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Merry Meltdown! Triple dhamaka: Property prices fall by 20-30 per cent, interest rates come down, building materials get cheaper. Jupinderjit Singh reports YES, yes the meltdown is for real -- Property prices have fallen by 20 to 30 per cent in Jaipur and across Rajasthan, there’s virtually no sale-purchase, no new projects are coming up and even existing ones are progressing at a painfully slow pace. But there’s a positive side to it: The good news is that this is also the best time to buy as well as construct if you already have land. It is truer for the middle class more than ever. For one, banks have slashed interest rates on home loans. As no major company is undertaking building projects, iron and cement merchants in the state are offering up to Rs 20 off on a bag of cement! Iron prices have also come down to Rs 30 from Rs 45. “Desperate to sell their product and remain in circulation, dealers have cut down almost 33 per cent rates. This seems like the best time to build," says Arvind Saini, a prominent real estate dealer. Dealers are also offering large quantities of construction material on credit. "I have told prospective clients that they can buy now and pay later. Obviously, I first ensure that the person or group would be able to pay later, but in order to remain business, I have to change with the times. There is practically no business these days," tells Sooraj Mal, owner of a cement store. Prices of flats and apartments in the posh Tilak Nagar area have come down by a whopping Rs 1,000 a sq ft! Similar is the case in another posh colony in Jaipur, Bani Park. It was these two areas where hundreds of high-rise building offering world class flats and apartments had come up during boom time. "Liquidity is there in the market. The only thing is that people are holding on to their cash fearing investment in property would cause losses. But for the middle class population that saves each penny for a small, dream home, this is the time to construct," suggests a leading developer of the Pink City. "You see, earlier there were no sellers in Jaipur when prices boomed in the Golden Triangle of Delhi, Jaipur and Agra. Then came the recession and a change in government, policies, which hit the segment hard," says Anand a local property dealer. The realty bubble had burst long ago, he says. "More houses, flats and apartments were built in Jaipur than required. There are over 1,000 buildings with just 30 per cent or less occupancy. The investors’ money is stuck now. They have no option but to wait for a reversal," he adds. There is but one major hurdle in the way of encouraging construction, says Anand. “Banks are proceeding with utmost caution. They have devised stricter regulations and checks before passing home loans. It is quite ironic that on the one hand they have lowered interest rates, and on the other they are making it difficult to get a loan," he says. The apprehensions of banks aside, it’s a win-win situation for government employees, the favourite of lenders. "It is easier for government employees to avail a loan. Perhaps, this section may actually pull us out of the recession," he adds.
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Uncertainty stalls realty
IT’S a battle of wits now. The global meltdown has, of course, impacted lands deals in and around Ludhiana city, especially sale and resale of residential plots and flats. Even as a section of property dealers say land prices have not and will not go down, a sizeable number say there are no buyers, even at reduced prices.
The scarcity of buyers in not hard to explain. Naturally, they are confused. As prices boomed, both buyers and sellers knew most of it was over valuated. Now, upbeat with the correction, buyers are treading with caution, reading market signs and readying to make the kill. Some have stocked up cash expecting a crash in prices in the near future. Kulwant Singh, president of the Colonisers and Builders Association, says, "Whether fellow property dealers accept it or not, prices have corrected between 10 and 15 per cent. Of course, we are calculating the decrease on prices recorded at the peak and not original land prices.” On the other hand, realtors and developers are holding fort and not showing signs of striking cheaper deals. Ashok Malhotra, managing director of a Ludhiana-based construction company, says, “Property rates never crash, which is why it is considered the safest investment option. True, virtually no deals are being made these days, but it is incorrect to say that the real estate sector is in grave trouble.” However, a property dealer requesting anonymity says, "No matter what they say, the ground reality is that there are no buyers even at reduced rates. Not very long ago, land cost Rs 15,000 a square yard in a good residential area of the city. Today, there are no buyers for even Rs 11,000 a square yard. Please don't quote my name. I cannot offend my partners or other property dealers.” A large number of property dealers are trying to come up with ways and measures to make their offers lucrative, like easy installment schemes, he added. Kulwant Singh says a number of financiers are also trying to sell their properties. “They recorded big profits when the price index soared. With the market coming to a virtual halt and signs of prices further going down, many financiers are disposing off properties purchased earlier. Any which way, most are recording profits on original prices," he explains. Raikot resident Dalbir Singh says, "Whether we blame it on the global meltdown or wariness of buyers, the fact of the matter is that no or very few deals are being made these days. Flats by a leading company in the city were earlier priced at over Rs 1 crore. Now, these are being offered for approximately Rs 50 lakh!” Jagraon resident and prospective buyer Narinder Singh Sidhu says the cartel of property dealers is putting up a good fight. "See, don't expect property dealers to publicly admit that land rates had crashed as it would affect prices. The very fact that there are no buyers at existing rates says it all,” he says. The so-called public apprehension is a very calculated rest period the buyers are taking, he says. “Let us see how long there are no deals and how long realtors and dealers can keep Another property dealer, requesting anonymity, says work has stopped at majority of sites as well. When there are no buyers, a builder is left with two options — stop construction or slash prices.
“Real estate prices really spiraled. The crash had to come. As the economy struggles, a delay in completion of much-hyped projects all over the state is expected," he says.
But Ashok Malhotra is adamant. "Prices have not fallen and are unlikely to fall. We know people are stocking money these days thinking they might find a good deal."
Interestingly, property dealer Kulbir Singh dismisses the impact of the global meltdown on realty in the state. “The media has created all this. Only property prices that were unnecessarily inflated have corrected. The actual prices remain unchanged." As to why there are no buyers, Kulbir Singh says the service class are very cautious and in the current scenario, they have become more guarded. “The clouds of uncertainty should settle shortly and the real estate market will stabilise.” Ruling out panic selling in the Ludhiana area, he adds, “Majority of holdings belong to the affluent, who would rather wait for a better time than post losses in a deal."
DLF’s new offering
THE meltdown notwithstanding, DLF Commercial Complexes Limited (DCCL) has announced launch of its first office cum retail venture — The Galleria, Ludhiana. Being touted as the ultimate destination for retail and office spaces, the complex will come up at the centrally-located Ferozepur Road. It would offer an excellent location for the confluence of large format retail and office space under one roof with a multi-cuisine food court and specialty restaurants spread over 2.25 acres. The seven-floor Galleria promises to be an easily accessible and free from city congestion shopping
centre.
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Q. My father made a registered will in my favour, debarring my brothers and sisters from inheriting his self-acquired house property. My father expired about 15 years ago. I now intend to dispose of this property and I am likely to earn about Rs 42 lakh as long-term capital gain. However, I have been told that I cannot sell this house property in question unless I get its ‘intqal’ and ‘farad’ from the patwari. I, however, presume that I have automatically become the legal owner of this house property by virtue of my father’s registered will. Kindly elucidate this point.
n Also advise whether the ‘intqal’ is to be executed by the revenue department or the municipal committee or both. What documents have I to produce and what expenditure have I to incur to complete this formality? — O.P. Sharma A. A will executed by a person expresses his intention to enable his legal representatives to know the action to be taken in respect of his property after his death. Therefore, to confirm your ownership in the property it would have been advisable to get the same mutated in your name on the basis of the registered will. The mutation of the house property should normally be by the municipal authorities as they maintain records of house properties. Normally, a person is supposed to file an application for mutation and supportive documents with the municipal authorities as also the requisite fee. In case the mutation is sought in favour of one of the legal heirs, consent letters or no objection certificates from other legal heirs are also sought. This is to ensure that the will has been executed without any undue influence.
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Q. I have given general power of attorney to my brother in respect of my share in the ancestral immovable property. As a gesture of goodwill, I have not claimed the sale proceeds from the said property. My question is:
n Is long-term capital gain accr-uing from the sale of my ancestral property in question taxable on my hands or my brother who has actually received the money? n If I cancel power of attorney, what would be my responsibility for past transactions? — Hem Raj A. The long-term capital gain arising from sale of property for which you have executed general power of attorney (GPA) in favour of your brother would be taxable in your hands. The withdrawal of GPA would enable you to prevent future actions in respect of said property. It may not be possible to question the actions of your brother prior to the withdrawal unless you can establish that the power of attorney holder had committed a fraud.
Q. Please refer to your answer in response to my query published on November 29, 2008 ‘Where there’s a will, there’s no way’), there is some fresh information:
u
The immovable property (agri-cultural land) willed by my father is ancestral, not self-acquired.
u
I have recently obtained the copy of will through RTI Act and subsequently, came to know the facts regarding mutation and details of property left by my father. u
My brothers and the revenue department kept my mother and I in the dark. Hence, we were unable to represent the case with concerned authority. Since the rules of ancestral property are slightly different, kindly advise accordingly. — Lakhwinder Kaur A. This reply is based on the assumption that the said ancestral property was a joint Hindu family property. In such a case, a Hindu male has a right to make a will in respect of his share in it. He has no right to make a will in respect of the remaining shares, which would devolve on the co-parceners of the family by survivorship. The mutation of the property in favour of your brothers should not have been done without the consent of all interested parties. Maybe, the same was done on the basis of an indemnity bond given by your brother. Your mother can seek relief from the court for grant of maintenance and in case of partition of the family property, for her share, which would be equivalent to her son’s.
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File returns separately
u
Is it mandatory for me to file income tax return declaring Rs 9 lakh as long-term capital gain accruing to me and half of bank interest? u
Can my son file income tax return declaring whole of the long-term capital gain amounting to Rs 18 lakh along with bank interest as his income and pay income tax thereon? In fact, my eldest son looks after me very well and I want that he should enjoy my share of the ancestral land. — R.R. Sahota, Rewari A. Your queries are replied as under: n You will have to file income-tax return declaring the capital gain arising on the sale of your share of agricultural land. Your son will have to file the income-tax return for his share of capital gains separately. The general power of attorney executed in favour of your son may entitle him to sign for and on your behalf but it does not take away your obligation to file the income-tax return in respect of the income arising to you. n You could have gifted your share of agricultural land in case you wanted your son to enjoy the said share. In that case, he would have filed the return declaring the capital gain arising on the sale of his share of land including that gifted by you.
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Try with indemnity bond
Q. My father made a registered will in my favour debarring my
brothers and sisters from inheriting his self-acquired house. After his
death, I approached the patwari to get the said house transferred in my
name. However, I was told that written consent/affidavit from each of my
brothers and sisters is required to proceed further in the matter. Is
the patwari justified to demand such documents, which I cannot produce
for obvious reasons? I am a senior citizen and I intend to make a
registered will myself in respect of the house in question.
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Rattan Lal Bajaj, Sangrur A. Such requirement by patwari is a normal procedure. He has to ascertain whether the will executed by your father is genuine and has been executed without any undue influence. You may try with the patwari to mutate the property in your name on the basis of an indemnity bond.
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Bundle of choices
Plan electric wiring and switchboards carefully keeping in mind your lifestyle and requirements. Start deciding once your house plans are ready. And never compromise on quality of equipment & cables, warns JAGVIR GOYAL A SHORT circuit is the most common cause of a fire breakout. Little carelessness in electrification work may put the whole building at risk of fire. Little saving by buying inferior quality, substandard electrical items may cost heavily in the long run. You build your home using almost all the savings of his lifetime and would never want to put it at stake. Electrification work is, therefore, one such item that must be executed very carefully and only through skilled electricians. Plan the electric wiring of your house carefully. Get proper drawings made for it. Decide in advance the location of switchboards. Once your house plans are ready, you can approximately decide the location of ACs, coolers, televisions, home theatre system, refrigerator, washing machine, dishwasher, geysers, microwave, food processor, grill, electric chimney, water purifier, blowers, computers and other electric appliances. Provision of power plug points and five ampere points should be made accordingly. Similarly, the light points, fan points and call bell points can be planned. Keep in mind the following: Circuits: Let there be plenty of circuits in your electric wiring drawings. Plan a separate fuse for each power point. Never run the electric wires, the data cables and voice cables through the same conduits. Data cables are required for Internet and voice cables for telephones. These invite a lot of disturbance if bunched with electric wires. If you wish to maintain an aquarium in your drawing room, lobby or any other room, plan a separate switchboard for it. An aquarium requires many sockets to run filters, air pumps, lights and water heaters. Earthing: Take care of Earthing system of the house. Often Earth wires are ignored and two pin plugs are used. Always use three pin plugs and see that every point in the house is connected to the earthing system. Provide Earth Leakage Circuit Breaker (ELCB) in your house. It will save you and your family from electric shock. Any small leakage of current will make it trip. Sometimes, an ELCB causes irritation during rainy season or on running of coolers when the walls are wet and the ELCB keeps on tripping again & again. However, safety from shock is more important and ELCB must be provided, covering full wiring of your house. ELCBs and MCBs: In addition to ELCB (Earth Leakage Circuit Breaker), equip the electricity circuits of your house with MCBs (miniature circuit breaker). This is a must for yours and your house's safety. A short circuit will trip these breakers instead of blowing the fuse. A short circuit occurs when the live wire and neutral get connected due to the wearing off of insulation cover. If you will try to switch on the ELCB, it will not and will keep tripping until the fault is removed. If you don’t want to connect the earthing of whole house to ELCB, must connect the outdoor electricals, the bathrooms, the kitchen and the coolers to it. An ISI marked 40 ampere ELCB costs around Rs. 1600 and is worth its cost. Always buy ISI marked MCBs. There can’t be any compromise here. GE, L&T, Havell, Siemens and Clipsal are some of the reputed manufacturers. L&T MCBs are quite costly while Havell’s MCBs are reasonably priced. A 6 to 32 ampere MCB should cost around Rs 80. Geco and Assco are still cheaper varieties of ISI marked MCBs. Mains and sub-mains: Once the lighting and gadget planning is over, the job of providing mains, sub mains, conduits, wiring and switches can be taken in hand. Choose 100 ampere mains for your house as this much current is generally sufficient for a house. To be sure, do one thing. Once the wiring plans are drawn, check all light points, 5 and 15 ampere socket points, fan points, AC points, call bell points and any other points with wattage of each. Add up total wattage. Keep extra power required for ACs, geysers and dishwashers etc in mind as some of these keep adding to your house. This is your total load. Divide this by the voltage. For example, for a circuit of 230 volts, divide total load in watts by 230. Resultant figure will be your current required in amperes. To understand electricity better, just think that it is like water. Voltage is the pressure with which it flows and current is the amount of flow. So if your total load is 10 KW or 10000 watts, your current requirements at 230 Volts are 44 amperes only. Thus 100 ampere mains are quite sufficient. Electric meter: Further check that the meter for the house is corresponding to the total load. Once the electrification work is over and appliances are installed, you can work out actual load being drawn. The meter may get burnt if load on it is increased beyond capacity. Get the meter upgraded whenever there is an increase in load. Service cables: Your planning will also help in running TV cables and broadband cables through concealed conduits. These cables dangling here and there are major eyesores in the houses. If you are using Wi-fi for internet, there isn’t any need of broadband cable. Location of home theatre system is very important to decide to locate speakers and provide connections there. Split AC pipes: Take special care of drainage pipes of split Air Conditioners. Normally, due care is not attached to their quality and leak-proofing. Sometimes the wall area carrying these pipes gets covered with tiles or wood paneling. A little leakage of these pipes may create great trouble for you making you rip off the paneling or tiles. Switch connections: See that the switches are always connected in series with live wire. The switch will be provided in the line and then the light or fan or other point will follow. This way, the switch always opens or closes the circuit. Otherwise, you will see that a bulb continues to burn even if the switch is off. Provide independent conduits for ACs and Geysers, with a separate neutral from the mains. Conduits: Use of MS conduit pipes is decreasing now. If you plan to use these, use BEC or MKAY make, painted inside and outside and of 16 Guage MS. Better is to choose PVC conduits. RP, PK, Diplast are some of good companies. For RCC slabs, always choose 1 inch dia conduits. Don’t choose three-fourth inch dia conduits. Further, choose 2 mm thick conduit for the slab. Conduits are supplied in 10 feet length. 1 inch dia, 2 mm thick conduit should cost around Rs 35 per 10 feet length while cheaper variety may be available for Rs. 26 or so. Choose better quality and forego this small saving. For walls, choose 1 inch to three-fourth inch dia conduits depending upon the number of wires to be run. Don’t choose half-inch inch dia conduits. ¾ inch dia conduit should cost around Rs 26 per 10 feet length. For walls, use a minimum 1.6 mm thick conduit. CAUTION: Keep an eye on electric wiring of your house when the plumbing work is in progress. Prefer to run electric wires after the plumbing work is over. There is every chance of their getting damaged during laying of water supply pipes in the walls. The plumber is going to care least for them and insulation may get damaged. Go ahead. Happy electrification! (This column appears fortnightly) The writer is deputy chief engineer, civil, PSEB. He can be reached at www.jagvirgoyal.com
Not to Miss...
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Commercial projects get a boost
THE landless Mussoorie Dehra Development Authority (MDDA) has now decided to first implement key commercial projects in Dehradun. These projects had been on hold for over 18 months and would now get a fillip with the decision. Significantly, the decision comes after the Uttarakhand Government objected to acquisition of public land by the authority to start some more housing projects.
Prominent projects include the much-awaited Dun Haat, which is to come up at an approximate cost of Rs 65 crore over five acres of prime land on Rajpur Road near the Clock Tower and the Rs 200-crore City Centre at Mazra near Inter State Bus Terminus. “The detailed project reports have already been cleared and others that may finally see the light of day include the Rs 30-crore Integrated Commercial Complex at Transport Nagar, Rs 6-crore Rajpur Road beautification project, Rs 31-crore Chakrata Road widening project and parking and commercial complex at Veterinary Hospital Dispensary,” said authority secretary U.C. Kabadwal.
The eagerly-awaited Dun Haat will boast of one-of-a-kind, spacious parking places along showrooms. Apart from sending the authority’s cash registers ringing, the haat will offer residents respite from the hassle of shopping in the congested heart of the city. Similarly, the Integrated Commercial Complex at Transport Nagar will have house top-end showrooms, offices, shops and an auditorium with basement parking.
The Dehradun Municipal Corporation has also tied up with the authority for some of these ambitious projects. “We are providing land for the Guara Devi Park and night shelters in some places in the city,” said Sushil Kumar, chief executive officer of the MC. Both bodies would share profits in these projects.
Completion of these projects would help the authority get much needed financial gains. Till now, the authority had been focusing on housing projects. It has till date constructed 3,563 houses and flats for higher income, middle income and lower income groups in Dalanwala, Indirapuram, Rajpur, Ajapur and Kedarpuram.
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Q. I am a senior citizen and my husband expired in 2004 without making a will. My four sons and I inherited equal share in the ancestral agricultural land in our village situated within municipal limits. Last year, I executed power of attorney in favour of my eldest son in respect of my share in the ancestral agricultural land. In May 2008, my son sold his share of land along with mine for Rs 26 lakh. This amount was received by an account payee cheque made out in my son’s name and deposited in his savings bank account. The net long-term capital gain by both of us comes to Rs 18 lakh after deducting Rs 8 lakh as the indexed cost of land etc. My query is: