Barnala bucks the bust
Shariq Majeed reports on the realty scene in the district

Though Punjab has not remained unaffected by the slowdown in the real estate sector over the past few years, the area in and around Barnala has managed to withstand the bust to a great extent. The main reason for this has been the grant of district status to Barnala (this district was carved out as the 20th district of Punjab from the Sangrur district in 2006). Ever since then the prices of land for approved colonies here have registered a massive increase of two to three times. Prices in unapproved colonies have also registered a marginal increase during the same period. The growth of industry has been another factor that has lead to appreciation in the property prices.

Good response

Land prices in about eight PUDA (Punjab Urban Development Authority)-approved colonies have registered a massive surge of 100 per cent and in case of some of these colonies the rise is as high as 200 per cent since 2006. In more than half-a-dozen unapproved colonies, the prices have appreciated by about almost 34 per cent.

There is a great demand for land in the approved colonies because these have all the civic facilities and offer better living standards.

Deepak Bansal of Barnala Builders and Developers Private Limited, who has developed two approved colonies in the area, says, “It is good that people have started realising the difference between approved colonies and unapproved ones. In approved colonies every facility, right from sanitation, sewerage, water supply and even the security, is taken care of. All this is lacking in unapproved colonies, which don’t even have proper roads.”

In colonies like Aastha Enclave, Green Avenue and Mahesh Nagar the rates are Rs 10,000 per sq yard. In these colonies the rates of land for the same area were Rs 2,000-3,000 four years back. (see box).

Rental high

Growth of industry in the area, too, has given a boost to realty sector in the area. This growth had started with the Trident group beginning operations in Sanghera village in 1984 with a fertilizer-producing unit. The group is at present producing yarn, paper, towels and chemicals in its two units at Sanghera and Dhaula in Barnala.

As many as 13,000 persons are employed in these units and of these about 4,000 are from outside the Barnala district. So along with the increase in land prices the commercial and rental value of property here, too, has seen a massive growth in the past few years.

There has been an increase of 15-20 per cent in the rent of the commercial and private accommodation in and around this town mainly because of the Trident units.

In Sadar Bazaar the commercial rent is the highest at Rs 60,000 for 1,600 sq ft area. The rent for the same specification was around Rs 52,000 in 2006. In markets like the KC road area, Handyaya Bazaar and Dharwahi Bazaar the rent of 1,600 sq feet area is around Rs 45,000 that was between 35,000 to 38,000 four years ago. In Qilla Mohala the current rent is about Rs 30,000 for 1,600 sq ft area.

As far as the rent of private accommodation is concerned there has been an increase in almost all the localities. The prices of agricultural land, too, have registered more than 150 per cent increase and in some cases the increase is as high as 200 per cent. The rate of per acre of land, which used to be Rs 7-8 lakh in 2006 is Rs 15-16 lakh at present. 

REAL VIEW
For fair trade
Continuing with our series on effective regulation in the real estate sector, Sandeep Goel lists some more points, which will have far reaching positive effects

Approval for projects

While submitting the applications for approval of license the promoters submit the requisite documents and site plans to the authorities concerned. As per law the developers/promotors can get a licence without getting the mutation deed of the said land in their name. So usually the promotors submit Consent Letters from the actual landowners allowing the use of their land in lieu of “bayaana” documents. Sometimes, when the authorities concerned don’t bother to verify the authenticity of such documents and issue licenses, it leads to litigation between farmers/landowners and the developers leading to delays in the projects. Take for example the case of Sawan Enclave, Morinda. Recently, the authorities demolished the upcoming structures there because the promoters had a dispute with landowners because of non-payment of land cost and the landowners refused to transfer the land in the name of the promoters. This could had been averted had the Punjab Urban Development Authority (PUDA) not allowed the promoter to build a wall around 30-acre area after applying for a licence for just nine acres. Here both the government and the consumer were at the receiving end. While the government lost revenue in the form of licence fee, the consumers got struck in a muddy deal.

Ban on pre-launching

The government has come out with a law banning the pre-launching of projects. Though this is a welcome step but there are some loopholes, which need to be plugged to make it effective rather than being a farce. Many companies are openly carrying out pre-launches in hotels and are advertising these through property dealers. Another very convenient modus operandi adopted by them is that in connivance with certain property dealers an advertisement declaring the opening of booking for a said project is released in media and the very next day a second advertisement (bigger and more eye catching than the first one) is issued in the form of an apology by the said property dealer claiming that the first advertisement had been issued without the knowledge of the promoter/builder and as such the promoters has no role in it. Thus the promoter is able to release two to three advertisements without attracting any legal action, and the purpose of attracting the investors is also achieved. In such cases the issuance of licence should be delayed by a specified time to serve as a deterrent.

Displaying important information

The display of approved plans along with licence number from the authorities concerned clearly mentioning the approved area and building plans at the sites and offices of the builders and colonisers should be made mandatory. In absence of this, the builders try to include unapproved areas also in the sale deals. This is not only illegal but also creates problems for the consumers later. The government, too, stands to lose revenue because of this.

Completion schedule

The date of the completion of the project and tentative possession date should be made mandatory in the “agreement to sell”. This will save the buyers from getting exploited by the promoters and builders. The Punjab Government has come out recently with a proposal to increase the construction time after the approval from two years to five years. It is not clear whether this will be applicable to individuals or builders and developers. But if this is for builders/developers then it is not a healthy sign, as this will give undue leverage to them to hold on to the projects even after collecting money from investors.

Penalty for delayed possession

Authorities that issue licences and approve plans should activate their enforcement wings to keep a regular check on promoters and builders to see that the constructions and land development are carried out as per the bylaws under which the site plans had been approved. It is unfortunate that the authorities concerned are apathetic in this regard. They hardly bother to visit sites that they are in the process of approving what to talk of checks after the approval of projects. The government should act tough with promoters who indulge in such malpractices. Permission to such projects should be held back for at least one year along with heavy penalty in order to curb such practices.

GROUND REALTY
The X factor
Jagvir Goyal

The housing sector in India is witnessing a dazzling product parade these days. New materials are being invented by enterprising entrepreneurs. While the basic and universal desire for air, light and space (openness) always prevails, to have a unique and different façade for one’s house is the additional aspiration. People look for a “creative” rather than a simple architect. Architects, too, have shed all inhibitions and are suggesting bold and beautiful designs. “Nothing lasts forever” is an acceptable fact now. People are happy and satisfied if a product lasts for more than a decade or so. They look for a change after a few years. As a result, many materials to create eye catching and spectacular interiors and exteriors have arrived in the market. Here are a few for the exterior of your house:

Flake finish

Flake finish for exterior surfaces is emerging as one of the most attractive and durable finishes. Quite cost effective in comparison to other finishes, this finish lasts for more than 10 years without fading or getting dirty. Available in multiple colours and textures, it is becoming an ideal choice for projection walls and fascias of the front and back elevation. A combination of flake finish and exterior emulsion like Apex with one material of light colour and other of dark looks extremely attractive. Though the flakes applied are a mixture of light and dark colours of same family, one should prefer to choose a combination that has light coloured flakes as prominent as dark colours begin to look boring with the passage of time.

Technicalities: Flakes are supplied by the manufacturers in bags of 9.5 kg. These are in dry form. A bonding agent is supplied along with the flakes in five litre cans. About one litre of bonding agent and four litres of water are to be mixed with one bag of 9.5 kg of flakes to make a paste ready to apply on the surfaces. The flakes are made out of china clay and colored with inorganic pigments. The bonding agent is of milky white color and looks like Fevicol. Companies prefer to keep its composition a secret as it is the main item that binds the flakes together and to the surfaces. It is an acrylic polymer that contains biocides, fungicides and stabilizing additives. The flakes are available in almost all colours. The bonding agent on drying up leaves no colour behind. One bag of flakes is sufficient to cover around 130 sq. ft. of surface area.

Cost factor: Flake finish costs around Rs 50 per square ft, including its application. The application should be best left to the company people as they are experts in its application and provide 10-year guarantee for the work done by them. Preliminary requirement for the application of flakes is that the surface should be well plastered and finished smooth. The flake finish applicators take the job in hand only when a perfectly finished surface is handed over to them. Once the flakes are applied, these can be changed only after complete removal. Moreover, the thickness of flake finish is hardly 0.8 mm to 1.2 mm. That’s why the surface should be got well plastered and smoothened before allowing the flake finish gang to take up the work. Only a single coat of flake finish is sufficient. The flake finishes are either fine flake finish or large flake finish, the latter looking better. However, individual choice varies.

Topcoat application

Whenever the flake finish or granule finish is provided on the exterior surfaces, it should always be finished with a top coat of sealing agent. Application of sealing agent protects the flakes and granules against weather. Sealing agent is colourless and its top coat can be applied like paint with brush. Often, the rates of flake finish or granule finish as given by the companies include application of top coat. Therefore, take care that the top coat is applied by the applicator after the provision of flakes or granules. It will fill up the micro holes or pores of the walls and save them from any seepage of water inside. Top coat doesn’t change the appearance of the wall. Rather, it helps in lending a glossy or matt finish look to the walls depending upon one’s choice.

Reputed brands

Many companies are supplying the flakes, granules, grit, silica and granite finishes of above type but most of these wear out very soon due to non usage of good quality bonding agents and top coat sealants. Therefore, only a reputed brand name should be chosen. Heritage finishes provided by Bakelite Hylam limited and Spectrum finishes by Spectrum Paints are time tested and should be preferred. Further, these materials should be purchased and got applied from authorized dealers only. Spectrum also has the provision of double coat application while Heritage provides single coat finishes only.

Artificial laminate cladding

High pressure laminates are increasingly being chosen for the exteriors and balconies of all expensive residential buildings in the metros these days. These are produced in lamination presses under very high pressure and temperature, are not affected by the weather, don’t fade with time and well resist any impact or scratches. These have a flame resistant core covered on both sides with doubly hardened acrylic poly-urethane resin layers which harden irreversibly. These acrylic layers are highly attractive and decorative and are available in many colours and designs. The panel size varies from 2 x 1 m to 4 x 2 m, exact sizing being 2140 x 1060 mm to 4150 x 1850 mm. Thickness of these panels is between 5 to 15 mm.

Aluminium layer panels

High pressure laminates with aluminium layers inserted in them are extremely durable and reckoned as break-proof by the manufacturers. In these panels, 0.42 mm thick aluminium sheets are inserted in between the core and the acrylic laminates on both faces of the laminate. These aluminium layers provide extra stiffness to the panels. The maximum size of these panels is, however, restricted to 4100 x 1300 mm. Obviously, these panels are costlier than simple panels without aluminium layers.

Finish range and cost

The laminate panels are produced in uniform colours, wood grain finish and metallic finishes. Wood grain finish panels are being preferred most these days. This type of finish has been brought to India by Fundermax, an Austrian firm, which has been lapped by most of the high bracket architects in the metros, the cost of the product not withstanding. Metallic frames are first fixed on the walls and the laminate panels are then fixed over them by hiding the frame behind the finish. Presently, the laminate panels are costing around Rs 600 per sq. ft, which is about 15 times the cost of flake or granule finishes.

Gwalior White stone cladding

If instead of paint, granules or flakes, you prefer to clad the walls of your house with stone, Gwalior White is emerging as the latest stone for cladding. Earlier, various sandstones like Kota, Dholpur, Cuddapah, Paharpur or Agra Red were used. In addition, marble and quartzite such as Delhi blue stone are also being used. Now, Gwalior White is being used due to its very smooth natural surface. It is also called Gwalior Mint. Used in thicknesses of 15 to 22 mm, it can take good polish on exterior face and can be provided in shape of tiles or slabs. Normally, the tile size is 1 x 1 ft to 2 x 3 ft and slab size is 2 x 6 ft. The edges of the tiles or slabs should preferably be machine sawn instead of hand-chiseling. The stone lot chosen should show no signs of de-lamination when subjected to sulphuric acid immersion test. Gwalior white stone cladding costs around Rs 70 per sq. ft. Some architects are using Gwalior white tiles after making them rough by sand blasting or hammering instead of keeping them smooth faced.

The writer is deputy chief engineer, civil,\PSEB. He can be reached at www.jagvirgoyal.com 

Granule finish Another extremely decorative and durable finish available is the granule finish. In this case, the procedure of application and materials are similar to flake finish except the use of granules instead of flakes. The granules are special silica sands coloured by inorganic pigments. This finish has a uniform colour texture and about 50 shades of granules are available in the market. Granule finish is cheaper than flake finish as the raw material i.e. granules are cheaper than flakes. This finish costs around Rs 35 per sq ft of area. The surface to be finished needs to be smoothened to a perfect finish in this case also before application of granules.

TAX TIPS
File a petition
S.C. Vasudeva

Q. I am a Central Government employee and my wife is also a government employee. She got a quarter allotted in her name. Since 2006 I was getting HRA for which I paid tax. The office deducted full HRA paid during the year 2009 through 10 installments worth Rs 80,000.  My query is:

Whether I can claim income tax relief, as I had paid the tax. The office remitted the tax to government. Under which Section can the refund of tax be claimed? From where can I get the refund? How to file the revised tax or getting the tax already paid. Our office tells that this can be claimed from the IT Department. Whether I can claim from our office during this year by segregating the tax.

— Rajagopalan

A. The facts in the query are not complete. It seems the refund of tax is sought to be claimed for the financial year 2006-07 for which you had paid the tax. You could have claimed the refund by filing a revised return for the assessment year 2007-08 (financial year2006-07) by March 31, 2009. In view thereof it may not be possible to claim the refund by this process. You may, however, try your luck by filing a petition under Section 264 of the Act along with an application for condonation of delay. 

Rebate on loan against PF

Q. I had taken a loan for the construction of a house from my employer in 1998. I am paying the installments of which. Now, I have taken loan against my provident fund for the repair and renovation of house. The purpose is clearly mentioned in the application form. Whether I am eligible for the rebate on the portion of interest being paid on loan taken against provident fund.

— Vivek

A. The facts given in the query do not indicate whether the borrowing is against your contribution or includes the employer’s contribution also. In case the borrowing is against your contribution, the deduction for interest would not be allowable. However, in case the interest is being paid on an amount, which is inclusive of employer’s contribution, part interest paid by you in respect of the employer’s contribution would be eligible for deduction under Section 24 of the Income-Tax Act, 1961 (the Act) against the income from house property. This position is in accordance with the decision of the Income-Tax Appellate Tribunal in case of O.P. Sharma vs. ITO (17 ITD 45).

Tax liability

Q. I would like to get a clarification for the tax liability arising out of sale of our paternal property. The case is:

Our father purchased approx. 1200 sq. yd. of land in Jaipur in 1962 (for approx Rs. 3500) and built a house by 1963 (Costing approx. Rs 62,000). He willed to us — five brothers — equal share in 1983. He passed away in 1986. In 2006 we got the land converted from residential to commercial, and in 2007 we entered into an agreement with a developer to build a commercial complex in which we had 55:45 share (five brothers: developer) as he financed the demolition and construction. The building was ready in May 2009 and the five of us started selling our 55 per cent share in stages. Kindly let us know as to what kind of tax will be applicable on the capital gains. Also, whether we can save part of the tax liability by investing in Rural Electrification Corporation’s six-year bonds?

— M.B.L. Bhargava

A. It is presumed that the land was mutated in the name of five brothers more than three years after the death of your father. The reply to your query is, therefore, based on that presumption. The land inherited by you and your brothers would be treated as a long-term capital asset and the gain arising on the sale of commercial complex would be assessable as a long-term capital gain in the hands of each one of the five brothers.

You can save part of the capital gains tax by purchasing the bonds of Rural Electrification Corporation Limited. It may be added that investment is allowed to be made in such bonds by an assessee during any financial year for an amount not exceeding Rs 50 lakh.