Real estate being the country’s second largest employer of India, and the fact that the sector is under severe liquidity crunch, Budget 2020 was a very keenly awaited budget. Budget 2020 was also the key event for any sign of revival in the economy.
Last year, the government had taken several steps like ‘housing for all’ by 2022, tax sops, a sharp cut in GST rates for under-construction flats and a Rs 25,000 crore fund to salvage stalled residential projects. Budget 2020 is also in line with the Sabka Vikaas line that was the hallmark of the 2019 budget.
Personal Income Tax Relief
Heavy taxation faced by homeowners is a fundamental obstacle to the real estate industry slowdown. The marginal personal income tax rate in India at a 10 year high, coupled with 18% GST has caused a heavy burden on taxpayers.
In order to provide significant relief to the individual taxpayers and leave significant money in the hands of the tax payer, Budget 2020 has proposed to bring a new and simplified personal income tax regime. Income tax rates will be significantly reduced for the individual taxpayers who forgo certain deductions and exemptions. This could lead to reviving the consumption cycle in the real estate sector and kick start the economy. Further, additional savings can bring in an upsurge in individual investments in the housing sector.
Attacking the Liquidity Crunch
It is common knowledge that the real estate industry is facing a liquidity crunch. Coupled with the liquidity crisis faced by the NBFCs / HFCs in 2019, it has become a double whammy. The Budget 2020 proposal to further enhance the credit guarantee scheme for NBFCs and HFCs is expected to provide some respite to the market. The government has decided to further bolster the guarantee scheme for NBFCs and HFCs and offer subordinate debt to MSMEs. It should help bring liquidity into the real estate market alongside the abolition of DDT.
Affordable Housing
Continuing the last budget’s focus on affordable housing, the tax benefit on affordable housing loans was decided to be extended by a year up to loans sanctioned till March 2021. This will push more first-time home buyers to hurry up their decisions to purchase their dream homes. This should take care of the excess inventory in the market.
Whats more, the date of approval of tax holiday provided to developers of affordable housing would also be extended by one more year. This should encourage small and medium sized real estate developers in states like Assam to transition into affordable housing. The luxury segment in the tier 2 cities is suffering due to lack of consumer demand, and the more attractive investment for a builder would be to focus on affordable housing.
Positive on warehousing segment
The National Logistics Policy and the proposal of the viability gap fund for development of warehouses would provide impetus for increasing construction of warehouse facilities. Budget suggests the PPP model to encourage building of warehouses supply which is expected to rise from 211 million sq ft in 2019 to 379 million sq ft in 2023. Single-window clearance will expedite supply, as approval time is expected to reduce by six months.
Conclusion
Although Budget 2020 was a good budget for infrastructure, it was left much to be desired for the real estate and real estate construction segments. The crisis created due to the policy restructure of 2016 (RERA, GST and NBFC’s) has created a slump in the market. Allowing tax breaks for buying property could have gone a long way in sorting the real estate sector, causing a rise in domestic housing demand. The budget 2020 needed incentives such as completion of stuck projects and allowing the home buyers to full income tax benefit, immediate and effective disbursal of the Rs. 25000 crore stress fund of 2019 budget, removal of tax on vacant properties, increasing the bracket to claim tax benefit on home loans etc.
Buying a home is a significant investment and it involves the financial planning of one lifetime for an average middle class household. We therefore thought of discussing the concern of deciding the right real estate builder while buying a house.
A wise choice is only possible with fair amount of market research. There are a variety of factors that comes into play while deciding a house to buy. Some of us worry about the return on investment, and some of us worry about the quality of amenities provided. We will take 5 of the most important factors, which are commonly considered before buying a flat in a city-like conditions. These factors stand to establish that we should only trust reputed established builders and developers for our dream home purchase.
Timely Completion
Most households take a loan to purchase their dream flat. An early possession of the flat saves EMI and reduces rent costs. It is therefore very important to considered the aspect of timely completion. It is seen that reputed experienced builders have their systems & processes in place to complete the flats on time for timely delivery to the home owners.
The probability of getting the ready flat on time is therefore higher in case of a reputed real estate builder. Also, it is now an essential requirement after the RERA Act where the builder is obligated to complete construction on time.
No Tampering with RERA Norms
RERA is the most important regulation that has been launched for both the builders and the consumers. The intention was to safeguard the interests and the hard earned money of the consumers. We must check the RERA registration number of any project where we plan to purchase a flat.
A reputed builder is more likely to be registering his project under RERA and to inform the buyers about the same. It is also more likely that the reputed real estate builder will follow all the rules of RERA and that the consumers will get the benefits of RERA if anything goes wrong, or there is a delay.
Quality Amenities
Many reputed real estate developers have built their credibility on the kind of amenities their housing projects offer. These developers make sure that consumers get a right value for their money. It is seen that reputed builders provide state of the art amenities including including proper parking space, 24/7 security, clubhouse, swimming pool, jogging track, amphitheater etc.
A reputed developer is experience enough to easily perceive the need of the home buyers, and has the necessary clout in the market to get the amenities made at a competitive price. The quality and durability of the amenities provided therefore bears the mark of excellence as well.
ROI is Return on investment. Lot us buy our properties with the assurance that if we need to sell it in the future, we must get a good bargain. The real estate brand that we choose can work in our favor in such times. A good brand also can pay us a premium on the rent, if we ever decide to put the property on rent.
Additionally, a real estate project by a reputed builder is usually in areas, which are popular, have good connectivity and is secure in terms of market volatility. It is very likely that we will end up getting a better ROI if we invest with a good reputed brand.
Easy Home Loan Sanctions
As we have discussed earlier, most of us buy homes with a long term home loan. We all have banking relationships with one or two banks, and it becomes crucial if these two banks sanction a home loan for the property that we have shortlisted. It is likelier if the property is being built by a reputed experienced real estate developer.
Safety and security of the property and of children is a primary concern for any home buyer. A reputed real estate developer will have better security features in their projects. We have seen sophisticated inter-com facilities at entry points with CCTV monitoring to provide continuous surveillance of the ground floor, entry / exit points, lift and staircase areas in almost all projects of reputed real estate builders.
Conclusion
Established brands are concerned about their brand value and recognition. They are manned by processes rather than individuals. So, there is a lesser change that they would compromise on the quality of their product. When stakes are high, it is important to play safe and buy your property from a reputed real estate developer.
Properties in India are becoming expensive by the day. This makes it even more important to choose the right real estate developer to buy apartments suiting your needs.
About Protech Group
Protech Group is a pioneer in real estate promotion and development in India’s Northeast with over 11 years of experience, 12 projects and 393 flats. Protech derives its name from the two inspirational words – Progressive and Technology. These two words have guided the company’s continuing commitment to uphold the excellent standards of design, quality, pricing and customer service.
As the year 2018 is about to end, it is perhaps the most probable question on real estate buyers’ mind. So, will Real Estate offer profitable Return on Investment (ROI) in 2019?
The Indian real estate sector has witnessed volatility and a demand crunch over the last few years. The real estate industry is going through a lull. The good news is that we think that 2019 could be the year that the property market bounces back with all the major policies had been implemented in the last five years.
As per experts, the real estate sector has witnessed a fast growth with the rise of demand for residential as well as commercial projects in the recent times. Private equity investment in real estate is also estimated to grow in the coming years. The recent Real Estate policy level reforms (RERA), Goods and Services Tax (GST) and Real Estate Investment Trust (REIT) is streamlining the industry and is expected to provide stimulus to its growth.
Home Loan interest rates
Today’s market can be termed as a buyers’ market as there are more supply than demand. In addition, the low home loan rates coupled with the various Government incentive schemes like PMAY and Apun Ghar makes the marketing very friendly to the buyers. These schemes give further discount on the monthly EMI for the buyers, which in turn makes real estate affordable. Experts believe that the return on investment (ROI) will be more than the investing amount in the property from a long-term investment perspective.
Real Estate vs. Other investment avenues
The real estate section, unlike the other investment options like Gold, Commodity and Equity Markets, is not related to overseas global economic factors. It is largely insulated from the global factors which are less in our control. A trade war between two countries or a crude oil crisis for instance, is less likely to affect the real estate market. So it is not as volatile as the other assets such as gold, currency and equity markets.
Real estate is highly dependent on consumer spending in the domestic economy. It is an asset that is tangible. It can not only give long term financial benefits, but also can be used to procure business loans to increase returns through other assets and businesses. Moreover, it can also give regular returns consistently in terms of rent income.
Return on property investment
Apart from being a highly tangible physical asset, Real Estate investing has tax benefits that increases your overall ROI. A physical asset like a home has a cultural relevance in terms of security. By its very nature, it is bought from a long term perspective. The anxiety of immediate or medium term returns is not seen among the real estate buyers. This buyer attitude of not wanting to liquidate a real estate makes the property investment less vulnerable to speculations. Real estate investment therefore is more stable than other investment options.
We need to be judicious in terms of choosing the builder and the location of the property. It should have a better chance of appreciation to become a secure income generating asset for the security of the investors’ future.
Conclusion
One of the biggest hindrance is the 12.5% GST for the buyers and 5% on the stamp duty and registration. Even GST rate of 28% on cement increases the price of the property. Revising the rates of the Goods and Services Tax (GST) on various segments connected to the real estate industry, could help both, consumers and developers. With the GST council meetings underway, as we write, the developer community is hopeful that GST rates will be substantially reduced by the government. It will help in boosting the demand for housing and the overall GDP of the country. It will make 2019 a great year for real estate investment.
Benefits of RERA are many. Owning a home is every person’s dream. Real Estate Regulations Act (RERA) introduced in 2016 is meant to safeguard that dream of every Indian.
Real estate is an investment of a lifetime and not everybody can afford a home for themselves in the metros, tier I and tier II cities like Guwahati in Assam. To add to the misery, every developer / builder earlier had his own norms and standards. They followed different practices and structured the builder-buyer agreement in a manner that favoured the builders. The common buyer had very limited rights.
Real Estate Regulation Authority (RERA) was instituted to protect and safeguard the rights of the common man who invests his lifelong savings in buying a home. RERA specifies certain norms for building and development of real estate, which will enhance the transparency in transactions in the real estate sector. Benefits of RERA include several rights to the home buyers and has also specified certain rules and regulations to be followed by all builders/ developers. It also specifies the creation of an Appellate Tribunal for each state to understand and tackle complaints by home buyers.
10 Major Benefits of RERA Act
Here are the 10 major benefits of RERA act for the common home buyers:
Standardized Carpet Area:
Earlier, the carpet area on which the builder calculated the price of the property was not defined. Every builder/developer had his own method of calculation of the Carpet Area. Now, the method of calculation is defined and standardized by the RERA Act and the same formula has to be used by all builders and developers.
The definition of carpet area as given by the law is:
Carpet area means the net usable floor area of an apartment, excluding the area covered by the external walls, areas under services shafts, exclusive balcony or verandah area and exclusive open terrace area, but includes the area covered by the internal partition walls of the apartment.
This definition is a direct benefit of RERA and has an impact on the Real Estate prices, as most developers charge on the basis of carpet area. Builders compute the price of a property by multiplying the carpet area by the rate per square feet.
Rate of interest on default:
In case of default in payment by the buyer or default in completion of the project by the builder, the rate of interest to be paid shall be the same for both parties. Earlier, the interest burden on the home buyer was higher than the interest that the builder agrees to pay in case of construction delays. There was no parity in the interest to be paid by both the parties. The RERA Act has now clearly specified that the interest rate shall be the same for both the parties.
Lesser risk of builder going bankrupt
A developer usually has several projects, which are being constructed simultaneously. Earlier builders were free to divert the funds raised from Project A to fund the construction of Project B. Now, this would not be possible after the introduction of RERA. The builder is liable to deposit 70% of the amount realized in for the project in a separate bank account. He can withdraw from such account only on the basis of completion of project, which shall be certified by a civil engineer, architect and a chartered accountant in practice.
RERA will ensure that the builders use funds collected for a project, for the same project and this will reduce their chance of getting bankrupt. It will also ensure timely completion of the property as the funds are being used in the right project.
Advance Payment:
The builder can take not more than 10% of the cost of the flat, apartment or villa as advance or application fees as the case may be, before entering into an agreement of sale.
Buyer Rights as Benefits of RERA
The home buyer enjoys various rights under this act. They are detailed in the following paragraphs explaining the benefits of RERA.
Right of the buyer in case of false promises:
In case there is a mismatch in the commitments made by the builder and the actual project, the buyer has the option to withdraw from the project, wherein he is entitled to full refund of the amount paid as advance or otherwise along with interest and claim compensation.
Right of the buyer in case of Defect after possession:
The builder shall rectify any defect free of any charge if the defect is discovered within 5 years. The defect can be a structural defect or any defect in workmanship, quality, provision, or service. The builder will rectify all such defects at no extra cost within 30 days. If the builder fails to do so, the buyer shall be entitled to claim compensation for the same.
Rights of the buyer in case of delay in possession:
If the builder fails to complete the project on the due date of completion, then the buyer has two options:
To withdraw from the project, wherein he shall be entitled to full refund along with interest payable from the due date of completion till the amount is refunded.
To continue with the project till the completion, wherein he will be entitled to compensation along with interest payable from the due date of completion of project till the project is actually completed.
Rights of the buyer in case of defect in Title:
Even after taking possession of the property, the Rights of the buyer are protected. If the buyer finds a defect in the title of property, then he or she can claim compensation from the builder. There is no time limit within which the buyer have to report the defect.
Right to information:
The buyer is entitled to all the information related to the project. The right to information clause gives him that privilege. He can ask details about the plan layout, execution plan, stage wise completion status etc.
Appellate Authority for Grievance Redressal:
The home buyer can take the builder to the state authority set up under RERA for any grievances. It has the power to redress all grievances. The buyer can file an appeal with the Appellate Tribunal if he is dissatisfied with the order. The tribunal will redress your case within 60 days, or shall record the reasons of such failure.
If the builder wants to appeal against any order, he shall have to deposit to the Appellate Tribunal against the order of the Authority, then he shall have to deposit at least 30% of the penalty, or such higher percentage as may be determined by the Appellate Tribunal. He may also need to pay the total amount to be paid to the home buyer including interest and compensation imposed on him, if any, or with both, as the case may be, before the said appeal is heard.
It’s that time of year again where fun, food & festivities take over in the family home. The much-awaited festival of light Diwali is here! This festival is all about colours, lights, diyas and crackers, in order to celebrate the victory of happiness, prosperity and goodness.
Although, bursting firecrackers is increasingly becoming unpopular as it creates environmental, noise and air pollution; yet it would be presumptuous to assume that you would not light a fire cracker. Bursting fire crackers is something everyone including children and adults enjoy. So lets take a moment to know how you and your loved ones can celebrate the festival safely, without injury or accidents.
Protech Group advises these simple safety guidelines and precautions to make this Diwali a memorable and special occasion for yourself and your family.
Clothes and Shoes
The primary danger during Diwali festival is from a fire. We strictly advise you to wear close fitting 100% cotton clothes while bursting crackers or lighting other fire items. You must not wear synthetic clothes since they easily catch fire, and get stuck to your skin.
Secondly, we must always wear fully covered shoes while lighting fireworks, or even when you are in the fireworks area watching others light crackers.
Open area for Fireworks
Most often than not, we celebrate Diwali with a large group of close family and friends. So it is important we choose a wide open space outside our homes. We must clean the area free from trash, debris and other flammable material.
It is during this time that we decorate and our houses with candles and diyas. So we must ensure that the candles are away from curtains or other inflammable items at home.
Fire Extinguisher
We should always invest in a fire extinguisher to be kept in the close proximity of the fireworks area. We should keep a bucket of sand or water in a corner to dispose off the spent fireworks. It is better to keep the emergency number of the fire brigade and the nearby hospital in case of any fire emergency. In the case of a simple burn, immediately wash the area with tap water. Seek medical attention if it is a serious burn.
Noise & Air Pollution
The major concerns about Diwali arise from noise and air pollution that hampers our health. People suffering from respiratory illnesses such as asthma, bronchitis are greatly affected by the toxic chemical smoke released by the fireworks. People with respiratory problems should stay indoors and wear protective masks while venturing out. The dust and chemicals from fireworks can irritate the eyes. In case of any burning sensation in the eyes, we must wash the eyes thoroughly with lots of water.
Increasing environmental noise with loud bursting sounds can damage the ear drum and cause hearing impairment. It may cause a hike in blood pressure and may affect the sick and the elderly. Use ear plugs if the noise is too loud, or opt for low noise fireworks like sparklers and flowerpots.
For pet lovers, we must note that pets find it unbearable to tolerate so much bursting noise. They get scared and uncomfortable with bursting sound.
Cracker Safety Tips
If at all we have to buy crackers, we must buy quality crackers. Quality crackers have a lesser risk of mis-firing accidents. We should light one cracker at a time and after lighting it, we shouldn’t become over confident and try to show off by staying close to the lighted cracker.
A very important safety tip is to ensure that children play with crackers under adult supervision. We must instruct our kids about the usage of firecrackers and the proper ways of disposing them. Never should we allow any minor to play with crackers alone.
We should always keep a first aid kit handy with burn creams like Burnol and Silverex. In case of minor burns or injuries, we can get immediate medical attention.
Spread Awareness
The motto is that we should all be aware and be careful. It is important to spread the safety tips amongst all the people around the society. It is even better if we can collectively opt for a cracker free Diwali. Even if we can’t raise a consensus for a cracker free Diwali, we must be sensitive and avoid bursting crackers near hospitals, old age homes and crowded public places. We must always remember that our celebration should not be a reason of discomfort to the others.
Diwali is a festival of happiness and we need to keep it happy for ourselves and our neighbours. Fire crackers are not a plaything and you should not use them on someone just for fun. We should follow these precautions in order to celebrate a peaceful and pleasant Diwali not only this year, but for every year.
