RBI tightened the provisioning norms for 10:90 loans

The scheme, under which a property buyer paid only 10% of the property cost at the time of booking and 90% at the time of possession, was the buzz during the festival season. However, it was felt that such loans were risky for banks and so the Reserve Bank of India (RBI) stepped in and tightened the provisioning norms for such loans. Builders such as Indiabulls Real Estate (IBREL), Lodha Group and Nahar Group are among those to have floated this scheme.

Analysts said banks were rejecting loans because buyers failed the eligibility norms. Less than a sixth of the loans for such projects were getting passed, an analyst said. Bank approval rates for these loans have fallen steeply since then, because of which it is the builders who are now staring at possible cancellations.

The average cost of the 3000-4000 sq ft flats was Rs10 crore and a tenth of the buyers did not opt for the 10:90 scheme.The problem with the 10-90 scheme is also that developers agree to pay interest only till the construction is completed.If the developer is selling property claiming it would undertake interest subvention for that period, then the buyer should ensure that mentioned clearly in the agreement.

Banks have also become wary of giving out such loans because their regulator, the Reserve Bank of India, looks down upon such lending practices. So Builders face cancellations as 10:90 loans dry up

Source: DNA India

Housing society can impose fine if you skip society meets

A circular issued by cooperative commissioner Rajgopal Deora allows a co-operative housing society to impose fines on members who remain absent from the annual general body meeting or elections for the managing committee. The circular comes in the wake of directions form the state Lok Ayukta, which has been flooded with complaints against administrators and managing committee of cooperative housing societies. Though the circular does not mention any upper limit for the fine, it clearly states that a reasonable amount can be collected as penalty.

The circular also states that a three-member committee, headed either by the housing society secretary or chairman, be formed for instant redressal of residents’ complaints. The circular further states that the panel must attend to a complaint within 15 days of its receipt. A member can approach the registrar if the panel fails to resolve his/her complaint within the stipulated time. According to the circular, the committee must comprise a female resident. Two of the three residents on the grievance-redressal committee should not members of the managing committee, but must be elected by general body.

Advocate Vinod Sampat, president of Co-operative Societies Residents, Users and Welfare Association, said, “The circular can be challenged in a court of law as it does not mention under which Section of the Co-operative Societies Act it has been issued. Moreover, a member can create nuisance during the meeting if he is forced to attend it.’’

Prakash Paddikal, president of the Hillside Residents’ Welfare Association, said, “Hardly 15% of the members attend society meetings. Large-scale participation by members would go a long way in improving the way societies function.”

Builder bought 1BHK for Rs 4 crore

Mumbai-based Parinee Developers claims to have shelled out between Rs 4 crore to Rs 4.5 crore for a one-BHK flat and Rs 5 crore to Rs 5.5 crore for a two-and-a-half-BHK in the three-decade-old Bharatiya Bhavan Cooperative Housing Society. Parinee plans to demolish the buildings and set up a high-end residential tower.

In a bonanza for residents of a Khar housing society located at the corner of 17th Road in Khar (west), Mumbai-based Parinee Developers has been buying off their mid-sized flats, paying each family between Rs 4 crore and Rs 5.5 crore. The developer has already bought out 20 of the 37 flats in the society and said it is negotiating with the remaining flat owners. The society comprising six buildings, each ground plus two floors, is spread over an area of 5,570 square yards (over an acre) with ample open spaces and car parking. The one-BHKs have a carpet area of between 580 to 625 sq ft while the two BHKs are between 800 to 900 sq ft in size.

However, there is a word of caution from real estate experts. They warn these huge amounts may send wrong signals in the redevelopment market, unnecessarily create hype and raise expectations of other housing societies in the area.However, Parinee said it is paying this astronomical price only because the society has utilised barely 40% of its floor space index (FSI). “We are finalising the purchase of the remaining 17 flats. Our acquisition cost for all the flats is around Rs 200 crore,’’ said a spokesperson for the developer.

The society had invited sealed bids from various developers and that a Navi Mumbai-based builder, APA, had offered Rs 180 crore to the society. However, the builder subsequently withdrew the offer due to recession and also because of infighting between two groups of flat owners. Some residents thought that APA’s offer was not enough. The fight culminated in a legal battle, Parinee Developer now claims it has helped resolve the issue between the two groups.

A real estate expert has a word of advice for housing society residents, “Dont get greedy. Stick to only prominent developers who have delivered in the past.’’ The expert further said some unknown builders in the past had offered astronomical prices to housing societies, even outbidding the big guns in the industry. These shady builders are just fronts for some politicians who want to roll their black money in real estate. Housing societies should stay miles away from such builders, he warned.

L&T dropped the proposal to set up a Rs 700-crore IT SEZ in its Powai

L&T had proposed to set up an IT SEZ on 10 hectares of land in its Powai plant. Then, it had proposed to invest Rs 700 crore and create 14,000 jobs. However, now in view of the recession in the IT sector, it has dropped the plan. Larsen & Toubro, one of the largest private sector organizations dropped the proposal to set up a Rs 700-crore IT special economic zone (SEZ) in its Powai premises owing to the slowdown in the IT sector.

Between 1995 and 2000, there was rush for the IT sector, but now from official records, it has been confirmed that well over 30 lakh square metre of premises under construction or constructed, is surplus.  “For the Maharashtra government, it’s big setback,’’ the official said. “Well over two years ago, the Centre had granted permission to L&T for setting up an IT SEZ in its Powai campus. However, last month, it approached the board of approvals for withdrawal of the project. The board, in its meeting on June 9, accept ted L&T’s plea,’’ a senior industries department official said. “In all the states, there’s a slowdown in the IT sector. In our opinion, we have reached the stage of saturation. As such, it appears that attracting fresh investment will take a long time. A decade ago, the situation was different. Then the IT sector was booming, but now, it’s a disturbing trend,’’ the official said.

Mumbai will have the world’s tallest residential building

City-based realty group Lodha Developers will collaborate with two New York-based firms to build an over 450 metre residential tower at Worli in south-central Mumbai. Lodha Developers has tied up with New York’s architectural firm, Pei Cobb Free & Parners, and structural consultants, Leslie E. Robertson Associates, for the prestigious project which will be a landmark in Mumbai.The construction work on the project will start in a couple of months and it is expected to be completed by 2014.

“The project has been christened World One and will be built on a 17-acre site at Worli (south-central Mumbai). It will include a 117-storeyed tower, around 1,450 feet, which will be the world’s tallest residential building” said the firm’s managing director Abhisheck Lodha. According to Lodha, a significant aspect of the World One project will be rating of Gold Leed Certified Building by the Green Building Council. It will be the only 100-plus storey building in the world to get this coveted certification for its high-level of environmental care.

The key eco-friendly measures it will incorporate are: 100 percent water harvesting and recycling, using VRV air-conditioning and solar energy for common areas and heating, thus slashing electricity consumption by over 40 percent, and waste segregation and recycling. For the luxurious in-house feel, all the components for the kitchens, bathrooms, living rooms and bedrooms shall come from Germany, Italy, Japan, the US and France.

The project will be world’s tallest residential building and it will include a 117-storeyed tower, around 1,450 feet. It is estimated at a cost of Rs.2,000 crore ($424.67 million) and it is expected to be completed by 2014.The complex will offer world-class amenities for the occupants, including a 3-level club-house and spa. The flat sales/bookings shall start by June-end.

Procuring title deed to go online

RTI promises to make life easier for citizens trying to procure title deed. State chief information commissioner (SIC) Suresh Joshi has directed the department to put up details of all the registered documents on the department’s website, mentioning details like name and date of registration, number of documents registered and the status of the document.  The Right To Information Act has helped many citizens beat bureaucratic red tape since it came into force in 2005. Now it promises to make life easier for citizens trying to procure title deed documents of their residential and commercial properties from offices of the department of registration and stamps across the state.

“If the information commission’s order is not complied with, the applicant can approach the SIC again and he will be compensated, while the Public Information Officer (PIO) will be penalized,’’ said Shailesh Gandhi, central information commissioner. Joshi told that every document registered by the department falls under the purview of the RTI Act and they are bound to publicize these documents. “There is also a danger of losing the documents as they are kept in the office for years together. The department has a responsibility to send the original documents as soon as the work is done,’’ he said.

The SIC order came on May 13, 2010, after Borivli resident Deepak Furia filed an RTI query in August 2009, with the department of registration and s t a m p s asking for basic procedures of procuring the title deed documents from stamp duty registrar offices. When both the PIO and the first appellate authority denied him information, he appealed to the state information commission. “When the case came up for hearing with SIC, officials admitted that over one lakh original documents prior to 2002 were pending at various offices. The officials justified this saying that they though had sent many documents to the title deed owners, they were returned back,” Furia said.

Joshi noted the RTI query touched upon a larger issue and it is necessary for the additional chief secretary (revenue and rehabilitation department) to take genuine interest to help citizens get back the original documents duly registered, which are being held back by the department. The SIC added that prior to 2002, the Pune office maintained records for photo registry and scanned these documents. Before registering these documents, the sub-registrars had to verify the proper valuation of the property and then the documents were ordered for registration.

Government plot in Wadala fetched the highest bid of Rs 4,000 crore

A six-acre government plot in Wadala fetched the highest bid on Tuesday. Lodha Group bid Rs 4,053 crore for six acre plot in Wadala setting not only an all-India record but also reaffirming land-starved. Till now, DLF’s bid of Rs 1,750 crore for 350.7 acres in Gurgaon last year was considered to be the highest in the country. But on Tuesday afternoon, the Lodha Group beat this record by several times after it outbid three other developers for the Wadala plot by quoting double the reserve price.

In 2008, a Delhi-based developer, BPTP, had bagged a 95-acre plot in Noida for Rs 5,000 crore, but the deal was later called off. The six-acre sprawl which is located in the Wadala Truck Terminal will also allow the developer for the first time ever to utilise an unheard floor space index (FSI) of 20. The Mumbai Metropolitan Region Development Authority (MMRDA),tweaked tender conditions to allow multiple towers instead of a single iconic’ tower. It also permitted 100% residential construction instead of the earlier stipulation of just commercial.

The MMRDA had set a minimum rate of Rs 40,000 per sq m (Rs 1,980 crore) and Lodha put in its bid for a hefty Rs 81,818 per sq m. The Lodha Group beat this record after it outbid three other developers for the Wadala plot by quoting double the reserve price.

Service tax would not be levied with retrospective effect

For the past one month, many city builders have been asking purchasers to start paying up the 2.5% service tax announced in the Union budget. Although the official notification from the ministry is expected any day now, market sources say that developers have informed buyers that the possession of their apartments would be held up in case they fail to cough up the amount.

The service tax will be charged on only those residential projects which are still under construction or where a completed building has not received its occupation certificate. Buyers say they were not informed of the additional levy when they had booked the flats.

Credai chairman Kumar Gera said, “It is the duty of the builder to collect this service tax from the purchaser and deposit it with the department. The developer is just a postman. It is ridiculous and makes a mockery of the government’s thrust on making housing affordable.’’ A year ago, Credai had worked out a rough calculation on a pan-India basis to find out the quantum of tax collected by by the local authorities, the state government and the Centre. “We found that on an average price of Rs 2,800 a square foot for a residential property, as much as Rs 850 goes towards various taxes, duties and levies,’’ said Gera.

A 1% VAT is also in the pipeline. Besides this, the builder has to pay development charges to the local municipal body. The service tax will be charged on only those residential projects which are still under construction or where a completed building has not received its occupation certificate. The service tax would not be levied with retrospective effect. “For those who have booked their flats some time back, this tax will only have to be paid on the remaining instalments and not on the entire value of the flat,’’ said Gera.

Source: Times of India

The largest commercial transaction of 2010 in the suburbs

A real estate analyst said demand for commercial properties was once again picking up with mainly Indian companies rather than multi nationals showing interest. A brand new office building in Kalina has been sold for Rs 407 crore, it is the largest commercial transaction of 2010 in the suburbs.

The buyer, Edelweiss Broking Ltd, is believed to have paid around Rs 20,000 a sq ft for the over 2 lakh sq-ft space in the 14-storey building, Lotus Midtown, located just outside the Bandra-Kurla Complex. The building has been constructed by Anand Pandit of the Lotus Group.

Last year, Mumbai-based developers Rustomjee sold 1.42 lakh sq ft of office space in Andheri (East) to public sector SBI Life insurance company for a whopping Rs 211 crore or close to Rs 15,000 per sq ft and Motilal Oswal had bought 1 lakh sq ft of commercial space from K Raheja Universal at Prabhadevi for Rs 160 crore. However, the biggest deal recorded so far was when the multinational bank, Standard Chartered, bought close to 2.5 lakh sq ft of office space in the BKC for Rs 750 crore in late 2008. StanChart bought the property from developer P D Developers at around Rs 30,000 per sq ft. In early 2008, British Council had bought commercial property from Naman Developers for around Rs 45,000 per sq ft in BKC.

A market source said  brand new office building in Kalina has been sold for Rs 407 crore and the deal was signed last week. Last February, a fourstorey commercial building at Worli was sold for Rs 640 crore, pitching it as one of the costliest of its kind in the country. The Wadia Group sold its property to Axis Bank, which plans to shift its headquarters there. The building, Wadia Tower A, located on the Bombay Dyeing Mill compound on Pandurang Budhakar Road, has a saleable area of more than 4 lakh sq ft. It worked out to Rs 16,000 a sq ft.

Source: Times of India

A criminal offence could be filed against builders who fail to hand over the possession of flats

Home minister R R Patil replying to a query raised by Prakash Mehta (BJP) on builders cheating buyers said “A criminal offence could be filed against builders who fail to hand over the possession of flats to buyers within the stipulated timeframe mentioned in the agreement”. Prakash Mehta had tabled a calling-attention motion to raise the issue pertaining to Vidyavihar where scores of buyers who invested in the Gammon-Nilkanth Project were cheated.

“In 2004, the company gave an advertisement for a housing project in Vidyavihar. Around 300 to 400 people paid 85% of the cost of the flats in the project. It is nearly six years and still the buyers have not got possession of their flats,’’ said Mehta, demanding stern action against the offenders. In his reply, Patil assured action against the builder. “I have asked the economic offences wing to conduct a probe in the case. Once the probe is over, appropriate action will be taken,’’ he added.

Opposition MLAs demanded that the home department should take the case seriously. Criminal offence should be registered against all those who are attached with the project and cheated the buyers, the Opposition unanimously demanded. “Even the court has rejected the anticipatory bail of the offenders. Why is the government defending such persons?’’ Mehta asked.

Source: The Times of India (TOI)