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Hope Floats
Finally, it’s advantage buyers in Haryana: A recent landmark legislation
aims to regulate the state’s chaotic real estate sector
IT is the perfect example of better late than never. Years after Gurgaon made its presence felt on the country’s real estate map and thousands of gullible buyers were duped by unscrupulous brokers, the recent Haryana Regulation of Property Dealers and Consultants Bill, 2008, offers hope. In the backdrop of numerous stories of buyers who either ended up losing their money or quite often helplessly saw it blocked in unintelligible twists passed off as legal hurdles by fraudulent brokers, the landmark legislation passed last Tuesday by the state Assembly is being seen by market insiders as the right tool to streamline the largely unorganised real estate market.
Shops of real estate brokers dot almost every nook and corner of this town. To cash in on the hefty commissions in the booming market, there are estimated 45,000 property dealers. And almost half of them have their shops set up in Gurgaon. It is disturbing to note that almost 60 per cent cases of fraud registered here are related to property matters. “The certification of brokers henceforth, besides reducing the chances of frauds, will help develop faith in the minds of customers as it makes mandatory on part of the brokers to have pan and service tax numbers. Moreover, since the brokers will have to identify themselves as witness on the documents of the deals conducted by them, they can be held accountable if they indulge in cheating,” observed Parveen Mangla, managing director of Ozone Group. But most prospective buyers felt that the law will prove useful purpose only if it’s implementation and enforcement is monitored in the right spirit. “It is normally seen that laws are manipulated and circumvented and the people have no option but to suffer in long-drawn legal battles. The concerned authorities must ensure that this law does not become victim of any kind of nexus detrimental to the interests of the genuine buyers or sellers,” said Ompal Rathi, a retired government servant and resident of Sector 15. This is all the more imperative as the booming housing sector has made Gurgaon an attractive proposition to make investment. As per an official estimate, Gurgaon has more than a lakh houses and apartments in the 57 sectors that have been developed here so far. This should have made the planners to visualise the necessity of such a law since the boom set in. “It would have saved a large number of buyers especially from the middle and lower income groups from falling into the hands of the conmen who had been operating with impunity in the real estate market here for long,” observed Arshinder Randhawa, a marketing professional residing in Sushant Lok. Tracing the emergence of such a large number of brokers who were so far unaccountable for the deals done by them, market insiders observed that the boom in real estate made everybody feel in Delhi and NCR that they could make quick and hefty commission. This allowed a large number of inexperienced brokers who may have worked for a year or so in some real estate company to start his own business especially as it did not require any kind of government permission. Since generally the companies take help of the connections of these small time brokers to sell their products. The brokers are offered share over and above the flat rate that companies want for each of their units sold. This rampant strategy to promote the companies’ sales too has contributed in spawning of the brokers’ network. “Definitely the big companies have to own the responsibility to follow the new law and disassociate themselves from unscrupulous brokers to help cleanse the unorganised market of the unscrupulous brokers as envisaged by the government. Even if it was very much required long back but if it has happened now, it should be welcomed,” observed Kulbhushan Gaur, vice-president (marketing) Paramount Group.
Ready Reckoner
BUYING an apartment? Do some thinking first. Decide on your purpose of purchase (residential or investment), spatial requirements and finance. Whether it’s Dehra Dun or anywhere else, here’s some help on what to keep in mind: n Check for approach roads, neighbourhood, distance from schools, colleges, markets, hospitals and transport facilities. n Find out the general profile of owners in the building. n Visit the developer’s earlier projects to check out quality of construction. Find out about the architects and the contractors. n Check for specifications offered by the developer like flooring, sanitary / kitchen fittings, etc. n Check on amenities provided in the building and if any additional cost is involved for their use. n Check on availability of uninterrupted supply of utilities like water & power, a good drainage system. n If the building is under construction, confirm tentative time for completion.
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Falling for Flats
Spiralling land prices, increasing material costs & shrinking families. Apartment culture
has invaded Dehra Dun, writes Jotirmay Thapliyal WHILE the real estate sector is experiencing an unprecedented slump, there is a flurry of activity in several localities of Dehra Dun. Multi-storey flats are coming up everywhere — Mohini Road, Balbir Road, Old Survey Road, Shastardhara Road, Kalidas Road… As many as dozen apartment projects have completed and nearly 50 are in the pipeline.
Take for instance the posh Dalanwala locality, which was very quiet a few years back. Today several apartments like Green View Silver Rock Apartment, Ganga Apartment and Windlass Residency have come up. Almost all flats in these buildings have been sold out. Over a dozen luxury apartments are also under construction. The cost of an apartment ranges from Rs 20-25 lakh for a two-bedroom one while a three-bedroom one could leave you poorer by Rs 30-35 lakh. Of course, prices also depend on location with the outskirts being a little cheaper. While ensuring comfortable and affordable accommodation to the people, apartments are proving to be a safe bet for those seeking investments. With city population projected to witness phenomenal rise in the years to come, this aspect of housing becomes all the more important. So, what draws people to apartments? State-of-the-art infrastructure for sure. Most of these apartments have round-the-clock power supply thanks to independent tubewells. Same is the case with electricity as they have made adequate provisions to ensure 24 hours un-interrupted power supply. And then foremost, with ample security arrangements at place, they certainly are secure. “Definitely, apartments have come as a respite for the middle class. Now, an average family can fulfill its dream of owning a house of its own,” says Rishi Bansal of Ganga Realtors, one of the leading companies undertaking apartment construction in Dehra Dun. Echoing similar sentiments, real estate consultant Atul, who has helped many
get an apartment of their choice, points out that with land beyond the reach of the middle class, apartments are the best available option. Apart from those who seek a roof over their head or take it as a mode of investments, these apartments have also come a big relief for those who live outside Dehra Dun but have their wards studying in the city, which boosts for some of most reputed schools of the country. These parents who frequently come to Dehra Dun prefer permanent accommodation in the city rather than checking into expensive hotels. Ganga Realtors has already completed Doon East Park, and are now planning to come up with the first-ever integrated township in the Pathribagh area. Giants Parsvnath, Ansals and DLF have also known to have shown an inclination towards commercial and residential complexes in the city. Amidst escalating land prices coupled with very little space left in the city, apartments, evidently, look to be the only answer to the city’s growing housing needs. Once a non-descript township, the city is buzzing. With Dehra Dun also emerging as the financial capital of Uttarakhand, the city’s skyline is set to change forever.
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Where there is a will... S.C. Vasudeva
— Reena, Ajmer A. Section 6 of the Hindu Succession Act, 1956, provides for a deemed partition in case of the death of a Hindu Mitakshara coparcener. The explanation to sub section (3) to section 6 of the aforesaid Act which deals with the devolution of interest of the Hindu Mitakshara coparceners in a joint Hindu family property provides as under: “For the purposes of this sub-section, the interest of a Hindu Mitakshara coparcener shall be deemed to be the share in the property that would have been allotted to him if a partition of the property had taken place immediately before his death, irrespective of whether he was entitled to claim partition or not.” Your father can thus make a will in respect of his share in the ancestral property in favour of his legal heir/heirs. In view of the express provisions of law, such a clause in his will should not lead to any dispute.
Win-win situation
— Sushil Kumar A.
The term “agricultural land” has not been defined by the Income Tax Act 1961 (the Act). However Section 2(14) of the Act includes the following category of agricultural land within the term ‘capital asset’. Agricultural land that is situated: n in any area which is comprised within the jurisdiction of a municipality (whether known as a municipality, municipal corporation, notified area committee, town area committee, town committee, or by any other name) or a cantonment board and which has a population of not less than ten thousand according to the last preceding census of which the relevant figures have been published before the first day of the previous year; or
n in any area within such distance, not being more than eight kilometers, from the local limits of any municipality of cantonment board referred to in item (a), as the Central Government may, having regard to the extent of, and scope for, urbanization of that area and other relevant considerations, specify in this behalf by notification in the Official Gazette. The agricultural land so included in term ‘capital asset’ becomes exigible to capital gains tax. It is not possible to publish the notification issued by the government due to space constraints.
Rental issues
— Ashok Arora A.
Exemption for the house rent allowance is allowed if the employee is entitled to a house rent allowance and has incurred expenditure towards payment of house rent. In case both of you have incurred expenditure towards the payment of house rent, it may be possible to claim the deduction in respect of the house rent allowance. The exemption in respect of house rent allowance is regulated by Rule 2A of Income Tax Rules 1962. The limits provided by the said rule are as under: An amount equal to 50 per cent of salary, where residential house is situated at Bombay, Calcutta, Delhi or Madras and an amount equal to 40 per cent of salary where residential house is situated at any other place. The actual amount of house rent allowance received by the employee in respect of the period during which rental accommodation is occupied by the employee for which exemption is claimed. The amount by which the expenditure actually incurred by the employee towards the payment of house rent allowance exceeds 1/10th of the amount of salary due to the employee in respect of the relevant period. Exemption is allowed to the extent of least of the above three amounts.
Q. I purchased one S.L.F. plot from Improvement Trust, Patiala, got it constructed and gave it on rent in 1993. The Patiala Municipal Corporation is charging house tax on this property owned and governed by the Improvement Trust. Though we are paying in protest, is it legal on the part of Municipal Corporation to charge house tax on such rental property? M.S. Randhawa,
Patiala A. House tax is normally charged by municipal authorities from the owner of the land or the house property. It seems from the facts given in the query that the plot was purchased from the Improve-ment Trust and the house was constructed thereon by you. Further, it is also evident from the query that the property has been given on rent by you. Therefore, in a fact, you are enjoying all the benefits of an owner from the said property. In my view, therefore, the house tax has been correctly levied by the Municipal Corporation. Q. I acquired a house for Rs 50 lakh which had been mortgaged to a public sector bank. The mortgager had died after creating the mortgage. I am also supposed to discharge the mortgaged debt existing on that date. The debt would be approximately Rs 50 lakh. Could you please enlighten me what would be the cost of acquisition of the house? Dinesh Vinayak,
Ludhiana A. The facts of the case indicate that the mortgage created by the previous owner was subsisting on the date of his death. You, as a successor, have obtained the mortgager’s interest in the property. You will acquire the interest of the mortgagee after discharging the mortgaged debt. The amount paid to clear off the mortgage would thus be treated as a cost of acquisition of the mortgagee’s interest in the property and would be deductible as a cost of acquisition under Section 48 of the Act. A Supreme Court decision reported in 93 Taxman 386 can be referred to.
This column appears weekly. The writer can be contacted at sc@scvasudeva.com
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I’m special agent, home loans
As credit delinquencies give bankers nightmares, new-age investigators are their best friends RAPID industrialisation, an expanding economy, growing aspirations, increased incomes, improved lifestyles and an expanding market – the perfect atmosphere for a rapid credit off take. While demand for credit has risen, so have credit delinquencies, especially in the housing loan segment. To counter this, banks have now started appointing special agents before sanctioning housing loans. These specialised investigating agencies step in to verify a client’s credentials once the individual has submitted documents necessary for the loan to the bank. According to reports, a host of banks — especially in the private sector — appear to have found this a more efficient way to crosscheck customer credentials. Now, public sector banks are increasingly following this route. In a communication to banks, Reserve Bank Of India had pointed out certain lapses in implementation of banks’ own approved policies while lending. It was found that branch managers, field officers and even assistant general manager were not aware of certain policies on granting loans. Frauds are increasing only because these people in the banks to not take interest in the institutions. The RBI had conducted a supervisory review of around one dozen banks with significant exposure to sensitive sectors, particularly realty. These banks had a real estate and capital market exposure in excess of 200 per cent of their net worth, respectively. RBI provided the banks with a list of deficiencies and irregularities revealed by the study and had instructed banks to improve risk management at operating levels. Soon, banks would be able to determine whether a property is already mortgaged when a borrower approaches them for a loan against it and this would help in checking the increasing instance of housing loan frauds. The Credit Information Bureau India Limited (CIBIL), which collects borrowers’ details from banks, has approached the Indian Banks’ Association (IBA) with a proposal to develop a mortgage database as instances of borrowers having availed of multiple loans against the same property have surfaced. Besides, a credit report on borrower banks will match the property to see whether it has been already mortgaged. At present, a bank can check ownership details of property but cannot determine if a loan has already been taken against it. Upsurge in banking frauds have been found to have a direct link with the boom in the real estate loan market. Banks have not taken action where senior executives were involved but where the branch managers and field officers were involved the action has immediately been taken. Banks that have seen pressure on standard assets in recent times have become proactive in putting in place systems to identify accounts that could turn NPA overnight. Bank of Baroda has set up in its corporate office a whole new department headed by a general manager to look after the bank’s credit monitoring functions. Representatives of Union Bank of India, Indian Overseas Bank, Punjab National Bank, Bank of India and all its seven associate banks including the largest lender, SBI, said that the new system was beginning to show results and the delinquency ratio had declined.
Ground reality
THE housing loan portfolio of banks on a year on year basis grew 17-20 per cent and present outstanding is Rs 2,73,500 crore and non-performing assets (NPA) level is increasing every year because of poor selection of borrowers by banks while sanctioning loans. The current NPA level stands at around Rs 45,000 crore.
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Tile it right Jagvir Goyal
The base
TILES can be fixed either over a concrete base or over an already laid floor of concrete or on terrazzo flooring. While laying tiles on existing flooring, prepare the base by keeping the thickness of tile in view. On the prepared base, lay a tile near the door and see that it opens easily without touching or scratching the tile. Otherwise, choose a thickness that allows easy opening of doors. Nothing can be done afterwards as neither the door can be peeled off nor the tiles
changed.
The method
TAKE a long string, dip in chalk powder and hold it diagonally across the room. Pluck the string along each diagonal. It will leave a chalk mark on the floor giving you the centre of the room. Now, find the centre of each wall. Hold the string along the opposite center points, passing through the middle point and pluck the string. Start laying tiles centre outwards. Before starting fixing of tiles from the centre line, check the space that is left near opposite walls after dividing the total distance by the width of a tile. If a slight left or right shifting of centre line saves cutting of tiles, go ahead.
The bedding
USE a half to three-fourth inch thick 1:3 cement-sand mortar for laying floor tiles. See that it is not less than 5 mm anywhere. Prepare cement slurry for laying it over mortar bed and fixing tiles on it. Wet the reverse of tiles before laying. There is no need to immersing them in water. At one time, the cement slurry can be spread over an area for 20 tiles. Just before laying of tiles, sprinkle some dry white cement over the prepared base.
The joints
Adhesives & grouts
IF you want to use an adhesive for fixing the tiles in flooring, follow the same procedure adopted for marble slabs. There is no need to soak tiles in water when an adhesive is used. For grouting of laid tiles, normally white cement mixed with pigment matching the tiles is used. Grout only 24 hours after the tiles have been fixed. Grout, which is polymer-modified cement, works better than white cement and is available in packs of 500 gm, 1 kg and 10 kg in most colours. Rainbow Tile Mate and Bostik Tile grout are a few good grouts. To apply, take three parts of grout and mix with one part water by volume to get a smooth paste. Apply to tile joints using a squeeze trowel. Use a sponge to wipe off surplus. Allow 24 hours to dry.
Replacing broken tiles
IF during laying of tiles, a fixed tile gets broken, remove it with a chisel and hammer by breaking it at its centre. Don’t touch its edges as that could damage surrounding tiles. Remove all adhesive from the base with a chisel, gently hack the sub-base and fit in the new tile. In case some edges of tiles are chipped during transportation or handling, use them at junction of floor and wall where the edges is hidden below the skirting.
Special grouts
FOR a 1.5-2 mm joint width, about 300 gm of grout is needed for 1 x 1 foot tiles and 220 gm grout is needed for 2 X 2 feet tiles. These days, “fix tiles and grout” products are available and can be used immediately after their fixing instead of waiting for 24 hours. Use this grout only if you are in a hurry to finish the flooring work. Another option are epoxy grouts. These are waterproof and have excellent fixing properties. It comprises of a base, hardener and filler that need to be mixed together before use. However, these are better suited for commercial buildings. In residences, normal polymer-modified cement grout is ideal. After grouting, don’t wet the tiles for at least two weeks.
Tiles & traps
TO fix a tile around a pipe or floor trap, cut the tile into two and take out semi circles from each piece to exactly fit around the pipe or trap. To fix tiles around a WC, make a cardboard template of the WC base, lay a few tiles together and cut them as per this template. Now, fix the tiles around the WC without leaving a gap. This method will allow best fixing of tiles around English seat bases, pipes and traps. The author is deputy chief engineer, civil, PSEB. He can be reached at www.jagvirgoyal.com
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Window of hope S.C. Dhall Govt plans single window clearance for construction industry IN some respite to the construction industry swamped in multiplicity of regulations and licences, the Union Government is planning to set up a watchdog , a regulator, to facilitate single window clearance. It would also make mandatory for every state government to levy worker welfare cess on the construction industry. Currently, companies engaged in construction require registration under five laws apart from obtaining licences under several acts and being subject to inspection under 12 laws. The unified law would club all laws under a single umbrella. The model regulation also proposes a quick redressal mechanism for the industry always faced with litany and disputes. The department of industrial policy and promotion is taking up the proposal with concerned ministries for framing the policy.The regulator would help eliminate anomalies in the existing legal system due to multiplicity of authorities and procedural complexities. Once the proposal is approved, the government would enact a legislation to the effect. A model construction law may help bring together best of the points from national as well as state laws. The move has been welcomed by the industry. “We are an over-regulated industry. There is too much of bureaucracy for us to handle. That is why there is need for a body that can facilitate a single window clearance for developers,” said Sushil Ansal, FICCI real estate committee chairman. The real estate sector is growing rapidly. It posts profits in between 65-80 per cent while other sectors are happy with 25-30 per cent. So what makes this sector and its players so stupendously efficient? Have they unveiled new, path-breaking managerial practices or just serendipitously stumbled upon the elixir of eternal profit making at supernormal levels? Land prices are very high and developers say it is so because of slow release of open land by government agencies at extremely steep reserve prices. It forces them, they say, to pass on the high price to the consumers. Some states still allot land instead of auctioning it at even less than half the open market price. Do the allottee developers base their selling price on allotment rate? It is a win-win situation for developers. Haryana Urban Development Authority (HUDA) and Punjab Urban Development Authority (PUDA) auction commercial and residential plots and most buyers are developers. The Centre has been keen on such an authority for long but the proposal was always met with great resistance by state governments. The ministry of urban development had also asked states to put a stop on launch of properties with great fanfare before necessary approvals relating to land and infrastructure had been taken.
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Q. My sister and I are the only two daughters and children of our parents. Both of us are married. Our family owns some ancestral land in Rajasthan. My father and his four brothers jointly hold it and partition has not been done. My father is also in possession of his share of land. My father, in anticipation of any future dispute after his death, has made a registered will in favour of us sisters. I want to know if any kind of dispute may arise after my father’s death in case of non-partition of ancestral land. Also, is the will sufficient to claim legal ownership of that land? 
Q. What is agricultural land? I understand that the government has issued a notification for the coverage of agricultural land where the capital gain arising on the sale of such agricultural land is exempt from the leviability of capital gains tax. Is it possible to publish the said notification in the columns of the newspapers? 
Q. Both my wife and I are working and getting house rent allowance. Can the house rent deduction be claimed by both of us from our salary income?
IN
the last few parts, we have discussed how to choose vitrified tiles, ceramic
tiles and how to fix ceramic tiles on the walls. This is the last part on tiles
and is devoted to the right method of laying floor tiles. Howsoever expensive
and beautiful tiles you may buy, their real beauty can be experienced and
enhanced only if these are laid in the right manner by skilled hands. Here are
a few guidelines:
Thinner the better. See that the joints make a straight line and there is no break in straight line at the corners. Tap tiles well with the wooden tack hammer available with the mason to press them in position. There shouldn’t be any hollow sound on tapping as this indicates a void below it. Many companies provide joint-free tiles. This flooring has hairline joints joined with invisible grout. These enhance space as the tiles joined through invisible joints give feeling of a large slab. But these cost a tad more.