The Tribune, Chandigarh, India

real advice: buying a resale property
Fishing in ‘secondary waters’ no child’s play
Om Ahuja

The primary advantage of going in for a resale flat would lie in buying a home in a strategic location where no new supply is coming in. If one has personal cash resources at one’s disposal and is not dependent on a home loan (a home loan on a very old property cannot be taken for granted), buying a home in a project that is 20 years or more in age can be a good investment bet if the residential property is in a strategic, high demand location with low or no new supply. This would mean that the project would come up for redevelopment, ensuring a tidy profit to the owner.

Documentation and procedures

All the documents that are applicable for a primary residential property sale would be required for a clear resale flat transaction, as well. The seller should be able to produce all original documents.

The buyer should establish the existence of a proper society. The original sales deed and the society share certificate are most important, since the transaction cannot proceed without these. Also, the buyer should bear in mind that in the case of a resale property, proper transfer and re-registration is necessary.

The documents required for registration of residential flats, apart from the sale deed, include a letter from the housing society that reflects details such as the number of floors in the building, the year of construction, the apartment’s built-up area and the number of lifts in the building.

Also required is an assessment bill to the society from the municipality in question, an NOC from the Collector if the building exists on Collector’s land, a copy of the property card, and a receipt for the payment of registration fees. In addition, the buyer of a resale flat should ask for a clear ownership history if the residential property has changed hands before.

The local registrar will establish the authenticity of these documents. If one is buying the property via a home loan, the bank will run a routine due diligence.

The price factor

Are resale properties always cheaper? Not necessarily. In the larger cities, new residential property supply is scarce or non-existent in many central locations. In such areas, there would not be a question of discounts on resale properties. Discounts are more prevalent in areas where the market is more competitive. That said, resale properties are sold either by the primary owners or by investors. As such, there is a higher possibility of flexibility in payment terms.

Challenges and pitfalls

There are certain challenges that a buyer of a resale flat may face.

This could include lack of proper chain of documentation, especially in cases where the property has changed hands more than a couple of times in the past. If the property is over 18-20 years old, it is possible that it was never formally registered in the first place. Registering it at the current point in time would put the onus of paying the stamp duty in arrears on the buyer.

There may also be additional expenses for repairs to masonry, plumbing, electrical wiring and fittings. Obtaining a home loan for a property which is anywhere close to 50 years of age can also be a challenge.

Finally, one should bear in mind that the Indian residential property market is in a constant state of evolution. One is unlikely to find the facilities and amenities that are available in the newer projects on the market in an older building.

The writer is CEO , Residential Services, Jones Lang LaSalle India

Open your eyes to the ‘hidden’ costs
Sarthak Shukla

Are you taking a final call in terms of buying your dream house? If yes, then you have to ensure that you don’t end up paying more than what you had been asked to pay by the builder initially.

Many times it happens that builders ask buyers to pay more before handing over the final possession. This extra payment comes in the form of ‘hidden’ costs, which are the additional charges that are added to the amount you pay for buying the house. “Buying a property involves a whole lot of hidden costs, other than the purchase price. It is vital to take the other costs involved into consideration when setting your budget,” says Sanjay Khanna.

Additional charges

Stamp duty and registration fee are only the beginning. According to Nikhil Jain, CEO of Ramprastha group, “The first additional cost that a home buyer will incur is the stamp duty.” Stamp duty and registration fee constitute the mandatory fee that has to be paid and are around 5 per cent of the total value of the property.

Since most homes in India are bought through home loans, one has to consider the cost of an insurance policy to cover the home loan.

If you purchase a property with the help of a real estate broker then you will have to pay a brokerage charge based on the purchase price of the property.

You may have to pay conveyance costs to the lawyers. These are the costs involved in the transfer of title of property from one person to another.

In addition to this there are society maintenance charges and a yearly property tax that many buyers do not pay attention to before buying a house.

Facilities like swimming pools, gymnasium and garden along with the house also add to the cost.

Builders also buyers to pay more for a privileged location like a corner house or a park view. These costs are known as the preferential location charges (PLC).

Realty experts say that sometimes new kinds of additional charges are also demanded from the buyers as in a project involving 100 flats in Gurgaon, the developer charged Rs 20,000 for each flat towards advocate’s fee.

Some builders demand cash for getting connection for water supply and sewerage and also for electricity supply.

Sometimes, there are also disputes regarding the payment for common areas and undivided share of land. As a result, there are occasions when the buyer is asked to pay an additional amount towards the difference in undivided share of land.

VAT and service tax are two other charges that a buyer may be asked to pay as the project nears completion.

The statutory tax liabilities of builders vary depending on the size of the project — the larger the project the more are the liabilities.

One of these is the service tax which is levied for commercial or industrial construction services, site formation and clearance, excavation, construction of residential complexes with more than 12 units, work contract services. Ajay Agarwal, director of Avalon group clarifies, “The rate of service tax is 12.3 per cent on 33 per cent of the cost of construction. This works out to about 4 per cent of the overall cost of construction. This amount will be indicated in the builder’s agreement with the buyer. If it is not, then you can ask for a clarification. The value-added tax is another cost added to the project and is applicable to all builders.”

Meanwhile, the builder has the option to pay two per cent of the cost of building indicated in the builder’s agreement or compute it on item basis for all the materials at specified rates. For materials like sand and bricks, the tax is four per cent and for items like cement it is 12.5 per cent.

More often than not, realty firms demand more money due to escalation in the cost of construction. The latest example of this is that of Noida Extension. Some builders are indicating to their buyers that they would go for a price revision, while some others have already revised the prices. Before the land acquisition row a couple of years ago, the average residential rates in Noida Extension were in the range of Rs 1,800-2,000 per sq ft. Currently, these are at Rs 2,800-3,200 per sq ft. According to Devinder Gupta, head of realty advisory Century 21 DGS, “In the case of Noida Extension the main reason for price escalation is the inflationary pressure and the rising cost of raw materials. The builders have gone ahead and raised the cost per unit in order to be able to pay the stipulated compensation as demanded by authorities.”

“I feel that many times, buyers blame the builders for charging more forgetting the fact that with the increase in construction costs due to various reasons, they (builders) do not find any option but to ask for more from their buyers,” says Alimuddind Rafi Ahmad, MD of ILD group, adding, “Builders decide on the quantum of increase in rates after calculating the cumulative burden upon us including from the increase in the input costs.”

tax tips
Legalities of surrendering share in property
S. C. Vasudeva ...

Q. Kindly clarify:

What are the legal formalities for surrendering one's share in ancestral, joint family and in father’s self earned properties?

Can such surrendering be withdrawn? If so, when and how? — shankar prasand

A. In case of joint family property, the partition can always be in unequal shares, and therefore, while executing a deed of partition it is possible to exclude any of the co-parceners who are entitled to seek a partition of the joint Hindu family property. There should not be any necessity for any Relinquishment Deed for such cases.

However, in case a person is interested to execute a deed for relinquishing his share in the joint family property, he can do so by executing a Relinquishment Deed. Such a deed can also be executed for relinquishing a share in father's self-acquired property. Further such a deed will have to be registered with the Sub-Registrar.

The relinquishment deed can be withdrawn in case the same has not been given effect to. A Revocation Deed may have to be prepared for the withdrawal of such a deed.

Help in calculating capital gain

Q. I am a senior citizen and am drawing a pension of Rs 52,000 (per year). I sold a plot for Rs 21,00,000 in April, 2012, which my late husband had purchased for Rs 44,000 in 1995. I got 2/3rd share of this plot amounting to Rs 14,00,000. My queries are as under:

What will be the capital gain in this case?

What will be my tax liability for the year? — savita devi

A. Your queries are replied hereunder:

The capital gain arising on the sale of the plot would be a long-term capital gain. On the basis of cost inflation index for the financial year 2012-13, the capital gain would work out at Rs 19,66,591. The 2/3rd thereof would be Rs 13,11,060.

The tax liability on the amount of long-term capital gain would work out at Rs 4,05,118. The 2/3rd, therefore, would work out at Rs 2,70,078. You will be liable to pay the above amount of tax.

Should GPA by NRI be registered in India?

Q. My brother is a US citizen. He owns ancestral property in India. He gave me GPA, (general power of attorney) duly signed and stamped by Notary, USA, to sell this property. Do I have to register this GPA (of a foreign national) in India? If so, then under what Section. Kindly clarify. — vijay paul

A. In accordance with the provisions of Section 32 of the Registration Act 1908, every document to be registered under the aforesaid Act shall be presented at the Property Registration Office by a person executing the document or by the representative or agent of such person, representative or assign duly authorised by power of attorney executed or authenticated in the manner stated in the said Act. Section 33 of the aforesaid Act provides that in case a person does not live in India a power of attorney should be attested by the Notary Public or any Court, Judge, Magistrate, Indian Council or Vice-Council or representative of the Central Government.

As the power of attorney received by you is duly signed and stamped by Notary Public in USA, it should be sufficient for the purposes of representing your brother for executing a sale deed of the property owned by him. I may add that the authorities in India are very conservative and insist that a power of attorney executed outside India should also be registered in India.

Tax liability on compensation amount

Q. I was allotted a plot by the Haryana Urban Development Authority. An amount of Rs 5,28,000 was paid in five installments between March 31, 2005 to September 30, 2006. In addition I had to pay Rs 80,731 extra as demarcation and service charges in February,2012.

Recently the same plot has been acquired by the state government for development and a compensation of Rs 30,00,000 has been paid to me. Kindly let me know about my tax liability on this amount? — Raghav

A.You have not indicated the date on which the possession of the plot was given to you by HUDA. Presuming that the possession was given to you in the year 2006-07 the indexed cost would work out at Rs 8,66,775. After taking into account the demarcation and services charges of Rs 80,731, the long term capital gain would work out at Rs 20,52,494. The tax thereon would work out at Rs 4,22,814 @ 20.6 (20% + education cess of 3% thereon).

Can a tenant refuse to vacate house?

Q. Kindly advise me on the following issues related to my different properties:

After selling a residential property, can I invest one part of the capital gains on construction of my house within one year and invest the balance amount of capital gain in NHAI bonds in the same year to avoid paying any capital gains tax?

If I own two residential units, and live in one unit and give the other on rent, will I lose in the court if I ask the tenant to vacate my unit and he doesn’t agree? What chances do I have of getting it vacated? — shakunt bansal

A. Your queries are replied hereunder:

It is possible for you to invest a part of the capital gain towards the construction of a new residential house and invest the balance amount in NHAI bonds. The provisions of Section 54 of the Income-Tax Act allow a period of three years after the sale in which the construction of a residential house should be completed. Any action on the above lines would enable you to save the tax on the capital gain arising on the sale of a residential house. This reply is based on the assumption that the amount of capital gain arising to you is a long-term capital gain i.e. the residential house intended to be sold has been held by you for a period of three years or more.

The particulars given by you with regard to the rented property are not complete. You have not indicated whether the lease deed in respect of rented property had been executed for a fixed period and that the same had been registered with the Sub-Registrar. In case this procedure has been followed it may not be difficult to get house vacated even if you are living in your own house. In case it is a month to month tenancy, the legal position will be different. In any case, it would be appropriate to consult a lawyer on this issue as the proceedings for vacation of the house will have to be taken up in the court of law.

Can I re-invest part of sale proceeds in another property?

Q. I would like to thank you, for replying to my query in November 11 issue. However, could you please also advise me on the latter part of my query i.e: Please advise status of the money returned? Can I re-invest part in another residential property? — sanjeev

A. In case you decide not to buy the residential flat from the builder and he has agreed to refund the amount paid by you, the capital gain on the balance amount of Rs 2.50 crore would be payable in the year in which the period of three years expire. You can invest the amount of Rs 2.50 crore towards the purchase of another property but as stated hereinabove the amount of capital gain not brought to tax in the earlier years would become taxable in the year in which the period of three years expire.

Capital gains tax issue for partnership firms

Q. We are going to sell a part of the land of our firm this month. This firm has been a family partnership since 1978. One of the partners has purchased another factory in different name with other partners (not partners in original firm, but same family) in March this year.

Our query is whether one partner who bought another factory can claim exemption in capital gains tax for the consideration coming in her account according to her share in original partnership firm or not. Is their any other way to avoid capital gains tax in partnership firms. — ajay

A. The facts as evident from the query are that a partnership firm say ‘A’ is selling land and long-term capital gain is likely to arise on such sale. One of the partners of the firm say ‘B’ has purchased a factory building in the name of another firm wherein he is a partner. The issue raised in the query is as to whether ‘B’ can claim the exemption in respect of his share of long-term capital gain by claiming his share of investment towards the purchase of factory. In this regard it should be noted that the capital gain has arisen to the firm. A firm is a separate taxable entity under the provisions of the Income-Tax Act 1961. No capital gain has accrued in the hands of ‘B’. ‘B’ has not made any investment of capital gain towards the purchase of a residential house. There is thus no question of any exemption allowable to ‘B’.

There is no provision in the Act whereby ‘B’ can seek any exemption from taxability of his/her share of capital gain as the capital gain has accrued to the firm. As a matter of fact, no capital gain is taxable in the hands of ‘B’ as the firm ‘A’ is liable to pay tax and he or she as a partner in the firm is entitled to a share in the net gain.

The only way possible to save tax for Firm ‘A’ is to utilise the amount of capital gain arising on the sale of land by investing the same in bonds of NHAI or Rural Electrification Corp. Ltd. within six months of the date of sale of land.

REALTY GUIDE
Area prospects
B K Sanghi ...

Q. I have been offered a 500 sq yd plot in Mohali district by an upcoming builder known through a close friend at the pre-launch price. However, the mega residential-cum-commercial project is outside the Mullanpur urban estate on the Kurali-Mullanpur road. Please advise about prospects of the area. — n.s. sandhu

A. The Mullanpur area is an upcoming area in the vicinity of Chandigarh. While some major builders particularly Omaxe and DLF had already come up with residential and commercial projects in the urban estate area, not many builders have yet spared a thought for this urban estate's periphery. Since the area in question is outside the urban estate and on the Kurali-Mullanpur road, the strategic location will be its plus point. But before investing check all documents as only mega residential and commercial projects can be developed in the area outside the Mullanpur urban estate. The area holds a good prospect for long-term investment as the Punjab Government has announced the four-laning of the Chandigarh-Mullanpur-Kurali road. Since this is being developed as an alternative road to Kurali from Chandigarh on the pattern of Chandigarh-Kharar-Kurali road, a plot on this road can be a good investment opportunity for long-term (i.e. for at least 10 years).The proposed project site is also not far away from the Chandigarh-Mullanpur-Baddi road. However, strike a hard bargain as there would not be too many takers for the plots in the vicinity of the urban estate.

vaastu wisdom
Business needs a boost
madan gupta spatu ...

Q. I have opened a coaching centre in the heart of the city but am incurring a lot of losses. My friend has suggested that some Vaastu imbalance may be involved. Can you suggest some remedies? — kamlesh singh

A. An institute, school, college or any other coaching centre plays a major role in building the future of the nation. It is very essential to construct such buildings as per Vaastu principles to get the maximum benefit of the five elements of nature.

The direction of the entrance of the building should be facing east or north.

The students should face north or east while studying.

The classrooms should have larger windows on the northern and eastern walls

The electrical equipment like generators, inverters should be kept in the south-east

The toilet blocks should be in the north-west corner of the entire building

The administration block should preferably be in the north or east direction

The canteen should be in the south-east

The playground in the north, east or north-east side of the site.

Tips for a booming hotel business

Q. We are planning to enter hotel and restaurant business. Which Vaastu principles should we keep in mind for success in this business? — sohan singh

A. Here are some broad guidelines for hospitality business:

Ground floor would be apt for the reception and restaurant purpose

First floor can be used for constructing conference hall

For balcony of the hotel rooms, choose eastern or northern side.

Store for the restaurant should be built in the south-west direction.

Installation of AC plant should preferably be in the south-east

Generator, transformer and other electrical installations should also be in the south-east part of the building. Washing area should be in the north-east direction.

Landscaping and fountains or artificial water falls can be constructed in the north-east, north or east of the entire site.

The beds in hotel rooms should be placed in such a manner that the head of the guests is in the south or west but never in north.

decor trends
Warm up to winters
With winter season approaching, it is time to switch the ‘feel’ of your home in order to welcome it with your unique style
sapna aggarwal...

Winters take away all colours from nature. There is less sunlight, more grey sky, less leaves on tress and even lesser flowers. Outside becomes dreary, dull and unexciting. So winter is all about adding warmth and colours to your decor so that your home can still be spirited, stimulating inside. Don’t let the coolness intimidate you, rather pass on a new look to your home this winter season and the best way to do that is to change the decor.

So winterise your home with some cozy decorating ideas and electrifying decor tips that will help you add charisma into your home without digging too much on your pennies.

Go colourful

The mantra for winter is to ‘go colourful’. The warm side of the colour wheel is your ideal choice. Colours like orange, yellow, red and gold give an instant feeling of warmth and coziness. These colours can be added to soft furnishings, walls, ceiling, rugs, and accessories. An instant remedy to get warmth is to paint your walls in warm colours or just add wallpaper. Since walls occupy the maximum sq. ft. area, in any room; the effect of any colour applied is immediate.

Give accessory fix

Keeping the furniture or bulky items fixed, the feel of the whole room can be changed by clever change in w accessories. It is advisable to invest in 2-3 sets of accessories to enable you to change the overall theme easily. Accessories add a personal touch that give your house its character and turn it into a home. Accessories also allow us with the opportunity to have fun with new ideas and creativity and to add variety. Some home accessories that you can put to use to maximise the beauty of your nest are:

Candles and candle holders: Adding a few candles along with some natural elements to your tables will be a perfect accent to you holiday gatherings.

Wall interior, décor and mirrors: Change the art work displayed with deep warm colours to add zing to your room.

Show pieces, vases, pots and photo frames: These knick knacks can add a zing to your home by complementing your main décor.

Planters and flowers: Greenery in any form is always an ‘eye tonic’. It adds freshness and also keeps the energy level balanced in the house. Fresh cut flowers or potted plants add a hint of spring time to a room and lift the spirits. You can also add artificial flowers but they tend to get dirty soon and are not easily cleanable.

Fragrance: You can add fragrance with scented candles, fresh flowers, aroma oil burners or dispensers. Every fragrance has its effect on the mood of an individual. It is advisable to layer up the fragrance of your home by choosing the candles, oil burners and room fresheners of the same fragrance and using them together. Cinnamon and lemon grass both are wonderful aromas to be used in winters.

Fireplace: It is a great idea to sit near a real fireplace in a cozy chair and read a book through a weary winter evening. But building an original fireplace is a task, there are a lot of companies that offer ready-to-use fireplace that are low on smoke emission as well.

Ultimately it is your home and the decor should reflect the ambience, style and mood that you want to create for each room. The key is to avoid compromising functionality for décor. So, warm yourself up to give your home a unique and charming look in this deary season.

— The writer is Creative Director, Ansa Interiors

Soft furnishings — cushions, rugs, curtains and throws
When it comes to change, changing soft furnishings is the easiest as it doesn't cost a bomb and reflects in the whole home. It is the easiest way to enjoy seasonal changes and save money without sacrificing on style. You can include cushions, soft seating, throws, curtains, rugs, carpets, towels and blankets to soft furnishing. In winters it is advisable to double layer your window covering. The heaver drapery can be closed to help keep chilly winds that might penetrate the windows, but these heavy draperies can also be opened on sunny days to allow winter sunshine to flow through light-coloured pair of sheer curtains. Rugs and carpets not only feel good and warm under your feet but also add a rich ambiance.

Mirror magic

The desire to have the luxury of space in an environment dominated by houses with confined space is never ending. Mirrors can weave a magical illusion adding an element of extra space to any room.

A clever use of mirrors and strategically positioned lights and candles can add an allure and shine to one’s home décor. Especially at dinner time, mirrors can be combined with candles and low light to create the illusion of space.

Even for a small place, using plenty of mirrors of different shapes and sizes at strategic locations can create a reflection that illuminates the entire area making the space look bigger.

Mirrors used for decorating can be of various types ranging from mirrors with or without frames to Vietnamese or Victorian etc.

Frameless mirrors assure an uncluttered look and less maintenance. Wall mirrors act as great decorative pieces and can add depth with character to any room in one's home.

Adding a sense of reflection, the use of mirrors can beautify the space and make it appear larger than the actual size.

— With inputs from Subbanshu Jaiin, Director, Blackberry Overseas.

Sensible screening
Why wire-mesh doors are a must in Indian homes

Indian weather conditions demand the provision of wire mesh doors in all external door openings. Open-able parts of windows also need to have wire-mesh shutters.

Many house owners, however, have the tendency to postpone the provision of wire-mesh doors but it is prudent to provide these in the first instance itself.

Double rebate frames

In order to provide wire-mesh doors, it should be ensured that all external door frames are with double rebate to provide wire mesh door in the outer rebate and paneled door in the inner rebate. Similarly, window frames are double rebated for wire mesh and glazed shutters.

Door framework

Horizontal wooden members of the shutters are called rails and vertical members are called stiles. Wire-mesh doors essentially have a top rail, a bottom rail and side stiles. In addition, a middle rail and a middle stile should be added to the door. While the middle rail is either at lock level or at one-third height from the bottom, the middle stile can be at the centre or nearer to the unhinged stile. Addition of the middle rail and stile makes wire-mesh doors stronger.

Door design

After the provision of middle rail and stile, wire mesh can simply be fixed into the panels thus created. Preference should be given to provide a wooden panel between the lock and bottom rail while wire mesh can be provided in the panels between middle rail and top rail. In case a middle stile has not been provided in wire-mesh doors, wooden verticals can be fixed on the wire mesh on both of its sides. In addition, suitable and attractive design can be chosen to add more wooden pieces to the door. All wire-mesh doors except the main door, which often is of a larger size and has a special design, should have the same design.

Wire mesh

The wire mesh used in the doors can be either of galvanised mild steel or stainless steel. In the first instance, people prefer to choose stainless steel wire mesh. However, if the merits and demerits of the two materials are considered, the galvanised wire mesh is found better than SS wire mesh.

Stainless steel wire mesh

Stainless steel has its grades like 202, 304, 316 and more. The buyer doesn’t know that the stainless steel used in the wire mesh is of which grade and has to rely on the seller’s word. When used in doors, stainless steel mesh soon loses its luster and looks ugly. If painted, the paint doesn’t stick to it fully. SS wire mesh is costly also. Therefore, it shouldn’t be chosen for the doors.

Gauge of GI wire mesh

The GI Wire mesh chosen for the doors should be of 22 gauge GI wire. 24 gauge wire mesh should not be used. One may buy a gauge measuring disc and use it to check the gauge of the wire. 24 gauge wire mesh is not strong enough and sags with time.

Mesh size

GI wire mesh should have a mesh size of 12 X 12. It means that if a scale is placed along the wire mesh, it shouldn’t have less than 12 squares in an inch. More is the number of squares in an inch, more closely woven is the mesh and is better and stronger. The mesh size should be checked both vertically and horizontally. Lesser is the number of squares in an inch, poorer is the quality and strength of wire mesh. Such a mesh will allow the mosquitoes, flies and insects to pass through it, thus defeating the main purpose of its provision.

Mesh quantity

GI wire mesh is supplied in rolls of different widths such as 2 ft, 2.5 ft, 3 ft and 4 ft. Ask the carpenter to work out the wire mesh quantity in such a manner that minimum wastage of wire mesh is there. He will come out with different lengths for each width of roll. The suppliers have no objection in taking out the required lengths from the rolls of different width. This exercise will ensure less wastage and expenditure.

Wire mesh fixing

The wire mesh should be fixed as tightly as possible in the panels created in the doors by stretching it from rebate to rebate and bending it at right angles at the rebate. No sag or crease should be allowed. Single wire-mesh piece should be used in each panel and there should be no joint in it. Blue nails of ½” size should be used to fix the wire mesh.

The beading

Once the wire mesh has been fixed in the rebate with nails, a half to ¾-inch thick beading should be fixed in the rebate to cover the nailed and bent wire mesh in the door. The beading can have attractive design and should project above the surface of the door by about 3 mm.

Painting

While the wooden portion of wire mesh doors can be polished or painted as per one’s requirement, the wire mesh can be painted in green or blue colour to give a beautiful look. Otherwise silver colour can be used for painting to give it a stainless-steel like look. Earlier, silver paint was not readily available and one had to prepare it by mixing a powder into liquid. But now such paints are available easily.

Hanging wire-mesh doors

Use stainless steel hinges to hang wire mesh doors in the rebates in the door frames. Use 3 hinges of 5 inch size or 4 hinges of 4-inch size to hang the doors. For window shutters, use 3 inch size hinges. Let all hinges be of 12 gauge to be strong enough. Keep one hinge at the centre and the others two at 8-inch distance from top and bottom of shutter. Use stainless steel screws of 1.5 inch size to fix the door hinges and 1.25 inch size hinges to fix the window shutters.

— This column is published fortnightly

Main door
As first impression is the most lasting one, the main door of the house is usually designed specially to look attractive, inviting and beautiful. Lots of carving, squares and beading are added to it. As wire mesh is not that design savvy many homeowners avoid providing a wire mesh door outside the main door.
But this is not the right approach as a wire mesh door should essentially be provided at the entry point. It can also be made to look beautiful by adding some glass panels to it so that it has a combination of wood, glass and wire mesh.
Some people reverse the position of wire mesh door and main door and provide wire mesh door in the inner rebate. This tendency should be avoided as it ultimately doesn’t serve the required purpose.
Maintenance
Wire-mesh doors need regular cleaning of the wire mesh to avoid clogging by dirt. In addition, there is a tendency among people to open the wire mesh doors by pressing the wire mesh in a panel. This tendency leads to creation of a depression in the wire mesh or its coming out of the rebate hold. Such tendency should be avoided and wire mesh doors should be opened by pushing against the vertical wooden stile and not the wire mesh.

Banks told to consider lower EMIs and longer repayment terms
S.C Dhall

In a move that is set to provide much-needed relief to home buyers banks will be looking at the possibility of introducing home loans with lower EMIs and higher repayment period of up to 30 years.

The RBI draft report on home loans has also suggested that banks should introduce and popularise long-term fixed rate home loan with a provision of re-fixing the interest rate after period of 7-10 years. These suggestions form a part of a report, 'Feasibility of Introducing More Long-Term Fixed Interest Rate Loan Products’ by banks. RBI has invited comments from the public on the report by November 23.

At present banks give home loans with a maximum tenure of 15-20 years only.

The report also suggested that banks should popularise fixed deposit schemes for tenures of over five years as it would help them procure long-term funds.

The banks, the report added, may also raise funds by floating 30-year bonds on the lines of government securities. The report said “transparency in retail loan products should be appropriately addressed and the customers be educated by lending institutions on the possible impact of rate changes on EMIs to enable borrowers to have better planning with regard to their repayments.”

During 1977-2000, fixed rate loan products were popular. However, post 2000, these products gave place to floating rate loans mainly due to falling interest rates in the early 2000s and significantly higher interest rate on fixed rate loan products in many cases. The encouragement to fixed rate home loan, it added, is necessary as “customers are not able to understand the intricacies of economic cycles, changes in policy rates, transmission of the same and the consequential sudden increase in equated monthly instalments (EMIs) thereby exposing themselves to interest rate risk.”

On the issue of pre-payment penalty, the report recommended that it should be levied only on the outstanding amount on the date of pre-payment and not on the loan amount initially sanctioned.

It also recommended that large institutional investors like pension funds, provident funds, insurance companies, should be encouraged to invest in bonds issued by banks. The draft said, if necessary, suitable amendments to relevant investment guidelines could be made.

“These institutional investors are ideal match for developing long-term retail mortgage market in India,” the report added.

It further suggested that the housing loan regulator NHB may examine the feasibility of extending its refinancing scheme to banks offering long-term fixed housing loan products to their customers other than low income households. “Further, NHB may explore issuing long-term housing bonds for channelising the long-term resources into the housing sector,” the draft said.

The report also noted that substantial increase in EMIs over a period of time has an adverse impact on the repayment capacity of the borrowers which also results in loan delinquencies.

Construction sentiment stays upbeat

Notwithstanding economic challenges, the construction sector continues to remain buoyant, especially in the private housing and industrial segments, according to the latest RICS India Construction Market survey for the period of July-September.

The survey results indicate that sentiment in the construction sector remains relatively upbeat for both the private housing and private industrial sectors.

However, activities in the public non-housing, energy and oil and gas, have edged lower. “The all-important infrastructure sector is continuing to witness growth, albeit at a more modest pace than in the April-June quarter of this year. The respondents in the survey are fairly upbeat on the prospects of workloads, employment and profit margins in the coming year,” RICS South Asia Managing Director Sachin Sandhir said. According to the survey, nearly 97 per cent of the respondents anticipate an increase over the next 12 months on workloads, with growth expected to average between 7.5 and 10 per cent. The projected gain in employment in the sector over the same period, however, is a little more modest at 2.5 to 5 per cent, it said.

However, shortage of labour and financial constraints continue to be the most prominent factors limiting construction activity in the country even in the third quarter, followed closely by planning and regulatory challenges, the report said.

“One of the most prevalent hurdles for the real estate and construction sector is that of the human resource challenge. The sector has a lack of quality talent, which stems from the absence of specialised education, resulting in the absence of much needed fresh skilled manpower entering the sector,” Sandhir said. It has been indicated (in the report) that the shortage of skilled resources have been responsible for slowing down construction activity by an average of 6 months to a year, he said. As a result, development firms in the recent past have been compelled to import architects, designers and planners from countries such as Singapore, Thailand, Australia and New Zealand on handsome salaries thereby pushing up project costs and impacting profitability. “Therefore, there is a pressing need to adapt and learn new ways to do business and strengthen the ability to survive the paradigm shift taking place in global construction markets,” Sandhir added. — PTI

PROJECT WATCH
Supertech hands over possession at two projects

Supertech Limited has handed over possession of Amber Heights at 34 Pavilion, Sector 34, Noida and plots at Upcountry, Yamuna Expressway. Speaking on the occasion Mohit Arora, Director, Supertech Limited said, “I am delighted to hand over the apartments to customers in this festive season. We have delivered 100 units in the Amber Heights tower of the project and plots in the Upcountry project.”

34 Pavilion is spread over an area of 3 acres in Sector 34, Noida. The project has three towers — Amber Heights, Aristo Heights and Azure Heights which has 2 and 3 BHK apartments in 1050 sq. ft. and 1295 sq. ft area. Upcountry is a 100-acre integrated township located on Yamuna Expressway, Greater Noida. It comprises plots, villas, high-rise condominiums.