Gurgaon Arbitration Council set up for resolving builder-buyer disputes

A Gurgaon Arbitration Council (GAC) was constituted as ombudsman to resolve disputes between consumers and builders on Sunday at a meeting attended by builders, administration officials and RWAs.

The deputy commissioner of Gurgaon T L Satyaprakash announced the move at a round table conference hosted by REDCO (Real Estate Developers Council) Haryana at DLF City Club, Phase IV, Gurgaon on Sunday afternoon.

Satyaprakash also appointed Colonel (retd) Prithvi Nath (vice president and secretary general of REDCO Haryana) as the chairman of GAC.

The meeting was attended by administration officials and representatives of real estate companies including DLF, Unitech, Supertech, Ashiana, Rahejas, Ansals, Ambience, Emaar MGF etc along with the RWA heads. T L Satyaprakash, Vikas Gupta, MCG commissioner; Nazneen Bhasin, DCP, Gurgaon; Navin Raheja, MD, Raheja Group; Rohit Malik, director, DEDL and Col Ratan Singh, chairman, JAFRA were also present.

The stakeholders call the council as the first public private partnership and over 100 builders are part of it. It was formed to address rising issues between the builder and citizens and to bridge the gap between them. Builders present at the meeting claimed that most disputes between developers and consumers occur because of miscommunication between the two.

Navin Raheja said “There is a huge communication gap between the builders and consumers. Misunderstanding between the builder and the consumer should be fixed first. I look forward to GAC and hope that this will enable confidence in the people and act as a trust building enterprise.”

Satyaprakash said the disputes can expeditiously be resolved by the GAC instead of in the courts or consumer forums. Satyaprakash said, “This is a great initiative towards the welfare of the consumers. All good builders should collectively stand against the builders who are doing wrong and boycott them by creating peer pressure. Today most of the builders are not wrong but few wrong doers have maligned the image of good work done by builders.”

Source: ETRealty.Com

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8.5m sq ft of office space leased in top 8 cities in March qtr

For the commercial real estate sector, the first quarter of 2015 calendar year has been a good one with office space absorption reaching 8.5 million sq ft in the top eight major metro cities of India, according to a study by property advisory firm Colliers International.

Office leasing was led by Bengaluru with total leasing of 3.82 million sq ft, including 1.74 million sq ft of pre-commitments. The Delhi-NCR region that includes Gurgaon and Noida saw leasing of 1.48 million sq ft while Mumbai stood at 1.33 million sq ft, Pune at 0.89 million sq ft, Chennai at 0.81 million sq ft and Kolkata at 0.22 million sq ft.

Office space absorption increased by 2.8% over the previous quarter, the report said. IT/ITeS and BFSI were the primary sectors driving this demand and within IT/ITeS, e-commerce companies took up 52% of the total space absorbed in the quarter.

Select micro markets in cities like Bengaluru and Mumbai witnessed marginal increase in rental values in the range of 1- 3% QoQ.

“Among all the major markets, Bengaluru office market remains in the “sweet spot” in terms of supply-and-demand fundamentals. About 2 million sq ft of office space is expected to witness completion next quarter, out of which about 0.2 million sq ft is already committed. This steady increase in development activity and greater domestic and foreign investor interest in office market should result in additional occupancy and rent growth,” said Vikas Kalia, national director, office services at Colliers International.

Kalia said that many requests for proposal have been floated in Gurgaon and he anticipates an increase in office absorption in the near future.

Institutional sectors in Gurgaon such as Sector 32 and 44 will continue to remain preferred office destinations due to location advantages and competitive rentals. Also micro-markets such as NH-8, DLF Cyber City, Golf Course Road and Sohna Road have witnessed 5-10% appreciation in rental values due to high occupancy rates in properties in these micro-markets, and the fact that these are currently the preferred locations for occupiers.

“Absorption has increased, especially in Special Economic Zones, as a number of large format deals have been concluded in trailing 12 months and many are in the pipeline and expected to be concluded in the coming quarters,” said Kalia.

The report pointed that in response to this new tenant demand, the strongest markets (namely Bengaluru and Gurgaon) will witness development of new stock. “However, developer sentiment towards speculative construction of office buildings is expected to remain cautious, and this in turn will limit the risk of further overbuilding,” it said.

Source: ETRealty.Com

Budget 2015 – Plug the Loophole

The government should give more incentives to first-time home-buyers and stop limit-free deduction for second properties.

Keeping Budget 2015 in mind, tax experts are of the opinion that interest deduction for first-time home-buyers should be enhanced and the limit-free deduction on a second home purchase should be stopped to bring in much-needed revenues for infrastructure development and curtail the inflow of black money in multiple properties.

To achieve the government’s target of housing for all by 2022, the focus should be on ensuring that first-time home-buyers should be given maximum incentives to encourage them to invest. Under Section 24B of the Income Tax Act, the maximum deduction allowed is ` 2 lakh. This limit was raised from `1.5 lakh in last year’s Budget. Interestingly, there is no cap on the interest limit for a second property, which encourages people to make a second purchase. Many of them then claim losses on vacant property. This happens more often if the rent they receive for the property is lesser than the interest they claim to pay for such properties.

According to Sonu Iyer, partner and national leader, Human Capital Services, EY (Ernst and Young), a vacant second house is generally deemed as rented out with the rent attracting tax. However, in most cases the interest deduction amount on the property is higher than the notional rent, which the property owner usually shows as loss – which is an undue benefit, say tax experts. “One of the proposals that the government should consider in Budget 2015 is not to tax a property on a deemed basis. This will not only prevent claim for loss on vacant property, it will also bring in additional revenues,” says Iyer.

Also, in case of pre-construction interest, a person is allowed to avail of the interest deduction benefit only after possession and that too on amortized basis over five years subject to overall cap of `2 lakh, which includes interest payable for the relevant tax year. For instance, if pre-construction interest is `10 lakh, which means amortized interest of `2 lakh over five years and interest payable in first year after possession is `1 lakh, you can claim deduction only for `2 lakh and not for `3 lakh

This is unfair as in most cases property possession is delayed. “Taxation laws should treat pre-construction loan interest as a separate item of amortised deduction outside the cap of ` 2 lakh. Don’t cheat the customer of his right to deduction. In most cases, projects are delayed, and the customer is not able to avail of entire pre-construction interest deduction,” she adds.

In many cases people buy two properties, both for self-use. One is at the place where they work and the other is in their home towns as they want to stay connected to their roots. At present, one can only claim one property as self-occupied, eligible for nil rental value. The government can propose that the two properties be treated as self-occupied, says Iyer.

Source: HT Estates, Mar 3, 2015, Page 01

Affluent Buyers – Premium Housing to Gain Momentum in 2015

Even though the overall realty space was under the grip of slowdown, the higher-end segment always bucked the trend.

Driven by the fast pace of urbanization, higher disposable incomes, new offerings and greater influx of NRIs, the premium housing segment has evolved significantly over the past few years in India. So much so that even though the overall realty space remained under the grip of slowdown during this period, the higher-end segment was always seen bucking the trend.

While the residential real estate did well in 2014 in terms of absorption of right-priced properties, luxury residential real estate fared well in specific cities like Mumbai, Delhi, and Bangalore. And, according to some experts, that trend is likely to continue even in 2015.

“Selective luxury projects, backed by developers who have the delivery track record and credibility in the seven major cities, will do well in 2015. Thus, not all projects will do well as almost every developer has either launched or is in the process of launching luxury projects,“ Om Ahuja, CEO (residential services) of JLL India, said. Delivering a luxury project is not easy and requires a strong track record and excellent execution teams for timely delivery, Ahuja said. What is more, even the supply of higher end homes is likely to moderate in 2015, as developers will now stop focusing excessively on higher-end offerings.

Therefore, while smaller, yet better designed and more efficient homes, will define the residential real estate market in 2015, the supply of luxury homes will moderate to align with the slow demand dynamics for these offerings, a JLL India study said. Some industry experts, however, are still upbeat on the growth prospects for luxury housing in 2015.

Neeraj Bansal, partner (and head of real estate and construction) at KPMG, India, says that India’s luxury housing market may grow at the rate of about 30-35% in the short to medium term.

“This market, which is about 5-6% of the total real estate sector, is witnessing strong interest from investors, especially in Mumbai, Delhi, Gurgaon and Bangalore. Besides, formation of a strong central government, improving consumer sentiments and attractive schemes offered by developers – like possession-linked plans, freebies, and gifts on bookings – are driving interest from domestic HNI investors as well as NRIs, which will give it a big boost going ahead”, Bansal says.

A Harikesh, senior VP (marketing and sales) of Tata Housing Development Company, says: “With fast-growing urbanization and influx of global lifestyle trends, more and more affluent buyers now want their homes to reflect their financial and social standing. Demand for penthouses, for instance, has been increasing in cities like Bangalore, Delhi, Chennai, Kolkata, Mumbai, and a few others. Attributing to international flavors, housing and living concepts, Indian buyers today keep raising the bar in residential projects.”

The requirements, however, may vary from hilltop residences to riverside apartments.While some are opting to live in luxury homes in the suburbs, others are definite that their homes must be `smart’ or eco-friendly.

Source: Times Property, Feb 14, 2015

Tax Break – Tax Incentive on Home Loan Repayment

The income earned from a house is taxable under the head `Income from House Property’. In order to come under this tax bracket, the person deriving the income must be the owner of that property.

The property should consist of a building or land adjacent to it. The property should not be in use to conduct a business or practice a profession. It is to be noted that the property must either be rented out or be capable of being rented out to derive a rental income.

In Case of One Property:
In case an individual has only one residential property, that property will be treated as a self-occupied. There will be no taxable income in respect of such property, provided the owner has not rented out the property for any time during the year, or earned any benefits from it.

In Case of More Than One Property:
In case a person owns more than one property, this exemption applies to only one of the houses. The owner has the discretion to choose any one of the properties to be designated as a self-occupied property. The deemed income from all other properties is taxable, even if they are self-occupied and no rental income is derived from them. The remaining properties, although not actually rented out, will be deemed to be rented out and notional rental value will be treated as taxable income in the hands of the owner.

Source: Times Property, Feb 14, 2015