Better safe than sorry
Getting lured by 'pre-launch' offers can be a costly mistake for property buyers, reports Pradeep Sharma 

Investors and end users intending to buy residential and commercial property in Haryana in 'pre-launch' offers beware! You may end up losing your life's savings to unscrupulous developers as such projects, besides being illegal, may never see the light of the day.

With Haryana, particularly the National Capital Region (NCR), bursting at seams with the launch of new projects every other day, the Department of Town and Country Planning, Haryana has come up with an advisory to the investors and end users cautioning them to buy property in legal colonies only that have been duly licenced by the department.

"The sale/pre-launch of plots without a licence from the department is illegal and there is no guarantee of any such project ever taking-off," says T.C. Gupta, Director General of the department.

Cashing in on people's desire to make a quick buck through property transactions, certain unscrupulous developers, including major realtors, come out with huge advertisement in the print, electronic and on websites exhorting the general public to invest in a project even before the grant of licence to set up a colony. This results in misleading and defrauding the general public. While action against such unscrupulous elements is taken by the state government, the buyers should be extra vigilant and should make a thorough check before making any investment in projects for which due clearances and licences have not been granted by the department after getting "motivated" by such advertisements, a senior official said.

In Haryana, plots/flats for residential, commercial, institutional and industrial use within the controlled areas and urbanisable limit as declared under the Punjab Scheduled Roads and Controlled Areas Restriction of Unregulated Development Act, 1963 and Haryana Development and Regulations of Urban Areas Rules, 1976, respectively, can be sold only after obtaining a licence from the Department of Town and Country Planning, Haryana.

In its advisory the department has said that certain unscrupulous persons and companies may indulge in illegal activities of "pre-launch" of plots without obtaining a licence for development of such colonies. Therefore, general public is advised to contact and verify whether licence has been granted by the Director General, Town and Country Planning Department, Haryana, before booking of plots/dwelling units/commercial property to avoid any legal problems and financial implications.

Unfair trade practice

Pankaj Chandgothia, president of the Consumer Courts Bar Association, said the 'pre-launch' offers are unfair trade practices under the Consumer Protection Act as developers showcase what they do not possess till the grant of the licence by the state government. For the buyers caught in such a transaction consumer court is a forum to get redressal. Besides, compensation the consumer courts can impose punitive costs on the real estate firms offering property through 'pre-launches', he added. But it is always to be safe rather than sorry in such a case so one should always check the status of a project and a developer before parking one's hard earned money in a property deal.

Check developers' credentials

The Department of Town and Country Planning has so far granted licence to over 1,130 developers to develop colonies in the state. A substantial number of these legal colonies are in cities such as Gurgaon and Faridabad falling in the NCR. The details about the developers and colonies can be checked from the department's website tcpharyana.gov.in

Delivering a stern warning to developers offering properties through 'pre-launch' offers, senior officials said that legal action would be initiated against them.

The department had earlier issued notices to caution both the general public as well as the persons/companies/property dealers engaged in development/booking/sale of plots/flats in the private licenced colonies of Haryana stopping them from sale/purchase/bookings in such projects for which licence has not been issued by the state government.

However, defending the 'pre-launches', a Gurgaon-based developer said, "Such bookings are done for the premium and loyal customers. Since property market cannot survive without speculation". 'Pre-launches' form a part of the strategy giving a fillip to the real estate market. It is a tool to attract a segment of preferred customers and investors", he added. 

Caution

Section 7 of the Haryana Development and Regulations of Urban Areas Act, prohibits such transactions.

Section 7: Prohibition to advertise and transfer plots. No person, including a property dealer, shall:

l Without obtaining a licence under Section 3, transfer or agree to transfer in any manner plots in a colony or make an advertisement or receive any amount in respect thereof

l Erect or re-erect any building in any colony in respect of which a licence under Section 3, has not been granted.

l Erect or re-erect any building other than for purpose of agriculture on the land sub-divided for agriculture as defined in clause (aa) of Section 2 of this Act.

Stoop to conquer
Reduce interest rates to boost housing demand, say realtors

Real estate developers have maintained that the RBI's recent decision to cut cash reserve ratio (CRR) will help improve the liquidity position of various sectors, including realty, but felt that interest rates should be brought down to boost housing demand.

"The CRR cut will bring in liquidity. It will help the real estate market which is cash starved. However, it is important to see the interest rate shall have to come down to facilitate the home seekers to buy homes," Confederation of Real Estate Developers' Association of India (CREDAI) President Lalit Kumar Jain said in a statement.

In its third quarterly review of the monetary policy, RBI injected Rs 32,000 crore into the system by lowering the CRR by 50 basis point earlier this week but kept the short-term lending rate unchanged in view of persisting inflationary concerns.

Echoing the view, Unitech Managing Director Ajay Chandra said, "A reduction in the CRR is a positive move from the RBI as it will increase the credit-supply to different sectors of the economy." Chandra noted that an increase in the credit supply would also benefit the realty sector.

CREDAI Chairman Pradeep Jain said the apex bank has given a signal that interest rates would come down.

"For real estate sector in particular, this will serve as a signal that interest rates will now ease. Buyers may opt for floating rate loans at this juncture since the signal is clear. Also the rising input cost will not leave any space for reduction of price," Jain, who is also Chairman of Parsvnath Developers, said.

Credai Chairman said the RBI had attempted to do a delicate balancing act between the need for growth and urgency of containing price line.

"In the end it (RBI) has acted with caution by keeping all rates unchanged and just by reducing CRR by 50 basis points. The tokenism has seen release of Rs 32,000 crore for the banking sector to lend. After the negative impact created by 13 continuous rate hikes, this will prove insufficient to boost growth," he added.

CHD Developers Managing Director Gaurav Mittal welcomed the policy saying that it would help in improving sentiments.

"...This is just an indication that the sequence of rate rise is now behind us...the signal will serve as a boost for the real estate sector with sentiments of buyers turning favorable. This move is set to help stimulate growth," Mittal said. — PTI

Green house
Maj Gen C.S. Bewli

Aquatic plants have a unique appeal and can enhance the beauty of a garden be it big or small. These are basically of three types with submerged, floating or emergent leaves. For all lovers of aquatic plants this week we talk about the plants with floating leaves. It's much easier to create and take care of water garden than the potted plants. Such gardens can also be placed in living room, dining room or kitchen to bring nature indoors. Some easily available floating water plants are water lettuce, Salvinia natans, Hyacinth Azolla or floating fern.

They have special types of leaves which help them remain afloat. Stomata of these plants are situated on the upper surface of the leaves to ease photosynthesis and manufacture food. There's no need to change the water in a water garden, although you should top it every few days to replace the water that may have evaporated.

Water lettuce

Water lettuce, scientifically known as Pistia stratiotes is a common water plant and is found worldwide. It is a free-floating perennial plant with leaves forming light green rosettes. The velvety longitudinally grooved leaves are squarish, thick and spongy. It is a fast growing plant and spreads within a year from one plant to cover completely a round tray of 15 inches diameter with 4 inches height by the formation of underwater stolons. The roots of the plant are small and hang in the water underneath the plant. The plant is grown for its beautiful foliage, though it also has flowers that are very small and inconspicuous. Birds also find the plant very interesting and love to have a dip in it.

Summer is the growing season for water lettuce and it can be placed anywhere. However, it is has been noticed that under full sun conditions the leaves tend to bleach. It needs protection from cold during winter.

Floating ferns

Floating fern or Salvinia natans is a common plant and is grown for its ornamental leaves. It has a unique formation of three sets of leaves where two leaves lie flat against the surface of water and the third leaf remains submerged in water and functions as a root. Thus it is a rootless aquatic perennial fern and an extremely beautiful component for a water garden. The leaves are water resistant as they have small hairs on them. It is a fast growing easy to grow plant which can be grown from full sun to partial shade conditions.

The writer is President of The National Cactus and Succulent Society of India 

Tips to keep aquatic plants healthy

l These grow very quickly and tend to overcrowd the pot. So periodic thinning should be carried out on need basis to keep the garden maintained

l Make sure that the first plants in the water garden are healthy plants.

l Roots and lower parts of the plant should remain submerged.

l The leaves should be sprayed with water daily in order to remove any dust.

l There is no need to change the water of the tray. To avoid water stress due to water evaporation, tray water should be replenished as and when it reaches below 1cm from the rim of the pot.

l Decaying leaves should be removed

l Add a teaspoonful of micronutrient powder mixed with some water to the tray once in a growing season.

Creating a water garden

Select a suitable tray and ensure that there is no hole in it. Tray can be made of ceramic, terracotta or clay. A 15x4 inch tray is very handy and can be easily shifted to the desired location. A tub or any other big container can also be used for a bigger water garden.

l Fill the tray with water.

l Put the selected water plants in it.

l Water level should be about a centimetre below the rim of the tray.

l Place the tray at a suitable location where it receives some sun light.

Launch  pad
GurgaonOne Phase III

Alpha G:Corp Development Private Limited (Alpha G:Corp) the NCR-based, FDI-funded real estate developer recently launched the third phase of its group-housing condominium project, GurgaonOne Sector 84 (GurgaonOne 84). The company opened sales for two, three and four bedroom apartments ranging from 1181 to 3194 sq ft and priced at Rs 4,450 per sq ft.

To be built at a cost of Rs 290 crore, GurgaonOne 84 is spread over 12.5 acres in New Gurgaon. The area is adjacent to the Dwarka Expressway, and is billed as the widest expressway in the country. Launched at a basic sale price of Rs. 3230 per sq ft in February 2011, the project has shown appreciation of 38 per cent in less than a year.

Speaking on the occasion S. K Sayal, CEO and Director, Alpha G:Corp, said , "The key concerns amongst stakeholders in the realty sector today are lack of transparency and timely delivery. To address these concerns Alpha G:Corp has pioneered a secure model of operation, Real Estate Asset Management (REAM). Under this model payments received from customers are mandatorily transferred to escrow accounts dedicated to the development of the project. REAM is one of the major reasons which has helped Alpha G:Corp tide over tough market conditions and register positive sales".  — As per information provided by the developer

REALTY BITES
Construction on at DLF and Hines project in Gurgaon 

India's largest realty firm DLF recently started construction of its commercial project at Gurgaon in joint venture with leading global real estate developer Hines.

In 2007, DLF and US-based realty firm Hines had announced signing of an MoU to develop a 15-acre business centre located on Golf Course Road, Gurgaon.

In the project 'One Horizon Center', DLF and Hines would develop a 25-storey commercial building having 8,00,000 sq ft of office space and 65,000 sq ft of retail space.

The completion of the project is scheduled for 2013.

The construction of One Horizon Center, the first joint venture project by the two companies in India, has reached ground level and is rapidly moving upwards, said a company spokesperson.

The office tower has been designed by award-winning American architect Robert A.M Stern. "One Horizon Center will be Robert A.M. Stern Architects' first development in India".

" It is the only high-end commercial complex in DLF City's Phase-V and I am sure One Horizon Center will soon be recognised as the iconic structure in the NCR region," DLF Vice Chairman Rajiv Singh said.

Hines President and CEO Jeffrey C Hines said, "Along with DLF, we are proud to celebrate the start of construction of One Horizon Center. India is an important market for us with huge potential, as we see growing demand among discerning clients".

Stating that the company has invested significant time to study and understand the needs of the market, Hines said, "We are committed to extending our international best practices to this development".

Hines is a privately owned real estate firm involved in real estate investment, development and property management worldwide. It has offices at 108 cities in 17 countries with controlled assets valued at about $ 23.4 billion. — PTI

Meinhardt to invest 100 cr in 2012

Global engineering, infrastructure and project management consultancy firm, Meinhardt plans to invest over Rs 100 crore this year to increase its footprint in India.

Meinhardt will be increasing its presence in Kolkata, Mumbai and in a Southern city within a year. It has initiated talks to acquire a couple of consultancy firms engaged in water supply and sewerage space.

Talking about the firm's plans for India Rajesh Srivastava, MD-Meinhardt India, said, "The growth curve of Indian economy is at an all-time high and contributing to the upswing is the Infrastructure sector in particular. Growth in this sector is driven primarily by globalisation of Indian corporate, growing presence of foreign businesses in India and rapidly increasing consumer class. With major national and global players making large-scale investments, we have to play a major role to boost the development of infrastructure and thus construct a developed nation. We have over 400 engineers and architects in our offices in Delhi and Chennai. We plan to double the headcount and start operating from three other cities. A couple of acquisitions are also on the cards. All these will require over Rs 100 crore. We are currently talking to a company in South and also one in Delhi in the water supply and sewerage space. The deals are likely to be signed this year. The cost of acquisitions might be more than Rs 50 crore."

The firm is providing engineering consulting services for some very key projects in Kolkata which includes tallest building in Kolkata, "Urbana-2" which is 201 mt high ultra-luxurious residential project. They are also providing detailed engineering services to South City Residential Township, Kolkata, India's largest township development, covering an area of 372,000 m² and featuring four towers, each 34 storey high. Providing structural, mechanical and engineering services to the splendid residential project in Kolkata, "Rosedale". — TNS

REALTY GUIDE
B K Sanghi

You can avail loan as co-borrower

Q. I have a house in Himachal built by my father, whom we have lost long back. As per my father's Will the house is in my mother's name. Now we want to carry out some renovation work in the house and also construct a new portion. My query is that can I get house loan for the renovation of the house, and what is the process? If I can't get a loan then can I get a loan in my mother's name and give an undertaking that I will be paying the loan installments?

— Chanderbhushan Singh

A. You can easily get a housing loan for renovation of the house from any nationalised or any scheduled bank (such as ICICI Home Finance, HDFC Bank, Axis Bank) jointly with your mother by becoming co-borrower/co-applicant in the loan.

Joint home loans can be obtained by an applicant along with his/her spouse, parents or own siblings. "A borrower can't take a joint home loan with just any person. It is given to married couples or blood relatives such as parents and children".

A co-borrower is different that a co-signer in that a co-signer takes responsibility for the debt should the borrower default, but does not have ownership rights in the property. Co-borrowers are frequently spouses or partners, who use their combined income to qualify for a mortgage than what could be obtained alone, and are willing to share the risk of default on the mortgage and the general risks of homeownership.

Legal status

Q. Can a person who has been allotted a flat by the Chandigarh Housing Board in 1989 and subsequently sold on the basis of GPA, agreement to sell etc., further purchase a flat/house of CHB on the basis of sale deed/get gift/by way of transfer which is freehold and in which case a conveyance deed has been executed by the CHB. If so, as per the CHB records there would be two flats in one name - one sold on GPA but not transferred by the purchaser and the other by way of sale deed/gift/transfer. Is this transaction lawful?

— K. Singh

A. The transaction is lawful because both the transactions are separate and they do not have relevance with each other. The first property/ dwelling unit sold by you constitutes conclusion of sale of a property through an 'agreement to sell' coupled with the actual possession of the property and receiving of entire consideration amount. Secondly, you are acquiring the second property from a third party by way of sale deed/ gift/ by way of transfer which is freehold (a property where title paramount has conveyed the property in favour of the purchaser by conveyance/ sale deed with no restriction on the right of the holder of the property to further transfer the property) conveyance deed of flat has been executed by the CHB in your favour. You are not acquiring the second property by the way of allotment from the board. The board only bars one from allotment of more than one property through draw of lots.

This column is published fortnightly. Readers can send their queries at Real Estate Desk, The Tribune, Sector 29, Chandigarh (by post) or through e mail at realestate@tribunemail.com

Tax tips
S. C. Vasudeva

Fair share

Q. I need a clarification on the property rights of the living family members in the following case:

a) Mr. K. Singh built a house and made a Will in the name of his three sons while he had three daughters as well. The daughters accepted the decision of their father. His wife had passed away earlier and he died in 1993.

b) His two elder sons never got married and also left no Will for their share in property. They expired on August 22, 1996 and July 4, 2011, respectively.

c) The youngest brother got married but expired on April 7, 2011 leaving behind a widow and a daughter.

d) The eldest daughter also passed away on August 4, 2007 leaving behind her husband and three children.

e) Second and third married daughters are alive.

We have contacted five advocates but they are all giving conflicting opinions regarding the rightsd of surviving family members in this case.

(A) Four advocates say ;

a) The widow of the youngest son along with her daughter will get 1/3 (her husband's share) + ¼ of 2/3 (shares of two elder sons having left no will) =1/2 of total property and

b) The two living sisters as well as the three living children (together) of eldest daughter will get 1/4 of 2/3 (shares of two elder sons having left no will) = 1/6 (each) of total property i.e., 1/2 of the total property together.

(B) Fifth advocate says that the entire property will go to the widow of the youngest son along with her daughter.

Kindly help us with the correct scenario so that the property can be disposed off and the amount distributed fairly.

— Kuldip Singh

A. The issue raised by you depends upon of the interpretation of the provisions of Section 8 to 11 of the Hindu Succession Act, 1956. The lawyers are, therefore, best equipped to reply the query raised by you. However, on the basis of the provisions of the aforesaid Act, as I could interpret the provisions of Section 8 of the aforesaid Act, the property of a Hindu dying intestate devolves firstly, upon the legal heirs, being the relatives specified in Class I of the Schedule and secondly, if there are no legal heirs of Class I, then upon the heirs being the relatives specified in class II of the Schedule. As the two brothers who died on August 22, 1996 and July 4, 2011, respectively, did not have legal heirs as specified in Cass I of the Schedule (i.e. son, daughter, widow, mother and offspring of the son and the daughter), their share of the property would devolve on their brothers and sisters. On the said basis the equation would work out as under:

(a) On the death of the elder brother on August 22, 1996, 1/3rd share in the property would devolve on two brothers and three sisters who were alive on that date and each one of them would be entitled to 1/5th of 1/3rd of his share in property.

(b) On the death of the third brother on April 7, 2011, his 1/3rd share in the property would devolve on his wife and daughter. Both of them would share the same equally.

(c) On the death of eldest daughter her 1/5th share of 1/3rd would be inherited by her legal heirs.

(d ) On the death of the second brother on July 4, 2011 , his 1/3rd share in the property would devolve on the two remaining sisters in the ratio of ½ each.

The final equation should, thus, be as under:-

i) The widow of the youngest son along with her daughter will get 1/3rd share plus 1/5th of 1/3rd.

ii) The heirs of elder daughter would inherit equally i.e. 1/4th each in 1/5th share of 1/3rd which devolved on August 22, 1996 on the death of her brother.

iii) Each of the second and third daughter would get 1/5th of 1/3rd share in the property plus ½ of 1/3rd share in the property.

Who is the legal heir of childless widow?

Q. If a childless widow dies intestate, who will be the legal heir of her property which was purchased by her deceased husband and transferred in her name after her husband's death. Do married daughters of her husband's brother have any legal right over her property or sons of the other brother of her husband will be the sole owners?

— Chetan Chauhan

A. According to the provisions of Section 15 of the Hindu Succession Act, 1956 any property inherited by a female Hindu from her husband shall devolve, in the absence of any son or daughter of the deceased upon the heirs of the husband. In case, therefore, there are no other legal heirs, such property will be inherited by the husband's brother's son and / or husband's brother's daughter. Such legal heirs will inherit the property simultaneously.

Provision for old age from sale proceeds

Q. I am a retired Army officer. I booked flat with the Army Welfare Housing Organisation (AWHO) in 2000. The flat was ready in October 2009. I have made payments as under.

12/2000 20,000

8/2001 1,24,126

11/2001 1,39,887

1/2002 1,39,887

9/2002 1,39.500

11/2003 2,52,000

3/2004 2,52,000

3/2005 2,52,000

11/2005 2,52,000

4/2006 1,89,000

12/2008 5,77,053

10/2009 2,19,679

The total Payment of Flat 23,57,483 till completion in 10/2009.

After the decision of the Supreme Court that Registration will be done on Jayantri rate and not on the cost of flat, registration was done for 47,82,000. Amount spent 2,39,100.

Total amount spent over a period of nine years includes registration amount - 25,96,553. Registration done for 47,82,000

Can I sell the flat after three years i.e. after 12/12, and buy a small flat from the amount of long -term capital gain and get the balance money for my old-age expenditure?

If the flat can be sold for 60,00,000 after 12/12 what amount will be considered as long-term capital gain.

— S.P. Marwaha

A. Your queries are replied hereunder:-

(a) You can utilise the amount of capital gain for buying a small flat with the amount of capital gain and retain the balance amount for your old-age expenditure.

(b) It is not possible to compute the amount of capital gain at this stage because the cost price of the flat will have to be indexed on the basis of cost inflation index notified and applicable for the year of sale. Such an indexed cost would be computed and deducted from the sale consideration. The balance amount would be the long-term capital gain. The cost inflation index for the financial year 2012-13 is yet to be notified and therefore, it is not possible to work out the long-term capital gain for the transaction of sale which will take place in December, 2012. However, on the basis of index applicable for the financial year 2011-12, long-term capital gain would work out at Rs 19,70,348.

Tax status of rental income

Q. My query is regarding a commercial property. There are five co-owners of this property which is located in Gurgaon and was inherited under a Will. The property is let out to a multi-national company. The rent up to March 31, 2012 is being received in the name of the executor of the Will, and he is distributing the same to the co-owners. From April 1, 2012 the rent will be received directly in the names of four co-owners even though there is only one lease agreement as the company is yet to enter into a new lease agreement with the legal heirs. The total annual rental income of each owner is less than Rs 10 lakh. But the total annual rent received from the property exceeds Rs 10 lakh.

1. Will the service tax be payable on the rent received from a property or on the rental income of an individual?

2. In the above case are each of the four legal heirs individually liable to pay service tax?

— Raj Deep

A. Under Section 65 (105) of the Finance Act 1994, the taxable service is defined as a service provided or to be provided to any person, by any other person, in relation to renting of immovable property for use in the course of furtherance of business or commerce. The word 'person' has not been defined by the above Act. Under Section 3(42) of the General Clauses Act 1897, person shall include any company, or association or body of individuals whether incorporated or not. Thus a person will generally include a natural person, partnership firms, HUF, body of individuals, corporate bodies, charitable institutions, government undertakings, corporative societies etc.

In the case cited in the query, it seems the service provider was the deceased because the rent was being received in the name of the Executor. It is, however, not clear as to whether the inheritance has been recognised by the court and it is on the said basis that the rent is to be paid to the legal heirs. If the ownership of the legal heirs has been recognised and the payment of rent is to be made individually on the said basis, it may then be possible to claim the limit of Rs 10 lakh by each of the co-owners. This opinion is based on the premise that the service is being provided by each of the co-owners for the identified share of property leased to the bank. 

The writer can be contacted at sc@scvasudeva.com