Archive for October, 2009

What one-time settlement scheme holds for buyers

October 29th, 2009

Under-valuation of land has been rampant in State. Those who have done this can make use of the one-time settlement scheme. 
The exchequer has been losing vast sums for many years as amounts much lower than the money that changes hands are shown on record during property deals. Land buyers do this to make gains from a corresponding low outgo in stamp duty.

Registration Department officials say that apart from denying the State its rightful share of revenue, the illegal practice has been helping the sellers, who include even the land mafia, get away with low income taxes.

A one-time settlement scheme has been on since June in the State for those who have undervalued their property. Considering the response, the department has decided to extend the scheme till March 1, 2010 from the September 30 deadline.

The land buyer who opts for the scheme is exempted from legal proceedings in future. The exemption is applicable to land registrations till March 31, 2009. One has to pay a penalty of Rs.2,000 for up to five cents (1 cent = 40.5 sq m) of land in the Corporation limits, Rs.1,000 in municipalities and nothing in grama panchayat areas. For five-10 cents of land in the Corporation limits, the amount fixed is Rs.5,000; in municipalities, Rs.3,000 and in grama panchayat areas, Rs.1,000.

The fine for 10 cents to 50 cents in the Corporation limits is Rs.10,000, in municipalities, Rs.5,000 and grama panchayats, Rs.2,000. The defaulters have to pay a fine of Rs.12,000 or 6 per cent of the earlier stamp duty, whichever is higher, for lands above 50 cents in the Corporation limits; 4 per cent or Rs.7,000 in municipal limits and 2 per cent or Rs.3,000 in grama panchayat areas. The department has mobilised nearly Rs.18 crore from the scheme in the State. Kozhikode district’s share is Rs.1.8 crore, officials say. Sajan Kumar, Deputy Inspector-General of Registrations, says under-valuation of land rates has been prevalent throughout the State. The stamp duty in Corporation areas is 13.5 per cent; municipalities, 12.5 per cent; and in the grama panchayat limits, 10 per cent. Apart from this, a 2 per cent charge is levied for registration, says K.P. Suresh Kumar, District Registrar, Kozhikode.

Approximately 1.86-lakh under-valuation cases have been detected in the 33 sub-registrars’ offices in the district since 1986. The State has nearly 20 lakh cases.

The department has served notices on 25,000 people till now under Section 45(B) of the Kerala Stamp Act. There was a shortage of stamp paper for a month; so, the department is yet to despatch notices to the remaining defaulters. People can voluntarily submit the penalty even if they have not received any notice so as to avoid any liability in future, Mr. Sajan Kumar says.

He says that the sub-registrars determine the value of land in an area based on the guidelines fixed by the State government. They can report cases of undervaluation also on the basis of the market rates or a transaction registered at the actual value in a particular area. Normally, land transactions are done far below the actual market rates.

The sub-registrars’ offices will look at the highest transaction that took place in an area when dealers undervalue land. At present, the government tries to extract at least 30 per cent of the actual stamp duty, although in most cases it gets only 15 per cent. Builders of flats generally remit 50 per cent.

News Published Under:  The Hindu

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Waiving pre-closure penalty will ease burden on borrowers

October 29th, 2009

At a time when Indian households have been forced to cough up more for their monthly living needs, the Reserve Bank of India (RBI) seems to have come to their aid. Last week, the Central Bank, for the first time, has indicated that it is not comfortable with the penalty being charged by banks for pre-closure of loans.

According to media reports, the RBI is planning to ask banks to discontinue the practice of foreclosure penalty, which was a bane for the borrowing community.

At present, borrowers sitting on large chunk of loans need to think twice before shifting loans as in most cases the penalty amount runs into thousands of rupees.

Though penalty charges are applicable for all types of loans, it is particularly harsh for those sitting on home loans because of the large loan ticket size.

Hopefully, it will be a thing of the past soon.

As a borrower, you are bound to feel like celebrating but you will have to wait a little longer.

For, the RBI’s move is likely to be applicable only for fresh loans though the regulator is not averse to the idea of extending it to old borrowers at a later date.

In fact, the RBI wants to make life good both for new and old borrowers by removing various disparities between the two.

For instance, there is a move (still in early stage) to remove the concept of benchmark rate and replace it with a single rate which would be

The above changes, in reality, would put a greater emphasis on the concept of borrowing and borrowers would be required to keep track of loan pricing.

At present, for many borrowers, the downward trend in interest rate did not mean much as they were forced to continue with existing loans because of pre-closure penalty. In the case of home loans, the penalty amount was good (huge) enough to maintain their loyalty.

For instance, a loan amount of Rs.30 lakh required the borrower to cough up a penalty of Rs.60,000 for foreclosure (at a rate of 2 per cent) and worse, this was not funded by the fresh lender.

As you are aware, loans when shifted from one bank to another, take care of only the principal amount and do not include other charges.

Hopefully, the new regime will bring in the desired changes.

As pointed out earlier, the changes on the home loan front require borrowers to be agile to the changing dynamics and it will be prudent for borrowers to prepare for an early closure in their own good.

Gone are the days when borrowers could feel comfortable with the fact that their EMI is not a burden. With interest rates fluctuating on a regular basis, it will be advisable to look at the option of closure of loans well before the due date.
News Published Under:  The Hindu

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Posted in India Real Estate, Kerala Real Estate, Real Estate

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Unscrupulous middlemen back on the prowl

October 23rd, 2009

The revival of the realty sector has once again brought cheers to investors. However, the recovery has also made unauthorised land brokers make a smooth comeback into this thriving business.

Land brokers are back to cash in on the new sentiments prevailing in the market. So, buying and selling plots should be done in a very cautious manner. Beware of being duped by unscrupulous brokers and mediators.

The boom witnessed in property two years ago went through a rigorous corrective phase and has now reached a fair level. The land mafia and the real estate brokers have jacked up prices in most parts of Kozhikode city as elsewhere in the State.

Hundreds of people who had earlier invested during the boom period in 2007-end and early-2008 on the advice of brokers had lost a substantial portion of their money. Many of them had invested in land after selling gold and shares in their possession.

On the other hand, many who have invested in flats and villas of reputable builders, instead of buying plots, have not faced such pitfalls. Several things have to be factored in before buying a plot. As far as possible, avoid utilising the services of brokers in striking a deal. Numerous instances have been quoted of clients being deceived. Seek professional help from firms such as the Bangalore-based Real Estate Bank India (REBI) that has a branch in the city.

Besides, the buyer and the seller have to pay commission to the land broker. The commission rate for selling a piece of land is 2.5 per cent and buying, 1.25 per cent. But more will be demanded.

Builders say that nearly 75 per cent of land transactions usually take place through brokers. So, the pertinent question is how to avoid their machinations? One of the options is to advertise in the media so as to get a one-on-one interaction between the seller and buyer. There are Internet sites offering help as well.

Do not get intimidated by fraudulent brokers who hold out as a threat the clauses of any agreement they have with the buyer or the seller. One can take up the matter with the police.

Always check the original title deed to get a clear idea of the plot. Verify the back documents of the property at least for 13 years. Get an encumbrance certificate from the registrar’s office. The land tax receipt issued from the village office should be checked. Another is the possession certificate.

Make sure that the seller has been remitting the property tax at the Corporation office if the plot has a building. Check the occupancy certificate. Get a certificate from an attorney based on the title deeds and tax receipts.

The buyer should also verify whether the seller is governed by the Hindu Succession Law or the Muslim Succession Law. Another aspect to be checked is whether minors have claim to the property. In the case of the seller, he/she has to get a no-objection certificate from the tahsildar and get permission from the court to sell the property. A minor after attaining 18 years of age can claim the property he/she has inherited within three years.

Deceitful brokers can land buyers in trouble by providing forged title deeds. They usually make fake title deeds for non-existent land in connivance with officials at the sub-registrar’s offices. A builder nearly lost Rs.1 crore after buying 30 cents of unclaimed land in Kozhikode city. The only way not to fall prey to such crooked methods adopted by land brokers is apply for a no-attachment certificate at the office of the tahsildhar. The prospective buyer can get this certificate within 20 days.

If one is planning to buy a constructed house, then go in for more details. The buyer should check the original plan of the house submitted by the owner to the Corporation. Check if the seller has deviated from the original plan and if he had secured a completion certificate and possession certificate.

The government has planned to bring in legislation to curtail unethical land deals in the State. The new law will give an idea to the buyer of the value of land at a particular place. Proposals for fair value have been made in 117 villages in Kozhikode district. There are 55 villages in Kozhikode taluk. The three villages in the limits of Kozhikode city are Nagaram, Kacheri and Kasaba.

Recently, the Registration Department has come up with a notification for a one-time settlement to get exemption from legal proceedings if anyone has deliberately undervalued land during registration. The facility will be available till March 2010.

News Published Under:  The Hindu

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Posted in India Real Estate, Kerala Real Estate

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Towards houses for all

October 23rd, 2009

Recognition of housing as a basic right of every family is the theme of a memorandum being submitted by the Kerala State Housing Board Employees’ Association to the Union government through the Indian National Trade Union Congress (INTUC).

Why cannot the government come forward to amend the Constitution to protect the right of the citizens to have a decent shelter was the fundamental question raised in the paper, submitted at the 29th plenary session of the INTUC in the city early this week.

With the government having introduced steps such as the National Rural Employment Guarantee Programme, the National Health Insurance Scheme and compulsory primary education for all children, it is expected that the issue of housing will be addressed with the seriousness it deserves, said the paper, submitted at the session by Vithura Sasi, working president of the association.

The government cannot shy away from its responsibility to provide affordable housing for all, especially the weaker sections of society, said E. Sankaran Potty, general secretary of the association, explaining the contents of the proposed memorandum. According to figures provided by the association, there will be a shortage of 24.71 million housing units in the country in the near future.

The paper quoted a study by the Associated Chambers of Commerce and Industry of India, which said that despite the current slump, demand for housing would become “stronger and more intense” with rising income, a swelling middle class and rapid urbanisation. At present, the housing shortage is 19.4 million units in the country, of which 6.7 per cent is in rural areas.

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Builders see a change in buyer sentiment

October 13th, 2009

There have been some genuine enquiries right from the second quarter of 2009, says Najeeb Zackeria, president of the Kochi branch of the Confederation of Real Estate Developers’ Association of India. The interesting part is that there are enquiries in all segments of property, be it budget, semi-luxury or luxury, Dr. Zackeria says.

There are enquiries for villas, but unfortunately, there are no stocks available at present. The builders over the last year had concentrated more on delivering the ongoing projects. It was not a good time to announce new ones.

The customers’ approach is to go in only for finished products or projects nearing completion. This approach has slightly changed, he says. However, the change in this graph has favoured only builders who have sustained through the recessionary period and have delivered their products in time. Unless progress is seen in a project, customer confidence will be lacking.

The customer confidence is just coming back, says M. Unnikrishnan of the Thripunithura-based Royal Projects. There is a release from fear. The market is very much alive, but the budgeting is small. The customer is having a studied approach, Mr. Unnikrishnan adds.

Earlier, an investor will put in an extra effort to go for a higher budget, but now the customer is looking at the builder to help them make a good buy within their fixed budget. In fact, quite a few genuine enquiries are not materialising into buys only on the aspect of cost.

Customers have had to face bad times because quite a few projects in areas such as Kakkanad have come to a standstill. These probably had come up without any USP and hence were hit by the market trend, Dr. Zackeria says. The delay in the SmartCity project may also have been playing on the customer mind. Another factor affecting Kakkanad was perhaps the mushrooming of a number of small-time builders during the boom period, some of whom were not able to sustain through the difficult times. The builders are taking the new momentum in the market with caution. “We do not expect any rapid improvement,” Dr. Zackeria says. It will take about another six to eight months for a turnaround, he adds. It will happen as a spontaneous effect of the overall economic improvement, and depending upon the absorption of the present supply of stock and end-user demand, the new supply will start trickling in.

In fact, quite a few builders are waiting for some more time to pass before they announce their new projects. The full concentration is on completing projects in time.
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Posted in Cochin Real Estate, Kerala Real Estate, Real Estate

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