REAL ESTATE TRANSACTIONS MAY BE BROUGHT UNDER GST!!


The Union Government is seriously considering to bring the real estate under the GST, but there appears that a lobby is working against the same.

The prices of the properties may see an upward trend, but, hopefully, every transaction will be transparent.

RERA NOTIFICATION IN KARNATAKA AND THE IMPLEMENTATION OF GST AND ITS EFFECTS ON THE REALTY SECTOR IN KARNATAKA


The Government of Karnataka was deliberating and discussing the important issues and points of RERA, which had been notified by the Center and other states, but, will be notifying it soon without much MODIFICATION/CHANGE/ALTERATION.

This notification has very significant effect on the REAL ESTATE market and will bring about transparency and stability in the business.

The most important aspect of this Bill, that the ILLEGAL AND UNAUTHORISED CONSTRUCTIONS will be STOPPED.  Already, the fly by night builders and some VIOLATORS are out of business.  The deviation and violation might be controlled.

The under construction or incomplete projects might also come under this Bill.  The common man will definitely be benefitted by this bill to a great extent.

BUT, AS INDIANS, WE HAVE TO WAIT AND WATCH TO PLUG ANY LOOPHOLES IN THE BILL.

On the otherhand, the half baked and untested GST bill is also implemented from 01-07-2017 and there are various versions of its advantages and disadvantages of this BILL being deliberated and discussed across the country.

But, over all, the GST includes both service tax and the (earlier) VAT.  There is confusion over the benefits and its procedures in the minds of the builders, similarly, AS INDIANS, WE HAVE WAIT AND WATCH.

DO NOT JUMP INTO CONCLUSIONS AND TAKE ANY DECISION NOW.

WAIT FOR SOMETIME, FEW MONTHS TO KNOW THE AFTER EFFECTS OF THESE BILLS.

CHEATING, FRAUD AND FORGED OR MANIPULATED DOCUMENTS IN THE REAL ESTATE BUSINESS


The sudden increase and demand for the properties in and around Bangalore has given rise to many fraudsters.  The modus operandi is that they create or fabricate or forge or prepare fake documents of properties and approvals (forged and without authority) to sell it to the buyers.

The buyers, are too eager to make quick profits or to buy at cheaper prices, fell prey for such fraudsters.  It is quite common that documents pertaining to titles,(gift deed-will-partition deed) DC Conversion, layout approval, building plan approval and above all the MOST NOTORIOUS IS THE A KATHA, are FAKE, FORGED, MANIPULATED AND FABRICATED with seal and signature(forged) by the officials.

In a bid to save the expenses or the fees payable for the scrutiny or the investigation, the buyers, drown themselves along with their friends and relatives in the NEVER ENDING litigation.

The Scrutiny and investigation must be conducted by an experienced team, which must include an advocate, town planner, surveyor, architect and an investigator, who have extensive knowledge about the titles, approvals and appropriate prevailing laws.

It is found out that the KATHA of the properties both in village or panchayat limits and the BBMP limits are not genuine.  The files of few properties regarding katha does not exist in the BBMP at all and the green colour village gram panchyat kathas does not even have an entry in the Gram Panchayat Offices.

PAYMENT OF TAXES DOES NOT CONFER ANY RIGHT, TITLE AND INTEREST.

KATHA MUST BE GENUINE AND REGULAR.

APARTMENT WITHOUT OCCUPANCY CERTIFICATE WITH A KATHA MUST BE THOROUGHLY EXAMINED.

There is NO CREDIBILITY for the BRAND NAME.

For.Example. Yesterday, the Revenue Minister has categorically informed the legislative assembly that a particular land/property has been seized AND will be seized by the district administration in Bangalore, but it had been sold for few hundred crores by the real estate company.

Many cases are pending against who is who of real estate business, regarding their projects in Bangalore South both civil and criminal.

Lake encroachment cases are pending before the NATIONAL GREEN TRIBUNAL and some in the local courts.

Raja Kaluve, kaalu daari, bandi daari, gundu thopu, gomala and kharab encroachments are common occurrence, when confronted with evidence, the HONEST SONS OF LORD HARISCHANDRA, approaches the court to prolong the case with the help of scam tainted officials to hoodwink the greedy buyers. Ultimately, the greedy buyers, saying that I have borrowed money or I have earned money with hard work and with all sorts of escapism or lies, approach the courts and the government to provide them the relief.

The projects which are in and around lakes, raja kaluve, bandi daari, kaalu daari etc which are existing without any hassles, may encounter serious trouble during re sale or during RE DEVELOPMENT.

BRAND NAMES OR BIG NAMES DOES NOT CONFER ANY RIGHT, TITLE AND INTEREST.

 

 

AGENTS/BROKERS/MARKETING TEAMS/REAL ESTATE AGENCIES – CHECK BEFORE AVAILING THEIR SERVICES


AGENTS/BROKERS ARE THE MAIN ARTERIES OF THE REAL ESTATE MARKET IN BANGALORE AND THE BUYERS OF PROPERTIES OR LESSEES/LESSORS OF PROPERTIES OR LAND LORDS GENERALLY NEVER CHECK THE BACKGROUND OF THESE PERSONS/GROUPS OR ORGANISATIONS AS SOME OF THEM HAVE CRIMINAL BACKGROUND, NEXUS WITH LANDMAFIA AND EVEN TERROR OUTFITS.

MANY OF THESE AGENTS/BROKERS HAVE POSH OFFICES WITH A FRONT DESK AND SWEET TALKING PERSONS TO TRAP THE BUYERS.

CHECK THEIR BACKGROUND, EDUCATIONAL QUALIFICATION, THEIR PAST PERFORMANCE, PERMISSIONS/LICENSES, REFERENCES AND THEIR EXPERTISE TO DELIVER THE REQUIRED SERVICES BEFORE STEPPING INTO THEIR OFFICES OR DOMAIN OR HANDING OVER THE ASSIGNMENT.

THE BUYERS OR THE LESSEES /LESSORS ASSIGN THE DOCUMENTATION OF THE PROPERTIES LIKE DRAFTING/PREPARATION OF SALE AGREEMENT, GENERAL POWER OF ATTORNEY, SALE DEED AND LEASE DEED ETC INTO THE HANDS OF ILLITERATE, IGNORANT AND DANGEROUS AGENTS, WHO ON THE PRETEXT OF HAVING WIDE CONTACTS, DRAFT THESE DOCUMENTS AT THE RISK OF PERIL TO THE BUYERS OR LESSORS.

CONTRACT OR DOCUMENTATION OF ANY TRANSACTIONS MUST BE DONE WITHIN THE FRAMEWORK OF LAW WITH CLEAR CUT DETAILS AND PREVAILING LAWS.  THE LEGAL DOCUMENTS CANNOT BE GENERALISED, DEPENDS UPON THE NEED AND REQUIREMENTS OF BOTH THE PARTIES, MUST BE CUSTOMISED WITH EXPLICIT DETAILS ABOUT THE PROPERTY/SUBJECT WITH PROPER PREAMBLE OR RECITALS.  IN THE EVENT OF ANY DEFAULT OR DISPUTE, THE DOCUMENTS WILL BE VERY HELPFUL IN THE COURT OF LAW AND MUST BE ELIGIBLE TO BE ADMITTED AS EVIDENCE IN THE COURT.

THE LANDLORDS OF THE BUILDINGS OFFERED FOR LEASE OR SALE,MUST TAKE DUE CARE AND  DILIGENCE WHILE CHOOSING NOT ONLY THE TENANT BUT ALSO THE AGENTS TO PROVIDE SERVICE. 

RENTAL INCOME ON PROPERTY INVESTMENT


THE RENTAL INCOME FROM THE INVESTMENT IN PROPERTIES (BUILDINGS-CONSTRUCTED) IN BANGALORE IS AS UNDER:

RESIDENTIAL: 2% TO 6% ANNUAL RETURNS.

COMMERCIAL:1% TO 10% ANNUAL RETURNS.

INDUSTRIAL: 1% TO 4% ANNUAL RETURNS.

THE RETURNS ARE ON AN FIVE YEAR AVERAGE, DOES NOT INCLUDE MUNICIPAL TAXES, EXPENSES TOWARDS REPAIRS AND MAINTENANCE, SERVICE TAX AND INCOME TAX.

BUT, THE APPRECIATION IN THE ASSET VALUE ON THE PRESENT MARKET TREND (AVERAGE FOR THE LAST 5 YEARS) IS 1% TO 10% IN RESIDENTIAL, 1% TO 10% IN COMMERCIAL AND 1% TO 4% IN INDUSTRIAL PLOTS, RESPECTIVELY.

REVISED GUIDANCE VALUE – SOON!


THE GOVERNMENT IS KEEN ON REVISING THE GUIDANCE VALUE OF THE PROPERTIES IN AND AROUND BANGALORE AND MIGHT BRING IT TO THE MARKET VALUE/PRICE SOON.

THE BUYERS WHO HAVE ALREADY BOOKED THE APARTMENTS/VILLAS/SITES IN PRELAUNCH OFFERS AND THOSE WHO MIGHT BE REGISTERING IT BY THE END OF JULY,2013  WILL HAVE TO BEAR  ADDITIONAL BURDEN OF STAMP DUTY AND REGISTRATION FEE BETWEEN  2% 10% DEPENDING UPON THE VALUE OF THE PROPERTIES.

THERE IS A CLEAR CUT INDICATION THAT THE REVISION OF VALUES WILL BE BETWEEN 20% TO 200%. 

Features, Benefits & Advantages of Real Estate Bill, 2013 – THE REAL ESTATE(REGULATION AND DEVELOPMENT) BILL, 2013


The Union Government has proposed to bring in a Real Estate Bill to Protect the Interest of the Consumers and Promote Fair Play in Real Estate Transactions and approved THE REAL ESTATE(REGULATION AND DEVELOPMENT) BILL, 2013

The Objectives of the Bill is to provide for a uniform regulatory environment, to protect consumer interests, help speedy adjudication of disputes and ensure orderly growth of the real estate sector.

With the liberalization of the economy, conscious encouragement was given to the growth of the private sector in real estate sector and especially in construction, with a great deal of success, and the sector today is estimated to contribute substantially to the Country’s GDP.

But currently the real estate and housing sector is largely unregulated and opaque, with consumers often unable to procure complete information, or enforce accountability against builders and developers in the absence of effective regulation.

The proposed legislation would ensure greater accountability towards consumers, and to significantly reduce frauds and aims at restoring confidence of the general public in the real estate sector; by instituting transparency and accountability in real estate and housing transactions which in turn will enable the sector to access capital and financial markets essential for its long term growth. The Bill is also expected to promote regulated and orderly growth through efficiency, professionalism and standardization. It seeks to ensure consumer protection, without adding another stage in the procedure for sanctions, he added.

It contains elaborate provisions dealing with registration of real estate projects and registration of real estate agents with the Real Estate Regulatory Authority; functions and duties of promoters; functions and duties of real estate agents; rights and duties of allottees; establishment of Real Estate Regulatory Authority; establishment of Central Advisory Council; establishment of Real Estate Appellate Tribunal; offences and penalties; Finance, Accounts, Audits and Reports; etc.

Benefits and Advantages of Real Estate Bill, 2013

The Bill proposes to regulate transactions in the real estate sector and is in pursuance of the powers under Entries 6, 7 and 46 of the Concurrent List of the Constitution, which deals with Transfer of Property, Registration of Deeds and Documents, and Contracts. The draft Bill has been prepared after detailed deliberations with the State Governments and concerned Central Government Ministries, and after having suitably incorporated the suggestions received from them.

  •     The Bill will bring about standardization in the sector leading to healthy and orderly growth of the industry through introduction of definitions such as ‘apartment’, ‘common areas’, ‘carpet area’, ‘advertisement’, ‘real estate project’, ‘prospectus’ etc. Introduction of the concept of using only ‘carpet area’ for sale which has till now been ambiguously sold as super area, super built up area etc., will curb unfair trade practices.
  •     The Bill like other sectors such as telecom, electricity, banking, securities, insurance etc. provides for specialized regulation and enforcement which includes both curative and preventive measures, with powers to enforce specific performance, not available under the consumer laws. The Authority has powers to give directions for specific performance powers to impose penalty for non-registration of projects including imprisonment for continuous violation upto 3 yrs and impose penalty in case of other contraventions.
  •    The Bill proposes to register real estate agents which have hitherto been un-regulated, with clear responsibilities and functions, thereby leading to money trail and curbing money laundering. This clause has been added on the recommendations of the Department of Revenue, Ministry of Finance.
  •    The Bill aims to ensure consumer protection, by making it mandatory for promoters to register all projects, prior to sale; and only after having received all approvals from development/municipal authorities thereby protecting buyer investments.
  •     The Bill will promote transparency and fair and ethical business practices, relating to transactions, through disclosure of project details and contractual obligations vis-à-vis the project and the buyer,  promoting informed choice for the buyers. This will substantially reduce the power asymmetry prevalent in real estate transactions.
  •    The Bill seeks to establish a regulatory oversight mechanism, through Real Estate Authority(s) and Appellate Tribunal in the States, to enforce accountability norms for the promoter buyer and the real estate agents.
  •    The Bill will infuse professionalism and promote planned development of the real estate sector through the promotional role of the Regulatory Authority.
  •    The Bill makes it mandatory upon the promoters to deposit  70% or such lesser per cent as notified by the Appropriate Government to cover the construction cost of the project of funds received by the Promoter in a separate bank account, for purposes of ensuring timely completion of projects to be used only for that project, which shall help in timely completion of projects, and prevent fund diversion.
  •    The Bill provides for a speedy and specialized adjudication mechanism to settle disputes between the promoter, buyer and real estate agents, thereby de-clogging the civil courts and consumer forums, from disputes in the real estate sector.
  •    The Bill will catalyze domestic and foreign investment into the sector, thereby contributing to enhanced activity, and increase in GDP growth.

The main features of the Draft Bill:-

  • Applicability of the Bill:

The proposed Bill is limited in its applicability to residential real estate i.e. housing and any other independent use ancillary to housing. The two important definitions in this regard are:

“real estate project means the development of a building or a building consisting of apartments, or converting an existing building or a part thereof into apartments, or the development of a colony into plots or apartments, as the case may be, for the purpose of selling all or some of the said apartments or plots or buildings and includes the development works thereof”

“apartment whether called dwelling unit, flat, premises, suite, tenement, unit or by any other name, means a separate and self-contained part of any immovable property located on one or more floors or any part thereof, in a building or on a plot of land, used or intended to be used for residential  purposes, or for any other type of independent use ancillary to the purpose specified and includes any covered garage, whether or not adjacent to the building in which such apartment is located which has been provided by the promoter for the use of the allottee for parking any vehicle, or as the case may be, for the residence of any domestic help employed in such apartment”

  • Establishment of Real Estate Regulatory Authority:

Establishment of one or more ‘Real Estate Regulatory Authority’ in each State/UT, or one Authority for two or more States/UT, by the Appropriate Government, with specified functions, powers, and responsibilities to exercise oversight of real estate transactions, to appoint adjudicating officers to settle disputes between parties, and to impose penalty and interest;

  • Registration of Real Estate Projects and Registration of Real Estate Agents:

Mandatory registration of real estate projects and real estate agents who intend to sell any immovable property, with the Real Estate Regulatory Authority;

  • Mandatory Public Disclosure of all project details:

Mandatory public disclosure norms for all registered projects, including details of the promoters, project, layout plan, plan of development works, land status, carpet area and number of the apartments booked, status of the statutory approvals and disclosure of proforma agreements, names and addresses of the real estate agents, contractors, architect, structural engineer etc.;

  • Functions and Duties of Promoter:

Duty of promoters towards disclosure of all relevant information and adherence to approved plans and project specifications, obligations regarding veracity of the advertisement for sale or prospectus, responsibility to rectify structural defects, and to refund moneys in cases of default;

  • Compulsory deposit of seventy percent or such lesser percent as notified by the Appropriate Government, to cover the construction cost of the project, of funds received by the Promoter, in a separate bank account:

Provision to compulsorily deposit seventy percent or such lesser percent as notified by the Appropriate Government, of the amounts realized for the real estate project from the allottees, from time to time, shall be deposited in a separate account to be maintained in a scheduled bank within a period of fifteen days of its realization to cover the cost of construction and shall be used only for that purpose.

  • Functions of Real Estate Agents:

Real estate agents not to facilitate the sale of immovable property which are not registered with the Authority required under the provisions of the Act, obligation to keep, maintain and preserve books of accounts, records and documents, obligation to not involve in any unfair trade practices, obligation to facilitate the possession of documents to allottees as entitled at the time of booking, and to comply with such other functions as specified by Rules made in that regard;

  • Rights and Duties of Allottees:

Right to obtain information relating to the property booked, to know stage-wise time schedule of project completion, claim possession of the apartment or plot or building as per promoter declaration, refund with interest in case of default by the promoter, and after possession entitled to necessary documents and plans. Duty of allottees to make necessary payments and carry out other responsibilities as per the agreement;

  • Functions of Real Estate Regulatory Authority:

The Authority to act as the nodal agency to co-ordinate efforts regarding development of the real estate sector and render necessary advice to the appropriate Government to ensure the growth and promotion of a transparent, efficient and competitive real estate sector;

  • Fast Track Dispute Settlement Mechanism:

Establishment of fast track dispute resolution mechanisms for settlement of disputes, through adjudicating officers (an officer not below the rank of Joint Secretary to the State Government) to be appointed by the Authority, and establishment of an Appellate Tribunal to hear appeals from the orders of the Authority and the adjudicating officer;

  • Establishment of Central Advisory Council:

Establishment of Central Advisory Council to advise the Central Government on matters concerning implementation of the Act, with a mandate to make recommendations on major questions of policy, protection of consumer interest and to foster growth and development of the real estate sector. The Council to have among others, five representatives of State Governments, to be selected by rotation;

  • Establishment of Real Estate Appellate Tribunal:

Establishment of Real Estate Appellate Tribunal, by the appropriate government to hear appeals from the orders or decisions or directions of the Authority and the adjudicating officer.  The Appellate Tribunal is to be headed by a sitting or retired Judge of the High Court with one judicial and one administrative/technical member;

  • Punitive Provisions:

Punitive provisions including de-registration of the project and penalties in case of contravention of the provisions of the Bill or the orders of the Authority or the Tribunal;

  • Power to make Rules and Regulations:

Appropriate Government to have powers to make rules over subjects specified in the Bill, and the Regulatory Authority to have powers to make regulations.