in India:

Property tax or house tax in india from Green Realtech Projects Pvt. Ltd

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Stamp Duty & Property Registration Charges in India

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

Real Estate has always been the priority asset class for majority of Indians to invest their lifelong savings. Whether one is investing for end-use or for investment purpose, he/she needs to take notice of various costs associated with real estate. Other than paying the market value of property in consideration, there are costs such as brokerage charges, insurance, taxes, and stamp duty & registration charges.

In this article, Stamp duty and registration charges are presented in Gurgaon, Noida, Mumbai, Bangalore, Chennai, Hyderabad, Kolkata, Pune, Ahmedabad, Faridabad, Delhi, Ghaziabad, Kochi, Jaipur, and other cities (states) in India.

Stamp duty and registration charges in india from Green Realtech Projects Pvt. Ltd

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What are the various kinds of documents that are required to avail home loan in India? What are the documents a salaried class, self employed, businessman needs to present for home loan in India?

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

As per the recent report by National Housing Bank titled “Report on trend and progress of housing in India 2012”, the following observations were made.

The urban population of India has been growing at a rapid pace. As per the Census 2011, 31.16 per cent of the total population is in the urban areas. The shortage of housing units for the urban areas for 2012 is estimated at 18.78 million units.

With time, there has been expansion and improvement in the housing finance market by way of various financial reforms; however the housing loans as a percentage of GDP have remained at around 7 percent, significantly lower than the levels achieved in most of the developed countries.

During the financial year 2011-12, housing loan which is disbursed to individuals across India stands at Rs. 68221.12 Crore. Out of which about 71.34% was used by individuals for acquisition/construction of new houses, about 2.63% for repair of existing houses, and about 26.03% was used for purchase of old/existing houses (resale properties). The housing loan availed by individuals across India continue to increase year on year by an average of about 20%. All these numbers suggest that home loan is a key factor when an individual goes out to buy home.

However, before one approaches the bank or housing finance companies for housing loan, he/she needs to have the papers in order. Papers about income proof, bank statements, PAN Card, etc. What are the documents that are required to avail home loan? This is a question many of you are confronted with. And therefore, we have put together a comprehensive list of documents that are required for home loan. Find it below:

List of documents that are required to avail home loans in india from Green Realtech Projects Pvt. Ltd

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Understanding interest rates and its impact on home buying decision!

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

Buying a home has always been a cherished dream for an individual. The very thought of staying within the four walls that belong to you is very enthralling. The home that one owns provides not only the physical comfort but also emotional and psychological security which, in turn facilitate peace in life.

The dream of purchasing a home has remained intact; what has changed over the years though is age profile of buyers. Not long ago, purchasing a home would be a reality when a middle class man is on the verge of retirement. His life- long saving could be barely enough to finance the coveted asset. The balance could be pooled in by relatives and friends.  However, the time has changed now. Thanks to the wave of financial reforms and robust banking sector today. A young man out from the college and grabbing a promising job will soon be found to survey the real estate market to book a house.

The relationship between the financial sector and real estate today is complementary in nature even though the banks may be viewed as having upper hand in terms of being fund providers. It would not be an exaggeration to assume that majority of the transactions in the real estate market in India is being financed by bank loans. In such situations where bank loans have gained so much of importance in our lives, it becomes a necessity to understand the nuances attached with them.

Interest Rate:

A home loan seeker is confronted with a myriad of jargon. The most common and yet the most critical among them all is interest rate. Understanding interest rate and impact of its movement on the loan amount is crucial in making an informed decision.

Interest, to put it simply, is a kind of fee charged by lender of funds from the borrower. This fee or the interest may be computed at a “fixed” or “variable/floating” rate. So, if Rahul takes a loan of Rs. One Lac from a bank for period of one year at a rate of interest of 10%, it means he needs to refund Rs.1, 10,000/- at the expiry of one year (Rs. One Lac is the principal amount and Rs.10, 000/- is the interest).

Eligibility to avail home loans:

Banks and Housing Finance Companies are cautious when they lend. There are certain prudential norms which they follow while sanctioning a home loan. One of them is that the bank would restrict its exposure up to 80% of the value of the asset in respect of residential house property subject to the eligibility of the buyer. How the eligibility is determined and what role level of interest rate plays are interesting aspects to discuss.

In a typical home loan application, a bank would consider the following while determining the maximum amount of loan that can be sanctioned:

1. Gross Salary/month
2. Net Salary/month
3. Value of property 

An example:

Let’s take an illustration. Amit, a young software engineer in his mid twenties wishes to buy a house in Delhi NCR. He zeroes in on a property in Noida. The description of property is as follows:

• Builder: Sky Builder
• Area of Flat: 1000 Sq. Feet
• Rate/Sq. Feet (All inclusive): Rs.5000/-
• Payment Plan: Construction linked 
• Construction Period: 2 years 

Equipped with such information, the bank would put a threshold limit of Rs.40 Lac (Rs.50 Lac X 80%) on the loan amount that can be sanctioned against the property. Now it needs to evaluate eligibility of Amit based on his income profile. Banks make such evaluation on the basis of their own criteria which may differ from bank to bank. However, as a general rule, banks consider around 40-45% of net salary of an individual to be needed to service EMI.

The following example shows eligibility of Amit in three interest rates scenarios.  It has been assumed that in all three situations, Amit’s salary remains same and there is no change in any variable except in interest rate. In situation-I, where the interest rate is 10.50%p.a., Amit’s loan eligibility works out to be Rs.40 Lac. This is a perfect situation for him as he needs Rs.40 lac only and the maximum amount that the bank is ready to disburse is also Rs.40 lac. However, the situation is not so comfortable when there is a spike in the interest rate from 10.50% to 11.50% p.a. (situation-III).  Keeping the EMI amount almost at same level, there is a decline in the loan eligibility amount to the extent of Rs.2.55 Lac. The reason is simple. Given the hike in the interest rates and no corresponding increase in the income level of the individual, the banks would like to maintain their risk exposure at existing level. Hence, there is a reduction in the loan amount. A decline in the interest rates would be a spurt for the banks to increase the loan eligibility. This however is subject to overall ceiling with respect to asset value.

EMI:

Interest rate movements also cause substantial variability in the EMI that we pay. The table below is quite self-explanatory:

Hope this time when news channels flash the story of how RBI Governor is contemplating to tinker with the interest rates in its monetary policy review, you would not be so clueless about its probable impact on your home loan.  So watch out for it with the analyst in you.

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Power of Attorney in India

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

Power of Attorney is used in many real estate transactions in India. In fact, there are instances when people opt for Power of Attorney instead of the property registration to save on exorbitant property stamp duty and registration charges.

The literal definition of Attorney is ‘a person, typically a lawyer, appointed to act for another in business or legal matters’. Therefore, in real estate transactions, a typical Power of Attorney would mean one person authorizing another person to act on his/her behalf as a legal representative to make binding legal and financial decisions. The person who gives Power of Attorney is known as donor or Principal, while the person who receives the Power of Attorney is known as Agent or holder.

In Delhi, many real estate transactions take place on ‘Power of Attorney’. Since property circle rates in Delhi are extremely high, therefore, there are people who opt for Power of Attorney to save on stamp duty and registration charges. However, there are risks attached to such transactions in case the Agent or holder does not discharge his/her duties accurately and honestly. For example, if the Agent or holder defaults on EMIs on a given property, then, the Principal’s property may be taken over by the authorized bodies by issuing a SARFAESI notice and auctioned for recovery of dues.

More on Power of Attorney can be found below:

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What are the kinds of properties that can and can not be transferred?

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

The property transfer is a complicated process and therefore one must be thoroughly aware of the laws and practices. When we talk of property transfer here, it means, an immovable property that is already registered with one person. The person may choose to sell the property of transfer the property.

One should note that property transfer for an under construction property with the developer is a different and private process. The developer transfers the property from one buyer to another buyer on the request of first buyer. Normally, developers charge a fee for the transfer.

However, in this section, we are focusing our energies on property transfer for a property that has been completed and is registered with the registrar department. This property transfer between any two parties is governed by the “Transfer of Property” Act, 1882. Both of these parties need to be alive to carry out this kind of property transfer. In case, one person is not alive, then, succession laws as per the religion of the dead person are applied for the transfer of property.

So, what kind of properties can be transferred and what kind of properties that cannot be transferred? Find below in the detailed document:

What kind of properties can be transferred and what kind of properties that cannot be transferred from Green Realtech Projects Pvt. Ltd

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What are the various kinds of property disputes in India? What are the laws to resolve these property disputes?

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

Since time immemorial, property disputes of various kinds have resulted in tension and altercations among parties involved. The parties involved could be family members fighting for ancestral property, buyer and a real estate developer, illegal authorization of a property by someone who does not possess the property titles, cooperative housing society, or buyer and a lender, etc.

There could be multitudes of reasons for property disputes such as title certificates, illegal possession, transfer, mortgage, wrong land use, contractual, rental, etc.

All of these property disputes can create lot of trouble for the buyer or for the person holding property titles. And therefore, taking a legal route to resolve these issues becomes the eventual option. In India, state governments as well as central government have passed various laws in the parliament to resolve property related issues.

What are the various kinds of property disputes in India? What are the laws to resolve these property disputes? What kind of law is applicable to your specific property related dispute? We present them below:

Property dispute in india from Green Realtech Projects Pvt. Ltd

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5 Factors You Must Consider before Buying Plots

Whether looking to buy plots for your dream house in popular cities such as Mumbai, Delhi, Chennai, or Hyderabad, or simply making an investment in one, it is important to consider the following factors before making any rushed purchase:

1. Checking, verifying licenses and certificates

Tiresome as it may sound; getting some specific licenses checked and verified by a consultant is of prime importance before buying a plot. These include:

1. Title deed: This is a legal document that shows you have the right to the ownership of the plot. Before buying, confirm that the deed from the seller (or re-seller) has full right to the ownership of the property, and that it meets all necessary approvals from the authority.
2. Encumbrance certificate: It is a proof that the property is free from all/any monetary and legal liabilities. It also shows that the property can be sold as free title and that there isn’t any problem associated with the ownership. Ensure that this certificate says the land is free from the earlier-mentioned dues or liabilities.
3. Release certificate: This is important especially when dealing with resale lands. This certificate, which you get from the bank you have pledged a loan from, shows that the land you are about to buy is clear from all impending loans. It shows that any loans on the land in question have been repaid.
4. Property tax receipts: Any bills from the owner that haven’t been paid for, for a land on resale are shown on these receipts. Ask for tax receipts from the owner to ensure there isn’t payment pending from the original owner.
5. Approvals: Make sure that the land-use is permitted as per the city plan. You can get this from the local pubic-body office in your city. Additionally, ensure that the plot layout has been approved by the local body and the development corporation.

2. The wrong impression of renting the property

You may buy a particular land thinking you will cover the EMIs through renting the land. It may be a miscalculated or erroneous approach, as experts say rental benefit on residential properties is a meager 2-3%. Secondly, it may require a much longer duration than expected to rent out your property.

3. The right buying cost

When asking a broker about the plot, ensure that he or she tells you the final cost of the plot and not just the basic one, as such is the case many a time. They may keep you in the dark with respect to extra costs such as, but not limited to: Service tax, preferential location fees, development fees, etc.

4. Look out for available plans

You may be eligible for a guaranteed rental scheme that lets the developer pay you rent during construction of the plot, for a fixed period. Then there is another scheme that lets the developer pay you after the possession. In such cases (and schemes), the properties are generally located outside the city limits.

The fact of the matter is that you need to be aware of all the available schemes or plans before making the payment for your plot. While some may benefit you, some may also result in loss such as subvention schemes where the price is generally 10% higher of normal.

5. Constructing costs

When choosing to make your house, consider these for the construction costs:

• Home designing plan of the architect
• Contractor’s fee
• Labor cost
• Interior fittings such as tiles, bathroom fittings, etc.
• Building material costs

It’s wise to pay more towards the initial cost for building your house than to spend extra money at the time of reparation or maintenance.

Whether you plan to buy plots in Hyderabad or an apartment in Mumbai, you must consider these factors to make a wise decision.

This is a guest post by Dinesh Dawde

6 reasons why underwriting is bad for real estate sector in India

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

What is underwriting in real estate and why do real estate developers go for it?

Sumit was looking to purchase a property in Noida and he missed out on the opportunity to book a flat with reputed developer last time because within 2 days of the launch, the project was sold out. He had made up his mind not to miss such opportunities next time. However, even after keeping an eye on new project launches, he missed out again and now the only option left was to book the apartment with channel partners, underwriters, or brokers.

Why does this happen? He questioned…and even wondered…”I read an article last time, and it said…real estate demand is dropping”. How come, these new projects are sold out within a day or two of their launch??

The reason behind the selling of these new real estate projects in a day or two is not the actual demand but artificial demand. Real estate developers use the services of their nexus of brokers and financiers who underwrite these projects.

Real Estate project underwriting in its broader term means sharing the risk of the developer. Brokers or financing houses underwrite the real estate project, which means they have taken on the risk of distributing/selling the project. Should they not be able to find enough investors or customers, they will have to hold some stock themselves. Underwriters make their income from the price difference between the price they pay to the real estate developer and what they collect from investors or from broker-dealers who buy portions of the offering.

With the help of this nexus, developers start making claims that their projects are sold out. With underwriting, developers are able to create a situation wherein they let prospective buyer believe that there is demand for the project and that they should buy the property now or else the prices will go up shortly. And this normally creates a herd mentality among end-users and they have no other option but to buy the property.


Why underwriting is not good for real estate sector in India

• Artificial demand

The demand thus created by the nexus of builders and underwriters clearly sends the signals to the market that “All is well” with realty sector and demand is robust. However, for a given city the actual demand supply equilibrium can be understood by studying and analyzing the capital value appreciation and rental yields. If demand is robust, it should reflect in the rental yields as well. However, what we see in most Indian cities is the fact that rentals have not kept pace with the capital value appreciation. The artificial demand created by the builder-underwriter nexus keeps the capital value of housing stock unjustifiably high.

• Prices keep on moving up despite the sluggish market economy and demand

We keep reading from various leading research agencies about the amount of unsold stock lying with the developers and how it has increased over the last quarter or year. There is hope that prices might come down to reasonable level. And all of us sit on the fence hoping that prices are going to come down, but what happens is actually opposite. Prices are always going up. Demand or no demand, prices in real estate sector in India move only in one direction and that is up. There is never a correction. Why? Well, coupled with the limited launch of new supply, holding up of existing inventory keep the prices firm. Finally, the buyer gives in and the cycle continues as usual.

• Seller’s market

Housing is a basic need where one dreams of having a house with certain features and specifications. In reality, buyers are forced to buy whatever is available at prevailing market prices. There seems to be no choice whatsoever for buyer to buy a piece of land and construct his own property due to high prices.

• Non preferential allotment

There might be people who might have contacted the developer early and would have thought of booking an apartment at their desired floor with best available view. However, this wishful thought may not come true due to underwriting of the project as it may be blocked by underwriters in bulk bookings.

• Housing is treated as an investment class rather than a basic need

People or businesses with deep pocket and unaccounted income invest in some of these projects to park their money. There are instances when one individual or business house owns multiple residential properties. Whereas the land allotted by civic authority to builders should have served the purpose of creating housing supply for the needy at justifiable price, what we see is the mad rush by people to own multiple properties. And this builder-underwriter nexus serves this well by allowing cash component in property dealings.

• Black money

A builder offloads its stock to underwriters and then an underwriter sells the stock to end-users or investors. Based on the artificial demand created, builder keeps on increasing the prices periodically (monthly or quarterly). The underwriter then sells the property at lower value than the current builder price. The premium charged by the underwriter is usually paid in cash by the investors. And this leads to a circle wherein an investor with unaccounted income invests in property and the cash amount received by the underwriter is again pushed back into buying of another housing stock.


Are there any solutions to this builder-underwriter problem?

Yes, there is a solution. Whenever a real estate developer sells, it should be made mandatory by law that the buyer information will be made public. By having the buyer information, not only will this lead to actual demand but may also put a curb on entering of black money into real estate sector. But, will the authorities pay any attention to this? We don’t know and this is where the Real estate regulatory bill has also failed. Read more on real estate regulatory bill in the next column.

Found this post interesting and useful, please share it with your network or friends. Thanks!

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Urban development authorities in India

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

Real estate development within a city is an organized process wherein development authorities play an important role. The authority prepares the master plan for the city keeping in mind the population growth, employment opportunities, industrial growth, and educational activities.

At the same time, development authorities provide housing for middle income and low income strata of the society. DDA has developed many housing societies in Delhi. The development authority also acquires land from land-owners for the purposes of housing, industrial set-up, recreational set-up, and educational institutes. The whole idea is to prepare the urban map of the city keeping in mind future projections.

In recent times, development authorities across India have launched various housing, plotted, industrial plot schemes. People from all walks of the society participate in these schemes for their housing or business needs. In order to make sure that you do not miss on these schemes by development authorities, we have put together a comprehensive list of development authorities across Indian cities.

Visit the websites of these development authorities to keep an eye on new schemes.

Find below.

List of urban development authorities in india from Green Realtech Projects Pvt. Ltd

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What are the various State wise rooftop rainwater harvesting legislation in various Indian states?

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

Monsoon in India is one of the oldest weather observations which happen from June to September every year. It is a major weather phenomenon because of its influence on the lives of people and their well being.

Average rainfall across various Indian states is as follows:

Sl. No.	State	Meteorological Divisions	Average annual rainfall (mm)	Average annual rainfall (ft)
1	Andaman and Nicobar Islands	Andaman and Nicobar Islands	2967	9.73
2	Arunachal Pradesh	Arunachal Pradesh	2782	9.13
3	Assam	Assam and Meghalaya	2818	9.25
4	Meghalaya	Assam and Meghalaya	2818	9.25
5	Nagaland	Nagaland, Manipur, Mizoram and Tripura	1881	6.17
6	Manipur	Nagaland, Manipur, Mizoram and Tripura	1881	6.17
7	Mizoram	Nagaland, Manipur, Mizoram and Tripura	1881	6.17
8	Tripura	Nagaland, Manipur, Mizoram and Tripura	1881	6.17
9	West Bengal	Sub-Himalayan West Bengal and Sikkim	2739	8.99
10	West Bengal	Gangetic West Bengal	1439	4.72
11	Sikkim	Sub-Himalayan West Bengal and Sikkim	2739	8.99
12	Orissa	Orissa	1489	4.89
13	Bihar	Bihar Plateau	1326	4.35
14	Bihar	Bihar Plains	1186	3.89
15	Uttar Pradesh	Uttar Pradesh	1025	3.36
16	Uttar Pradesh	Plain of West Uttar Pradesh	896	2.94
17	Uttar Pradesh	Hills of West Uttar Pradesh	1667	5.47
18	Haryana	Haryana, Chandigarh and Delhi	617	2.02
19	Delhi	Haryana, Chandigarh and Delhi	617	2.02
20	Chandigarh	Haryana, Chandigarh and Delhi	617	2.02
21	Punjab	Punjab	649	2.13
22	Himachal Pradesh	Himachal Pradesh	1251	4.10
23	Jammu and Kashmir	Jammu and Kashmir	1011	3.32
24	Rajasthan	West Rajasthan	313	1.03
25	Rajasthan	East Rajasthan	675	2.21
26	Madhya Pradesh	Madhya Pradesh	1017	3.34
27	Madhya Pradesh	East Madhya Pradesh	1338	4.39
28	Gujarat	Gujarat region	1107	3.63
29	Gujarat	Saurashtra and Kachchh	578	1.90
30	Goa	Konkan and Goa	3005	9.86
31	Maharashtra	Konkan and Goa	3005	9.86
32	Maharashtra	Madhya Maharashtra	901	2.96
33	Maharashtra	Marathwada	882	2.89
34	Maharashtra	Vidarbha	1034	3.39
35	Andhra Pradesh	Coastal Andhra Pradesh	1094	3.59
36	Andhra Pradesh	Telengana	961	3.15
37	Andhra Pradesh	Rayalaseema	680	2.23
38	Tamil Nadu	Tamil Nadu and Pondicherry	998	3.27
39	Pondicherry	Tamil Nadu and Pondicherry	998	3.27
40	Karnataka	Coastal Karnataka	3456	11.34
41	Karnataka	North Interior Karnataka	731	2.40
42	Karnataka	South Interior Karnataka	1126	3.69
43	Kerala	Kerala	3055	10.02
44	Lakshadweep	Lakshadweep	1515	4.97

As we all know, rain is the primary source of water while rivers, lakes and ground water are the secondary sources. Our daily consumption of water is fulfilled by secondary sources of water. However, these secondary sources of water are replenished by primary source of water (rainfall). Therefore, it becomes imperative for all of us to harvest this rain water in order to refill rivers, lakes, ground water.

Advantages of Water harvesting

1. Provides drinking and irrigation water.
2. Increases groundwater recharge.
3. Reduces storm water discharge, urban floods and overloading of sewage treatment plants.
4. Reduces seawater ingress in coastal areas.

An example,

Let’s take the case of Delhi; the average annual rainfall is 617 mm or 2.02 Ft. In a given area of 1 Ft by 1 Ft, the rain water that can be harvested every year will be 2.02 Cubic Feet or 57.21 liters. In other words, every household can harvest 57.21 liters of water in an area of 1 ft by 1 ft. If you have a roof of 50 ft by 20 ft, the water harvested would be 57206.4 liters.

Now, is this water harvested properly? Households, residential complexes, commercial complexes can harvest rain water by capturing runoffs from rooftops. The water thus captured can either be stored in a community water tank or allowed to go to the ground via a pipe which helps in refilling or increasing the ground water levels of a given region, thus, reducing the scarcity of water.

ACTION TAKEN BY VARIOUS STATEs / UTs / MUNICIPAL CORPORATIONS TO MAKE RAIN WATER HARVESTING (RWH)/ROOF TOP RAIN WATER HARVESTING (RWH) MANDATORY

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As a prospective borrower, what are the terms you should be generally aware about in the housing finance field in India?

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

Continuing in our series of home finance, in previous article, we noticed the shortage of housing in India and the role that Home finance companies can play to plug this housing shortage gap. In this article, we will explore the various terminologies used in home finance such as types of home loans, pre-payment charges, processing fee, secured/unsecured loan, rate of interest, insurance, pre-approved loans, etc. The idea is to equip you with basic yet important terms used in home loan process. Therefore, whenever, you decide to go for the home loan to purchase property, it is advisable to quickly go through the following document.

Not only will this hold you in good position to bargain for lower interest rates with the bank but it will also help you to understand various charges that are incurred while procuring home loans. Home loans as described in the document below can be availed for purposes such as buying a property, construction, land purchase, etc. Irrespective of the type of home loan one is going for, it make sense to compare the various loan options from different banks.

Understanding home loans and their terminologies in india from Green Realtech Projects Pvt. Ltd

Having understood the various terminologies used in the home loan process, we hope that you will make an informed decision.

Thanks

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