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Investors take stock of realty
Real estate sector emerges as a safe and lucrative option after the recent upheavals on the Dalal Street, says
Peeyush Agnihotri
The
stock market tanked for the fourth time this year. A number of factors contributed to the two recent ‘monsoon’ crashes — FII pullout, global cues and more recently, RBI’s check-inflation policy. With stock brokers facing liquidity problems and margin money issues, pensive investors have yet again started looking at the real estate-cum-housing sector that has been left untouched by the RBI this time. Though cyclic, investors always wear own sense of logic up their sleeves. Yet again, they are looking at the realty zone with the corner of their eye. For one, real estate sector promises a fixed return on investment, even when there is a slump, and secondly, this sector never ever oscillates dangerously. Susheel Vats, DGM, M-Tech Developers, says RBI’s latest move is driven by both sectoral and democratic considerations. “But they would definitely go a long way in betterment of the realty sector,” he opines. “The safety factor of the investment and past track record of the realty sector, which has consistently given 19 per cent return on investment over the last 60 years and the recent experiences with the stock market have just reaffirmed the investors’ faith in realty,” Vats says. Traditionally, the stock and mutual funds may be good options from a short or medium-term perspective. “For long-term investor, realty is the sector,” he adds. Real estate has been a traditional area of investment. Investment in shares is being considered risky and the past experiences have shown its volatility. “The recent policy review by the Reserve Bank of India has no major changes in relation to the real estate sector. The general sentiments for this sector are positive and the demand for properties in the residential and commercial sectors continues to be robust,” concludes Avneesh Kumar Singh, MD, SNG Developers. “Mutual funds, however, are the flavor of the season and are gaining wide acceptance amongst the investors. But, historically, real estate investments have yielded better returns in the long term than shares or mutual funds,” he adds. Madhur Mittal, JMD, Triveni Infrastructure, says with the RBI leaving the home loan segment untouched in the quarterly review, home loan applicants may breathe a little easier. “This is the first indication that the upward movement of the interest rates may have peaked and stagnated and now because of many persons repaying the complete home loan, the banks would have surplus funds, for which they have to now find new users/borrowers. The banks will need to lower the interest rates to be able to make the home loans attractive to the borrowers, which in turn will fuel fresh demand of reasonable priced property units. “The shakeup in the stock market, which was waiting to happen, will encourage people to book profits and divert the funds to the housing and real estate sector,” he asserts.
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MFs preferred in Bangalore
Residents discover that buying a house for investment is no longer a lucrative option, notes
Jangveer Singh
Information
Technology made Bangalore. It also made its landlords who made new laws to suit their interests. Sample this — a 10-month cash advance cash deposit is de rigueur in the city as well as a 10 per cent annual increase in the monthly rent. So, after having it so good for more than a decade, house owners in Bangalore are now discovering that the rents are no longer galloping at the rate they were earlier. In fact, at some places there are at a standstill. While this doesn’t affect those who have been renting out for long, it does matter for the newly christened landlords. They are usually young professionals who moved into the city and bought a flat as an “investment”. They are now finding the investment, which they had thought would keep for a lifetime to guarantee a fixed monthly income, is not paying off. This is because the increase in rent has not matched the rise in real estate prices since the last few years. The situation is such now people who had bought flats as an investment are exiting the market due to low rental yields. “Consider this”, says Arun Patel of Arun Assets. “You bought a flat for Rs 50 lakh and are expecting a rent of Rs 20,000 according to the earlier trend in rentals. However, when you have to give it on rent for Rs 16,000, you grasp the amount realised does not even cover your monthly loan instalment. This in when you start thinking of mutual funds and other investments and want to exit the property market,” he adds. Patel feels the yield from property in Bangalore has come down gradually from the earlier figures of 6 per cent to 3 per cent. He says while a low interest regime was responsible for the rise in property investments, coupled with the surety of high rentals, property owners are now waking up to the promise of “tension free” income from mutual funds. “The Indian economy has arrived and is growing steadily. “This,” I feel, “is the reason for newfound confidence in equity rather than property,” Patel adds. Though there has been a slow down in other parts of the country and even a correction elsewhere, property prices are still more or less stable in most parts of Bangalore except the northern area, which is still witnessing growth due to the upcoming international airport. There is also the issue of demand and supply, with builders building for tomorrow rather than today and investors picking up these flats purely on hypothetical value. Businessman Inderneel Singh says builders are selling property riding on the “aspirational factor” rather than ground prices. “We are now advising our clients to purchase land rather than flats so that they can have their cake and eat it too by staying as well as renting it out,” Inderneel adds.
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HOME DECOR Devendra Malik talks about the latest trends in staircase designing
Terminology A step may be composed of the following parts
Stairs can take an infinite number of forms, combining winders and landings. The simplest form is the straight flight of stairs, without winders or landings. It is not often used in modern homes because: 1. The upstairs is directly visible from the bottom of a straight flight of stairs. 2. It is dangerous in that a fall is not stopped until the bottom of the stairs. 3. A straight flight requires enough space for the entire run of the stairs. Kinds There are many forms of different stair layouts from a straight flight to a series of intricate curves and landings. However, the basic principle of stair design does not alter. Stairs should be comfortable to walk up not only for the young but also for the old. The steeper the stair, the more difficult it will be to climb. A steep stair can be compensated with additional landings. However, it will be a balance between the amount of room you have for the stair and the distance between floors. The going will always be shorter than the tread but the tread should be, if at all possible, large enough to accommodate the whole of the human foot. Most modern stairs incorporate at least one landing. “L” shaped stairways have one landing and a change in direction by 90 degrees. “U” shaped stairs may employ single wider landings for a change in direction of 180 degrees, or tow landings for two changes in direction of 90 degrees each. Spiral stairs wind around a central pole. They typically have a handrail on the outer side only, and on the inner side just the central pole. A squared spiral stair assumes a square stair well and expands the steps and railing to a square, resulting in unequal steps (larger where they extend into a corner of the square). A pure spiral assumes a circular stairwell and the steps and handrail are equal and positioned screw-symmetrically. A tight spiral stair with a central pole is very space efficient in the use of floor area. A user of these stairs must take care to not step too close to the central pole as it becomes more likely that one or more steps may be missed, especially when going down. One should always take care to continuously use the handrail so that additional support is available in the event that a step is missed. Using the handrail will also direct the user to the safer outer portion of the treads. Helical or circular stairs do not have a central pole and there is a handrail on both sides. These have the advantage of a more uniform tread width when compared to the spiral staircase. Such stairs may also be built around an elliptical or oval platform. A double helix is possible, with two independent helical stairs in the same vertical space, allowing one person to ascend and another to descend, without ever meeting if they choose different helixes. The writer is a New-Delhi based interior designer. His email id is
devendramalik@yahoo.co.in
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GREEN HOUSE Satish Narula details on a few hardy indoor plants
It
is established beyond doubt that indoor plants play a crucial role in cleaning air inside. We thus find two roles, aesthetics and environment cleaning. When it comes to plant selection for indoor display, we normally get complaints against normal growing, leggy, pale and sick growth or even premature mortality. There is another big problem; selection of the suitable plants for indoor display that are not harmful. Plants like Dieffenbachia look pretty but are dangerous for indoor display, especially when there are toddlers. Even an accidental ingestion of sap could cause partial paralysis of the trachea. The person is unable to speak for a few hours and suffers excruciating pain. It is because of this reason that the plant is called Dumb Cane. You learn it only by experience about how to maintain indoor plants. For amateurs, maintenance is an uphill task. First you have to learn light, water, humidity and feeding requirements. I, therefore, recommend some very hardy indoor plants for the beginners. One of the most primitive, hardy and beautiful plants is Monstera. There are a few species of this plant but most hardy and common is the Monstera deliciosa. The plant is suitable for indoor display and can be planted outdoors near the trunk of a tree or wall on which it climbs on its own. It has giant leaves that have deep natural cuts and holes. It is for this reason that the plant is also called the Window Leaf plant or Swiss Cheese plant. Monstera is the popular name. Supported by a moss stick, this plant makes good growth in no time. Roots emerge from every node and cling to the stick. Some of the wiry roots also hang down out. Do not cut them and let them be spread in the pot. Monstera does not like to be shifted or repotting. In fact, the big-leaved plant rather prefers to keep roots confined to small pots for quite some time. When planted against a wall or tree, it climbs till the top and as it grows its leaves become bigger and bigger, with more ‘windows’ on them. Those who already have experience of growing it may graduate to grow another prized species of this plant, the Monstera delicios albo variegata (see the accompanying picture). Some of the leaves emerging out are completely ivory white and some are half or partially white. Do not be surprised if you get a normal leaf too. Monstera is very easy to propagate. A segment, four to five inches long and with three segments is sufficient to give rise to an independent plant. You can plant it vertically or horizontally in pure sand till when it strikes roots. Thereafter you can shift it to another pot. For those living on hills, Hedera helix or ivies are suitable for the same kind of display or planting as the Monstera. It can be planted indoors or out against a wall or on trellis near the gate. In the pot, it may show small palm type leaves that have cream yellow variegation. However, there are variations in leaf size, margin undulation and variegation. Most of these are leathery in texture. Outside, the size of the leaves grows big and it becomes a dense climber. Do not worry about the soil health for it grows in any kind of soil. However, the shade aspect is a prerequisite. It is also easy to propagate from cuttings. Another very common and easy plant to grow is our own money plant. Some feel it grows very well when brought by stealing otherwise it dies. But this is just a belief. There are other reasons for getting good growth. Those who are growing them in water should never use fresh water. Fresh water contains chlorine and is thus detrimental for plant growth. Use only stored or tank water. Besides the normal money plant you can get another species by the name ‘Marble queen’. It has ivory white variegation unlike the common type that has creamy variegation. The writer is a senior horticulturist from PAU. His email id is satishnarula@yahoo.co.in
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Indian granites for country of knights
Winds
of economic change in recent years have forced Scotland to import granites from India to feed the booming local construction industry. The durable stone hewn from the once great quarries at Rublislaw, Kemnay, Alford, Dunecht, Peterhead and numerous other locations was used by skilled craftsmen and architects to shape the form and character of the city over a period of two centuries. However, the industry’s decline has led to a ‘Look India’ policy because of the high cost of quarrying, cutting, polishing and transporting granite within the UK. Most new buildings in Scotland and elsewhere in Britain now use granite imported from India. The boom in Scotland’s construction industry includes high demand for granite surfaces in kitchens and bathrooms. Local granite quarry owners find it more worthwhile to meet the demand by importing granite from India, where it is cheaper and where there is more choice. However, the large imports from India have prompted concerns over the working conditions in quarries there, including those around the reported employment of children. Some consider it unethical to profit from granite that is produced by workers that are reportedly exploited in India. “There is quite a price difference and more choice.
— IANS
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TAX tips By S.C. Vasudeva Q. I am a government employee and had applied for 200 sq yd plot advertised by PUDA at Patiala. The application money of Rs 89,000 was financed through Punjab National Bank @ 10 per cent per annum. I have not been allotted any plot in the draw held by PUDA. Hence, I have incurred a loss of Rs 6,000. Can it be shown in ITR as loss against house property and adjusted against any other income or not. Is there any other alternative? —Davinder Singh Pannu A. The payment of interest on amount borrowed for the acquisition of the plot is not allowable as deduction under any provisions of the Act. However, in case the plot has been allotted to you, the interest amount would have been added to the cost of the plot. In the given case as the plot has not been allotted to you, the amount of interest of Rs 6,000, which has been paid for the temporary finance arranged for deposit with PUDA for allotment of the plot at Patiala, would be a loss which will have to be borne by you. Form 10BA
Q. I am a married employee and living with my parents. The residential accommodation is in my mother’s name and I am paying rent to her. My father and younger brother are earning less than exempted income tax limit individually. Therefore, they are not filing any income tax return. I am only member who is earning more than exempted limit and I am not in receipt of any HRA from my employer. On the basis of above, kindly clarify the following: a) Can I claim deduction u/s 80GG for the amount of rent paid by me to my mother for residential accommodation used by my wife and me. (My wife is a housewife.) Is it also necessary to submit Form 10BA with the ITR-1 for annual year 2007-08. b) Whether my father and brother also need to file income tax return independently or ours residential status will be treated as ‘HUF’ and only consolidated return of income should be filed by us. — Rajiv Aggarwal A.
The deduction under Section 80GG of the Act is allowable in computing the total income of an assessee if the assessee does not have any income under Section 10(13A) of the Act. Further, the following two conditions have to be complied with for claiming such deduction: (i) The residential accommodation is not owned by the assessee or by his spouse or minor child or where such assessee is a member of HUF by such family at the place where he ordinarily resides or performs duties of his office or employment or carries on his business or profession, or (ii) Owned by the assessee at any other place and is being used for his self residence and the same cannot be occupied by him by the reason of the fact that owing to his employment, business or profession carried on at any other place he has to reside at the other place in a building not belonging to him. On the basis of facts given in the query, the house in which you are residing is not owned by you or by your wife or minor children and you are not receiving any HRA from your employer. You are, therefore, eligible to claim deduction under Section 80GG of the Act. The question whether there is an HUF in existence is a matter of fact, which depends on so many other factors. The most important factor, which will have to be considered, is whether the house is owned by your mother or by the HUF. It is not possible to ascertain this fact without going into the source of investment made in the acquisition of the property. Your mother should file a return of income in case her taxable income is more than the maximum amount chargeable to tax. Form 10BA is required to be filed along with the return for claiming deduction under section 80GG of the Act. However, the present Form ITR 1 has to be filled without any enclosures. You may kindly fill in the Form 10BA and keep it ready. As and when required by the assessing officer, the same can be filed at that point of time. In case the income of your father and brother is below the taxable limit they need not file their tax returns.
Section 54 and 54F
Q. I own a plot of land, which I intend selling and buy residential flat in a society. Will the capital gain earned on the sale of the plot be exempt under Section 54 or Section 54F of the Act? Would you please highlight the major difference between the two sections? —Ravipal Singh, Jalandhar A.
The exemption from the taxability of capital gains on the sale of plot and its consequent investments in the purchase of a residential flat will have to be claimed under Section 54F of the Act. The major differences between Section 54 and Section 54F of the Act are as under: (i) Section 54 of the Act applies where a residential house is transferred and the capital gain arising on such transfer is invested in the purchase or acquisition of a residential house. The acquisition of the house has to be within a period of one year before, or two years after the date on which transfer of the residential house took place. However, in case of construction of a house the time period of three years has been provided in the section. The entire amount of capital gain would not be taxable if the investment in the acquisition or construction of the new house is equal or less than the amount of capital gain. The section also provides for a proportionate exemption in case the capital gain is higher than the cost of the new residential house. (ii) Section 54F is applicable where the capital gain arises from a long term capital asset other than the residential house and the investment thereof is made in the acquisition or construction of a residential house. The specified period in both sections remains same. (iii) Under Section 54F of the Act the net consideration is required to be invested instead of capital gain. Net consideration means the full value of consideration received or accruing as a result of the transfer on the long term capital asset less any expenditure incurred wholly and exclusively in connection with such transfer. The proportionate exemption is also allowed in case full net consideration is not invested. (iv) The exemption under Section 54F of the Act is allowable only if the assessee does not own more than one residential house, other than the newly acquired residential house, on the date of the transfer of the long-term capital asset.
The writer can be contacted at sc@scvasudeva.com
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Stairs