RERA has revived home sector demand

SBI is seen to be among the major gainers from the government’s move to inject equity into state-run banks to enable them to lend more and spur economic activity. In an interview with TOI, Rajnish Kumar, the newly-appointed chairman of the country’s largest bank, talks about signs of change in the economic situation and expects a pick-up in demand after Tuesday’s Rs 7-lakh-crore package for the road sector. At the same time, he says, the bank may reduce interest rates in some basket, given the low credit demand. Excerpts:The government announced a major recapitalisation plan on Tuesday. What is your fund requirement?

We will work out our numbers and estimate the capital requirement. But we are better than the Basel III estimate. Given that we account for one-fourth of the banking system, I am sure the government will prioritise our requirement.

The government has also talked about monetisation of non-core assets. What is your plan, including on the real estate assets?

That programme will continue. It’s a separate exercise.Our properties will be handled by SBI Infrastructure Management but hiving it off is not a very tax-efficient option and there are complications.

How do you see the overall economic situation?

The India story remains intact, which is a view that is shared by everyone. There is no real slowdown in con sumption. In manufacturing sector, things can be better.But the government’s announcements for the infrastructure sector will give a major boost to employment and given the linkages with other sectors, higher government spending will help a lot of industries. I see major gains for cement and steel. Higher manufacturing activity may not see as much increase in jobs as in the past due to automation, which has reduced the employment potential. But more construction will mean more employment and the sector will have a cascading effect on other sectors.

Given the slowdown in growth and inflation remaining below 4%, do you expect RBI to cut rates?

We don’t see an immediate reduction in rates, especially in the December review.

Is there scope for banks such as yours to reduce deposit rates and also lending rates, especially for housing and other retail loans?

It will depend on individual banks. But given that credit growth is muted, there is scope for some further reduction in interest rates in certain baskets. While the overall decision will be taken by the assetliability committee, but some changes may happen.

One of the problems for low demand for loans is over-capacity in the system. Have you seen an improvement in the situation?

There is a problem in sectors such as power, where a lot of capacity is idle or under-utilised. The demand for loans from generation projects is not there. In other sectors such as steel, there is a balance between production and consumption. There will be more demand from the engineering sector in the coming months and I also expect demand from defence production and railways. With the latest thrust on infrastructure, the investment cycle will pick up. Automobiles are doing well with car sales being strong and light commercial vehicles also doing well. There was some disruption due to RERA but now all developers are marketing RERA-approved projects, which has reduced the trust gap between the buyer and the builder. Now buyers feel assured and the residential sector demand has revived. The thrust on affordable housing is also positive for the sector. These are pointers to things turning around (in the economy).

The finance minister spoke about indiscriminate lending between 2008 and 2014, creating problems for banks. Going forward, how do you prevent that?

When we do business, the risk management department has to be very strong, something that is a focus for us. We need to strike a balance between business growth and the risk appetite. Pricing of risk is a very crucial element. In the past, the problem was excess liquidity, which meant that pricing of the risk was not proper. If the risk is higher, then the reward has to be adequate. Due to higher liquidity , everyone was chasing few assets and the risk was underpriced. We need to get the riskreward framework right and the anxiety for growth should not upset that.

GST is seen to have created pressure on SMEs. What is your feedback?

The steps announced by the government should help clear some of the problems as most of them have concerns related to timely realisation of receivables. The move for electronic registration of public sector companies will help clear the dues of MSMEs on time. I hope the private sector also responds in a similar fashion.

Source – TOI

ACT PROTECTS HOME BUYERS – Booking amt capped at 10% under RERA: PM

rotecting home buyers’ interest and their life time savings is one of the top priorities of government, PM Narendra Modi said. He added prior to the enactment of real estate regulation law consumers waited for years to get possession of their homes as they would fall prey to unscrupulous builders.“There used to be ambiguity regarding the area of the flat. Now after Rera, only registered developers can seek bookings only after getting all the required permissions. Moreover, booking amount has been fixed only at 10%,“ The Prime Minister said. He added earlier builders would go to the extent of taking up to 50% as advance amount.

Section 13 of Rera specifies that no builder shall accept amount more than 10% of the cost as an advance payment or an application fee without first entering into a written agreement for sale and register the said agreement for sale.

Modi said builders now need to keep 70% of the payment received from buyers in an escrow account and this amount will be spent on that project only.

 Source – TOI

Law to curb false advertisements for buyer safety soon: PM Modi

NEW DELHI: Government will bring in a new law to crack down on misleading advertisements and set up a central authority to fast-track redressal of consumers’ grievances, Prime Minister Narendra Modi said on Thursday .

The proposed law, awaiting Cabinet approval, provides for fine up to Rs 50 lakh and up to three years’ ban in case of misleading endorsement by celebrities while manufacturers would face fine and jail term for similar offence.

 Addressing an international conference on consumer protection, the PM indicated that the government would introduce the law, which has been in the works for more than three years, during the winter session of Parliament.
“Today we are in the process of enacting a new Consumer Protection Act keeping in view business practices and requirements of the country . The proposed act lays great emphasis on consumer empowerment,” the PM said. “Stringent provisions are proposed against misleading advertisements. A Central Consumer Protection Authority (CCPA) with executive powers will be constituted for quick remedial action,” he said. TOI has learnt that CCPA will be the first ever executive authority to take care of consumers’ interests.While individual consumer complaints can be taken to the consumer commission, CCPA will have the power to initiate class action against a product or service, if it impacts a group or large section of consumers.

“We are changing the law to simplify the process of grievance redressal and for faster resolution. Consumers will be able to file cases in consumer commissions online and from the place of their residence rather than from the place of purchase,” consumer affairs minister Ram Vilas Paswan said. The PM said the proposed law lays great emphasis on consumer empowerment. “Protection of consumer interests is a priority of the government.This is also reflected in our resolution of the New India. Moving beyond consumer protection, new India will have best consumer practices and consumer prosperity ,” Modi said.

 Addressing the summit, UN Conference on Trade and Development secretary general Mukhisa Kituyi pitched for protecting privacy of consumers in view of rising online trade as data provided by consumers are being commodified for marketing purposes. He also batted for nurturing consumer privacy and empowering vulnerable consumers with digital literacy amid growing online trade globally.
Source – TOI

HC sets 2021 deadline for builder in Powai

MUMBAI: The Bombay High Court on Tuesday directed Lakeview Developers run by the Hiranandani group to construct around 2,398 affordable houses in Powai before June 1, 2021, according to the undertaking given by them. The developer will have to build around 887 flats of 861 square feet each and 1,511 flats of 430 square feet each.A specified number of flats would have to be sold to the Maharashtra government at a rate of Rs 135 per square feet. A division bench of Chief Justice Manjula Chellur and Justice Nitin Jamdar said if the developer fails to meet the deadline, they would have to earmark an additional 10% of the flats for sale to the state government.

 The court was hearing an application by the developer over a 2012 order that restrained it from constructing buildings on its Powai land without permission.The court’s orders had come on a PIL that alleged violation of lease conditions. Hiranandani had signed a lease for the 230 acres of land in 1986 in a tripartite agreement with the state and MMRDA. As per the agreement, the builder was to construct 50% of the flats admeasuring 430 square feet and the remaining of 861 square feet. Instead, according to the petitioner, flats were allowed to be merged to as large as 4,000-5,000 sq ft and sold at prices touching Rs 7 crore. One of the important conditions was that around 15% of the floor space index consumed would have to be sold to the state government at a rate of Rs 135 per square feet. These flats would be used by the state to house its staff. The PIL had claimed MMRDA initially imposed a fine of around Rs 2,000 crore on the builder, which was brought down to Rs 89 crore and finally the state further slashed it to Rs 3 crore. As per the 2012 HC order, the builder has to construct 2,200 flats admeasuring 431 square feet and another 2,200 flats admeasuring 861 square feet.
Earlier this year, the HC appointed a committee to inspect and verify the affordable flats constructed and the remaining ones that need to be built. The flats will be in six residential towers.While some flats would be ready by December 2018, the rest have to be constructed before June 1, 2021. The court has allowed the developer one month to apply for permissions and around six months for the BMC to grant approvals. The builder will also have to open a joint account with the proto-notary of the HC, where the proceeds from around 207 flats would be deposited.
Source – TOI

Happening hubs

Undri-Pisoli belt is getting lots of focus from the homebuyers due to the availability of homes within their budgets.

Pune’s outskirts are growing at a faster pace. They sport a new look with sound civic infrastruc ture and good residential project. Ample availability of land sets Pune apart. With the residential realty market in the Pune city area getting saturated, the adjacent areas are quickly evolving as preferred destination for the home buyers.

Areas on Pune East are emerging as residential hotspots. Undri Pisoli belt situated in one of the emerging areas of Pune is getting lots of focus from the home buyers due to the availability of homes within buyer’s budget. It is well known for IT & ITes presence and the development happening in the area. Undri is one of the most logical residential property destinations in Pune. However, it has only come into prominence over the last 4-5 years because of the demand spill-over from saturated areas like NIBM Road and Wanowrie.

Its development in recent years has led to a greater thrust on civic infrastructure in Undri. Demand for homes in this location is driven largely by employees from Pune’s manufacturing and ITITeS industries, to whom it is a suitably affordable alternative to the pricier areas that cater to these workplaces. Undri is conveniently connected to many of Pune’s key localities. The well-developed social infrastructure of Wanowrie, Salunke Vihar and Camp is readily accessible to Undri’s residents.

IT crowd has been driving Pune’s residential market. Magarpatta Township’s IT-centric development as well as the industries in Hadapsar account for a significant share of the residential demand in this corridor. Wanowrie, NIBM Road and Kondhwa are already packed with development and the Undri-Pisoli market offers itself up as the next development corridor. Demand for properties here comes from both investors and end-users who seek to upgrade to larger apartments at affordable rates or buy second homes which are near to their existing ones.

Apartment prices in areas like Hadapsar and Kharadi have increased significantly and breached the affordability threshold for entry-level home buyers, and Undri-Pisoli is a viable alternative. It also has quality schools, which is a major plus The Undri-Pisoli belt, which includes Yeolewadi, Pisoli, Undri and Mohammedwadi, has several demand drivers working for it. It is very suitable destination for the working population at Magarpatta and the city’s CBD. It caters to the extended demand from Hadapsar and still boasts of relatively affordable real estate rates. It enjoys good connectivity to central Pune Owning a home is several times more preferable to renting in Pune, and these families are attracted to Undri’s relatively lower property rates.

Paying due heed to the specific requirements of this segment of buyers, some of the leading developers in Undri are offering all-inclusive packages on projects which have all the accoutrements of a modern, comfortable lifestyle. This factor is proving to be a further magnet for demand, which in turns encourages the faster development of this region.

As of now, Undri is primarily a destination for mid-income housing, and most of the projects there are geared towards this segment. It also holds great potential for luxury offerings once the demand for budget homes has been adequately met. Due to its superior location advantages, it is an ideal location for premium housing as well.

Source – PT

Beyond your city – The talking point – Talegaon

Talegaon’s journey from being a second home destination to a prime residential hub is noteworthy.

Located around 40 kilometres from Pune, Talegaon was an erstwhile second home destination, thanks to its scenic beauty. However, in the last couple of years, it has emerged as a prime residential hub.

The area gradually started witnessing growth with state-of-art amenities at reasonable rates. Today, it boasts of an array of projects from bungalows and townships to affordable housing.

The place is not only easily accessible via the Mumbai-Pune Expressway but is also connected via railway with Pune Lonavala locals plying hourly. It is at a 20-minute distance from Hinjewadi, the IT hub, hence making it a preferred destination.

Because of its proximity to Mumbai, several multinational companies have set up their base in the area. Overall, the area has sound civic infrastructure with good hotels, hospitals, schools and retail outlets opening up. Among the growth drivers are the industrial belt of Chakan and the automobile manufacturing units in the surrounding areas that have led to a large number of migrant population settling down at Talegaon.

Talegaon has predominantly been promoted as an industrial micro-market by Maharashtra government and MIDC and is home to various manufacturing and automobile companies. Along with the area’s growth, the last decade has witnessed a reasonable appreciation in Talegaon’s realty rates.

Source – ET

5 things NRI buyers must know about home loan

An NRI or a non-resident Indian can easily take a loan from any of the lenders in India for buying a property in the country.

1) A resident Indian as a co-applicant or a co-borrower or a co-owner of the property should be a part of the application that is to be submitted

2) The minimum age of the borrower should be 24 years

3) The borrower needs to submit last three months’ salary slips and bank statement of the salaried account to the lender

Procedure

1)There are a lot of online platforms available wherein you submit an online application with all the details

2) Such platforms help shortlist the right lender. They also give an option of uploading all the requisite documents online and then manage the entire process on your behalf

3) You will have to issue a power of attorney in the name of your co-applicant, maybe your family member or whoever is going to be the joint owner of your property or co-applicant to the loan in India

4) Additionally, you’ll have to go to the Indian embassy in your country and take the power of attorney format from the lender to whom you’re applying. There is a definitive format which has to be signed in favor of your Indian co-applicant in the application, after which the Indian Embassy will put a seal of approval on it

Switching banks: If you wish to transfer your home loan from one bank to another in the wake of lower interest rates, first check if there is a switching cost with the lender from whom he has taken the loan. If there is no cost of switching then there could be other costs involved such as fee which the new lender will charge. Stamp duty may also be applicable if you are creating a mortgage deed in favour of the new lender.

Be flexible: Taking a loan on fluctuating rate of interest is recommended because fixed rate of interest is generally 50 – 100 basis points more than the flexible rate of interest. They also attract a foreclosure charge whenever you want to switch. Thirdly, the Indian market rates may go down. If you are going to take 9.4 per cent floating rate right now, it is quite likely that in the next 12 months you might be at 8.75 per cent. Instead, if you go for a 10 per cent fixed rate of interest, you will be stuck at 10 per cent even if the market comes down to 8.5 or 8.75 per cent

Pre-payment: If you wish to make a pre-payment then you should tot up the numbers diligently. How much interest cost is getting saved by reduction in tenure? If you feel that is more as compared to the tax benefit which you would have availed by investing this money somewhere else, then you should go for it

What you must know

1) For a salaried customer, the maximum tenure possible is 30 years. For a self-employed person, it is 20 years

2) First get a loan approval for yourself and then decide on the value of the property you want to buy. Your savings should give you enough financial buffer

3) The age of the property does not matter much. If the property is well-maintained and the residual age of the property is at least 12 years, then the bank will definitely fund it

5) As in the case of Indian residents, if a female is the joint owner of a property, a five basis points reduction in the rate of interest is available under home loan
6) Two NRIs can also opt for a joint home loan in India but only if they are blood relatives and they stay in the same house
Source – Magic Bricks

Insolvency rules tweaked, home buyers get cover

NEW DELHI: The Insolvency & Bankruptcy Board of India has amended rules to mandate that any resolution plan for a company has to explicitly state how it has dealt with the interest of all stakeholders.

This move is aimed at protecting the interests of home buyers of real estate players such as Jaypee Infratech+ and some of the entities of Amrapali Group+ .

The revised rules were notified by the regulator for insolvency and bankruptcy+proceedings last week and will ensure that banks and other creditors do not get away by protecting their own interests at the expense of others who are impacted by the action.

Banks are part of the creditors’ committee, the key decision-making body after a company is admitted for bankruptcy.

“The change in the rules has plugged a gap as flat buyers are of the view that there is nothing to protect their interests,” said a lawyer specialising in bankruptcy cases.

The new law, enacted last year, aims to speed up the resolution process in a period of 180 days, with a possible extension of 90 days, by appointing insolvency resolution professionals who will take charge of the company’s operations and prepare plan. Under the law, if the creditors’ committee agrees, it will call for applications from other interested companies to take over the company after finalising an information memorandum.

Insolvency experts said the law provided for the plan being binding on the corporate debtor (the company) and its employees, members, creditors, guarantors and other stakeholders involved in the resolution plan.

But there was no obligation in the rules to give any treatment to the stakeholders other than the financial creditors (the banks) and operational creditors, which includes vendors and others who may have dues.

Based on the comfort provided by the revised rules, the National Company Law Tribunal will decide on the final resolution plan, based on bids that are received. “The tribunal will not clear the resolution plan without giving notice to all stakeholders and the flat buyers can raise objections at that point of time,” said a lawyer.

The government and IBBI have been trying to come up with solutions to ensure that the interests of home buyers hit by a spate of insolvency proceedings against builders are fully protected.
It has already eased the process to file for claims and is thinking of other steps.
Source – Times of India

Home buyers are main sufferer of real estate industry, neither getting home nor refund: SC

NEW DELHI: The Supreme Court on Wednesday sympathised with the plight of home-buyers made to run from pillar to post to get possession of flats even after paying their money and said they are the main sufferers of the real estate industry as they are neither getting possession of the flat nor getting their money refunded.

Justifying the court’s intervention to protect the interests of home-buyers, a bench of Chief Justice Dipak Misra and Justices A M Khanwilkar and D Y Chandrachud said flat-buyers had virtually come on the streets as the real estate companies were not delivering possession of flats on time despite getting money. It said the court’s intervention was required to protect their interests against the powerful builders and to rescue them from the hardship.

“Home-buyers are now on the streets and they are moving from one forum to another for redress of their grievances. We have consciously taken up their cases to protect their interests and bring relief to them,” the bench said.

The court’s observations came as it heard a plea of thousands of home-buyers in Jaypee Infratech Ltd(JIL) projects seeking refund of money. The court had earlier directed the company to deposit Rs 2000 crore to cover its liability towards 22,000 home-buyers.

Many reputed real estate firms including Unitech, Supertech, Amrapali, Jaypee and Parsvnath have recently come under the scanner of the Supreme Court which directed them to refund money to buyers for failing to hand over possession of flats on time. The court had repeatedly made it clear to the companies that it would not be bothered about their financial problems and they would have to refund the money to buyers. “We are not concerned whether you sink or die. You will have to pay back the money to home buyers,” the court had said.

The court in September directed creation of an online portal to pave the way for around 17,000 investors in Unitech’s projects to claim refund and hinted that its promoter Sanjay Chandra would not be granted bail till Rs 1,000 crore is deposited in court. It had also directed Supertech to deposit Rs 20 crore in court against the refund claims of home-buyers in its Emerald Court project in Noida.

The court had in October last year directed Parsvnath Developers to refund Rs 22 crore to 70 buyers who had invested in one of its housing projects in NCR for delay in handing over possession. Expressing concern over “common tendency” of real estate companies across the country to harass flat buyers the court had said companies should not venture into the sector if they were not able to complete the projects on time.

Source – Times of India

BUILDERS MUST PAY INTEREST FOR ALL DELAYED PROJECTS ON THEIR OWN: CONSUMER BODY

With the volume of complaints by harried home buyers for delay in possession of their flats rising every day, consumer rights organisation, Mumbai Grahak Panchayat (MGP), has urged the Maharashtra Real Estate Regulatory Authority (MahaRERA) to issue a directive to all developers to pay interest to home buyers as an automatic arrangement for delayed period of possession.

In a letter addressed to MahaRERA chairperson Gautam Chatterjee dated October 12, MGP chairperson and consumer activist Adv Shirish Deshpande said “The crystal clear provision under section 18 (1) requires that the promoters of such delayed projects should, on their own, pay the allottees interest on their amounts paid, at the prescribed rate for every month of delay.”

Deshpande said when RERA was passed, the intent of Parliament was that the allottees, already suffering hardships due to delays, should not be forced to approach MahaRERA or any other court in each such case.

“The interest payment to the allottees by the promoters is, therefore, expected to be as automatic as the promoters recover interest from the allottees in case of delay in payment of any instalment by just raising a demand letter,” Deshpande said in his letter.

Since the promoters, on their own, will not pay such interest to the allottees for every month of delay, Deshpande urged MahaRERA to issue a blanket directive to all developers who had delayed possession issues.

“You will appreciate that to protect the interests and the rights of the allottees, the MahaRERA shall be fully justified in directing all the promoters of the delayed projects to comply with the mandate of Section 18 (1) proviso and start paying interest to the allottees affected by the delayed projects. The Promoters may be further directed by MahaRERA to file compliance of this direction with MahaRERA in their quarterly updates,” Deshpande said in the letter, echoing the demand by most home buyers.

Deshpande pointed out that most of the on-going projects registered with MahaRERA were delayed for a period ranging from one to seven years or more.

“Huge amounts of hardearned money of allottees is stuck with the promoters of such ongoing delayed projects. Giving revised date of possession to MahaRERA while registering such projects does not in any way absolve such promoters from their liability to pay interest to the allottees for the original delay,” Deshpande said in the letter.

Speaking to Mumbai Mirror on Wednesday, Deshpande said “For example, a home buyer invested in a flat in 2014 and the developer promised possession by December 2014. When the developer registered the project in July this year, he put a revised possession date of July 2018. But this doesn’t absolve him of the delay. He is liable to pay interest on a monthly basis for the delayed possession under RERA provisions. So, why not make the developer pay the interest automatically instead of going through the process of receiving complaints from home buyers and then adjudicating such cases.”

MahaRERA authorities are likely to discuss the MGP demand on Thursday and take a decision.