These 7 Pointers Can Make the Affordable Housing Dream a Reality

Large-scale affordable housing in cities is the greatest necessity of urban India today. Because Indian cities have such a severe shortfall on this front, we are seeing the proliferation of slums and unorganized real estate. These are detrimental to planned growth of our cities. Large-scale urban developments - the only way to create affordable housing in the required magnitude in our major cities - are becoming increasingly difficult due to lack of land parcels, congested transit routes, lack of finance, rising input costs and regulatory hurdles. On analysing the bottlenecks that currently hold affordable housing in India to ransom, it emerges that any approach towards a workable solution will have to encompass at least seven important functions. These are:

1. Formulate guidelines for identifying right beneficiaries:
It is important to formulate guidelines that will identify the appropriate beneficiaries for affordable housing projects. This is critical, as the involvement of speculative investors in such projects defeats to whole purpose. The National Population Register and issuance of unique identities via the Unique Identification Authority of India will become crucial elements in identifying the right beneficiaries if they are linked with income levels.

2. Innovate on micro-mortgage financing mechanisms to ensure a larger reach:
Effective financing through micro-mortgages by utilising the reach of self-help groups (SHGs) and other innovative financing mechanisms can ensure that housing finance is available to large sections of lower income groups (LIG) and economically weaker sections (EWS). Flexible payment mechanisms should be put into place, as households in low-income groups typically have variable income flows.

3. Incentivise developers to enter affordable housing segment:
Urban local bodies can develop guidelines by giving free sale areas, extra floor space index (FSI) and other policy-level incentives to real estate developers, thereby attracting them to develop affordable housing. Schemes for redevelopment and slum rehabilitation should be developed with incentives that generate sufficient returns for the developers, while simultaneously controlling the development density. A cost-benefit analysis of regulations should be carried out from a development perspective to ensure that schemes to facilitate affordable housing development are actually realistic and feasible.

4. Streamline land records to improve planning and utilisation of land:
Adequate availability of land for housing and infrastructure can be ensured by computerisation of land records, use of geographical information systems, efficient dispute redressal mechanisms and implementation of master plans. The central government and some state governments have already begun work on this front, but there is still a lack of required pace.

5. Include mass housing zones in city master plans:
Additionally, ensure that these zones are developed within a pre-determined schedule, accounting for the future requirement of affordable housing. Some cities have already dedicated zones for development of affordable housing in their master plans. This needs to be replicated in other cities and towns - with a sharp focus on development timelines.

6. Deploy well-researched rental housing schemes in urban areas:
Authorities like the Mumbai Metropolitan Region Development Authority (MMRDA) have experimented with rental housing schemes in the past. However, these have not been very successful as a proper framework for such schemes was missing. The most visible limitations were that development of rental housing took place in far-flung areas which are not suitable for affordable housing, and the lack viable means to identify the right end-users.

7. Formulate policies for greater participation from private sector:
The private sector can play a big role in affordable housing, most notably in terms of providing technological solutions, project financing and delivery. Disruptive innovations on these fronts, with a specific focus on affordable housing, are the need of the hour. We need imaginative, workable solutions to reduce the costs of construction in the face of rising input costs. As construction costs account for a significant portion of the selling price of affordable housing units, savings accrued on the back of such innovations can immensely benefit the occupier. It bears mentioning that none of these solutions will work well in isolation. Given the complexity of the affordable housing conundrum in India, only a multi-pronged approach with equal weightage given to each element can hope to break the deadlock. The Housing for All by 2022 is indeed a workable vision if a determined and focused effort based on these solutions is employed - and it will definitely yield the desired results.

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Important Legal Documents That Home Buyers Should be Aware of Before Buying a Property

Buying real estate property can be an expensive affair and it is next to impossible to buy a house without financial assistance. It is therefore necessary to take precautions and ensure that the hard earned money invested into such property is not only safe but secured to the fullest extent. This highlights the need for a proper due diligence. Also, a purchaser needs to be aware of the following the basic legal documents before purchasing an immovable property:

1. Original Title Documents
The title documents means the flow of title devolution from one owner to another and culminating with the current owner/ seller who is selling the property. In case the original title documents are not with the seller, then there are chances that the title documents are deposited with the banks/ financial institution for the purpose of creation of mortgage and the same also needs to be verified by the purchaser.

2. Search Report
The title search report is usually issued by the search clerk after conducting searches in the offices of the concerned sub-registrar of assurances, to verify the entries on record in relation to the subject property, and by virtue of that, one can trace of the flow/ devolution of title as mentioned aforesaid. Additionally, the search clerk also reports, as to whether there is any Lis Pendens (pending litigation) notice registered with the office of concerned sub-registrar of assurances.

3. Title Certificate
Title Certificate is issued by an Advocate based on the Title Search Report and the title documents verified by the Advocate in respect of the subject property. The Advocate should ideally also search in the concerned Courts as to whether any litigation is pending in relation to the subject property. Such a certificate should also cover the claims, if any received, in response to the public notice issued in the local newspapers, to be published, one in English and other in the Regional language.

4. No Due Certificate
No Due Certificate is issued by banks/ financial institution after repayment of the loan and clearance of charge/ mortgage by the banks/ financial institution, so as to rule out any claims by the Banks and to assure that the subject property is free from encumbrance.

5. Sanctioned Layout Plans
It means the layout plans of the structure, which has been duly sanctioned/ approved by the concerned competent authority including the municipal corporation. In case the subject structure is not in terms of the sanctioned layout plans, then it is not advisable to purchase such property, since it is a clear indication of violation of the sanctioned layout plans and applicable laws.

6. Occupation Certificate
The occupation certificate is issued by the corporation, certifying that the subject property/ structures constructed upto relevant floors of the building, can be occupied by the purchaser. This indicates that the developer/ erstwhile owner/ seller has constructed the structure in terms of the sanctioned layout plans and has also complied with various other building norms and obligations.

7. Bills and Receipts
Latest Property Tax bills, Electricity bills, maintenance bills together with the paid receipts should be verified, since the same clarifies about the arrears, if any, in relation to the subject property.

8. For Purchase of Land
In case of purchase of land, in addition to some of the above mentioned documents, one must also verify
(i) 7/12 Extracts: This document indicates the name of the owner, name of the person having other rights such as, lessee/ mortgagee, the area admeasurements and cultivation in the land, and/ or
(ii) Mutation Entries: This document records entries regarding devolution of title in relation to the subject property.

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GST on real estate: Effective GST rate on under-construction real estate at 12%

The GST Council had in May decided to levy 12 per cent GST on construction of a complex, building, civil structure or intended for sale to a buyer, wholly or partly.

The effective GST rate on under- construction real estate projects will be 12 per cent only and not 18 per cent as there will be abatement for land cost, according to tax consultant EY.

Realtors' body CREDAI President Jaxay Shah also said that the effective GST rate would remain at 12 per cent and assured that as per the law, the developers would pass on the benefits of input tax credit to home buyers.

On Thursday, the government hiked the GST rate for the construction sector to 18 per cent from 12 per cent but removed land value from computation of tax liability.

The GST Council had in May decided to levy 12 per cent GST on construction of a complex, building, civil structure or intended for sale to a buyer, wholly or partly.

Earlier, the value of land was to be included in the amount on which tax was to be calculated.

"There is some confusion in the industry that GST on under-construction projects has been fixed by the government at 18 per cent instead of the 12 per cent proposed earlier by the GST Council.

"This confusion is mis-placed as there is an abatement of one-third for the value of land when you apply the rate of 18 per cent; which makes the effective GST rate 12 per cent only," said Abhishek Jain, Tax Partner, EY.

When contacted, CREDAI President Jaxay Shah also said that the effective GST rate will remain 12 per cent on under- construction properties.

Asked whether builders will pass on the input tax credit to home buyers, he said: "As per law, we will return input tax credit to buyers".

As on today, home buyers have to pay 15 per cent service tax on 30 per cent of the total cost of the apartment, which is effectively 4.5 per cent.

NAREDCO President Parveen Jain said the effective rate will be 12 per cent after the abatement for land value.

Earlier this month, NAREDCO had written to the Prime Minister seeking lower GST of 6 per cent on sale of under- construction property from 12 per cent as higher tax will lead to price rise and affect sales.

It had also sought exemption from Goods and Services Tax (GST), to be rolled out from July 1, to affordable housing which has gained momentum after getting infrastructure status and interest subsidy.

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Haryana Govt Working to Benefit all Private Builders

A senior official in the DTCP, which was of the subjects of Aggarwal’s ire in the assembly, said the MLA has not been able to substantiate his allegations because there is no wrongdoing.

Umesh Aggarwal, Gurugram’s BJP MLA, on Wednesday defended his line accusing the Manohar Lal Khattar regime of tweaking affordable housing rules to favour real estate companies, a day after he criticised his own government in the assembly on the issue.

“The Gurugram master plan is being changed to benefit private builders,” he told TOI. “The area for affordable housing projects is being increased from 300 acres to 500 acres to suit their (realtors’) needs,” he added. Asked if he was referring to a particular builder, Aggarwal said the government was working to benefit “all private builders”. He did not, however, elaborate.

A senior official in the department of town and country planning (DTCP), which was of the subjects of Aggarwal’s ire, in the assembly, said the MLA has not been able to substantiate his allegations because there is no wrongdoing. “To begin with, the affordable housing policy the MLA is referring to was prepared by the Congress government in 2013,” said this official. “During the previous government, 42 licences were issued and the present government has issued 25, of which 6 are delayed. Before the policy was passed, the draft was put in the public domain. In anticipation that the policy will be approved, some builder had prepared a draft beforehand,” the official added, referring to another charge made by Aggarwal in the assembly.

“I wonder how builders can prepare the draft ahead of finalisation of the policy,” Aggarwal had said on the floor of the House on Tuesday. “Complaints lodged by me are still pending at various levels. Neither the previous government, nor this one has ordered any probe to ascertain the shortcomings. They (builders) have been given licences instead.”

Asked about the “lapses” finance minister Captain Abhimanyu had acknowledged while replying to Aggarwal, another DTCP official said he was referring to the necessity for a course correction. “As per the policy, in every sector where land is available, 10 acres will be used for affordable housing projects,” the official explained. “The minimum land requirement is 5 acres. So far, the first-come-first-served’ principle was being followed to issue licences to builders. But there were objections and it has been decided that instead of this, a lottery system will be introduced.”

He added, “This is the lapse which the finance minister was referring to. There are otherwise no lapses in the issuance of licences for affordable housing.” he said. The finance minister could not be reached for a comment.

Source - http://realty.economictimes.indiatimes.com/news/residential/haryana-govt-working-to-benefit-all-private-builders-bjp-mla/57548072

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Govt to Soon Announce Relaxations in Foreign Direct Investment

The government last year relaxed FDI norms in over a dozen sectors, including defence, civil aviation, construction and development, private security agencies.

The government is expected to soon announce relaxations in the foreign direct investment (FDI) policy in certain sectors, including single brand retail.

The further liberalisation in the FDI policy is aimed at providing better business environment by removing impediments, an official said.

The easing of the policy will be on the lines of the announcements made by Finance Minister Arun Jaitley in the Budget for 2017-18.

The government last year relaxed FDI norms in over a dozen sectors, including defence, civil aviation, construction and development, private security agencies, real estate and news broadcasting.

Union Minister Harsimrat Kaur Badal recently stated that the government will consider the demands made by foreign retailers for allowing non-food items such as homecare products under the policy.

The government is also considering a proposal to increase FDI limit in print media to 49 per cent from 26 per cent.

Besides, a proposal to allow 100 per cent FDI through the automatic route in single brand retail is also under consideration with a view to attracting more global players in the sector.

Foreign investments are considered crucial for India, which needs around $1 trillion to overhaul its infrastructure such as ports, airports and highways to boost growth.

Foreign investments will help improve the country's balance of payments situation and strengthen the value of the rupee against global currencies, especially the US dollar.

FDI inflows into India firmed up by 22 per cent to $35.85 billion during April-December 2016.

By  - http://realty.economictimes.indiatimes.com/news/regulatory/govt-to-soon-announce-relaxations-in-foreign-direct-investment/57428072

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