Insuring New Apartments

The newly bought apartments should always be encouraged to be insured for the future uses and also to ensure safe living.

One of the home insurance provider companies reported saying that the insurance over the apartment would help any owner to get safe guarded from natural calamities like flood and earthquakes. These insurance policies are such that if at all the owner owns the apartment and after any disaster they are just paved way to do the re construction of the whole building wherein the insurance amount paid by the customers will be funded from it. Neelesh Garg, executive director, ICICI Lombard General Insurance reported saying that the  insurance is done only with the consideration of the built-up-area and the construction costs.

The insurance for the apartment needs to be done individually by the owners irrespective of the placement of the flat in the apartment.

Ajay Bimbhet, MD, Royal Sundaram Alliance Insurance reported saying that any insurance rejection is possible wherein the case of any apartment carrying down the commercial activity in it. However until and unless the house owner breaches the insurance agreement the insurance will serve the purpose completely.

If in case of the apartment is ahead taking care of the re-construction of the flat, in these kind of situations the apartment will hold the responsibility for the same but not the insurance companies.

Availability of BDA, KHB units will reduce demand for private developers’ flats

BDA allot 3-bedroom houses at Rs 27 lakh while private developers charge more than Rs50 lakh

Bangalore Development Authority’s (BDA) proposal for allotment of 6,190 low-cost housing
units and Karnataka Housing Board’s (KHB) initiative to construct 3,000 flats in and around
the city are likely to affect the realty sector in Bangalore.

Infrastructure experts pointed out that the BDA and the KHB acquire land at a lower price and construct houses at lower cost. The lower cost of housing units will naturally be lower and private developers cannot sell flats at the cost at which the BDA and the KHB sell their
units.

Private developers’ business is likely to be affected. It is said that the BDA’s allotments have
benefited the middlemen and speculators at the cost of farmers and private developers, and it is not likely to change this time as well. Many plots allotted by the BDA continue to remain
vacant.

Housing consultants argued that BDA’s plan to allot three-bedroom houses at Rs 23 lakh and
Rs 27 lakh, whereas private developers charge more than Rs 50 lakh for a three-bedroom
house in the city would naturally reduce the demand for private housing complexes.

Moreover, people who buy flats from government agencies can be secure as they will not
face any title disputes. Therefore, most of the people would prefer to buy flats from the BDA
even if the quality of construction would not be as good as that of private developers, they
said.

Bangalore Residential Report, published by a private realty agency, showed 20,600 housing
units were consumed in the city in 2011 and around 55,000 housing units were still available.

On an average, Bangalore consumed around 25,000 housing units annually and a majority
of them were low-cost units. If more than 9,000 units were made available in the market by
government agencies, private builders would be greatly affected.

Houses to benefit people, says BDA

Bangalore Development Authority (BDA) Commissioner T Sham Bhatt said the BDA’s low
cost houses will benefit the people of lower income in the City of Bangalore.

The BDA has invited applications for allotting 4,388 single-bedroom flats, 1,170 two-
bedroom flats and 632 three-bedroom flats at different places in the city and will issue
applications from March 25.

The BDA has reserved 2,194 single-bedroom flats from the total 4,388 units under different
categories. The KHB has proposed to construct over 3,000 low-cost housing units in
Suryanagar II Phase, Yelahanka, Devenahalli and Kengeri.

Real Estate Market see Return of Pre-Launches

Realty firms eyeing pre-launches in markets such as Mumbai, Bangalore to sell large inventories, test new markets

Key property markets such as Mumbai, Delhi and Bangalore are seeing a return of project
pre-launches, signalling rising momentum in real estate sales as buyers and investors regain
confidence in the sector.

Mumbai will see a spurt in pre-launch activity this year after the state government removed
hurdles in obtaining regulatory clearances for real estate projects.

In a pre-launch, real estate firms begin selling a project ahead of a formal launch and buyers
and investors, in return, get sharp discounts of 10-15% or more at this stage as an incentive
for the risk involved.

Over the past two years, pre-launch activity had dropped, especially in Mumbai, because
of the depressed real estate market as well as uncertainties in obtaining approvals. That’s
changing now.

If the pricing is right, investors who have been sitting on the fence for long due to the lack of
launches in Mumbai will come in,” said developer in Bangalore.

Pre-launches offer developers an opportunity to lure back investor interest in the Mumbai
realty market, as project approvals are trickling in and sales are picking up, and mop up
much-needed cash flows. Investors had shifted their attention to projects in neighbouring
Navi Mumbai and Thane districts where more projects were being launched.

“Developers will also offer buyers attractive pre-launch benefits in a bid to accelerate sales
momentum in the initial months following a launch,” he wrote.

Developers who traditionally avoided the pre-launch model are now adopting it for projects
in new markets.

Consolidating

Many companies, taking advantage of a sluggish real estate market, are consolidating or
moving their headquarters to bigger and better offices. Multinationals like VW, Bayer Crop
Science, FedEx, Pepsi-Co and L'Oreal along with Indian majors such as Cipla, Britannia and
HDFC have cleverly used the market trend to save on two fronts — cost and space.

With office rentals and capital values having dropped nearly 25-40% since the 2008 peak
in most parts of the country, including Mumbai, many occupiers are planning to relocate
to newer, safer buildings, with larger floor plates and better amenities," said Ramesh Nair,
managing director, West India -Jones Lang LaSalle India.

Most office space deals for shifting headquarters are either done on an outright basis or
leased for long tenures since a corporate headquarter often symbolises a company's power
centre, and companies usually avoid shifting headquarters for fear of sending wrong signals.

Global financial majors like Citigroup and Goldman Sachs have also used the current
downturn to strike large realty deals for consolidating their operations in Mumbai and
Bangalore, respectively.

In 2012, the country's office market saw new supply of 30 million sq ft and absorption at
27 million sq ft. In 2013 also, new supply is estimated to be around 40 million sq ft with
absorption of 29 million sq ft, and the climate is ripe for negotiating better price and terms.

Property taxes set to rise in Bangalore by 15 pc

The BBMP commissioner sent a note proposing an increase in property taxes.

Bangalore City Corporation (BBMP) is planning to increase property tax by 15%.

BBMP Commissioner Siddaiah had sent a proposal to increase the tax rate by 15 to 30 per
cent as the block period of the Unit Area Value system comes to an end this March.

Meanwhile, it is said that the BJP councillors have been taken to task by Deputy Chief Minister R. Ashok, who is also the city in charge, for proposing such a “sensitive subject” ahead of the urban local body and Assembly elections, apprehending it would dent the party’s prospects.

“The commissioner sent a note proposing an increase in property taxes. This was sent for discussion during the monthly meeting. But the Standing Committee on Taxation and Finance has no plans to hike taxes,” Standing Committee Chairman K A Muneendra Kumar
said.

The commissioner, according to Kumar, had sent a proposal for raising taxes by 20 per cent
on residential properties and 25 per cent non-residential ones.

Kumar said the BBMP had last increased property taxes in 2008 and according to the
Karnataka Municipal Corporation Act, property taxes can be revised every three years.

Deputy Chief Minister R Ashok also said the BBMP and the government had no plans to
raise property taxes.

A similar proposal was sent for council approval last year but was not approved by
corporators.

Eyeing more revenue generation, BBMP has planned to send a similar proposal to the council
once again this year, and if approved, the increased property tax slab is likely to come into
effect from April 1, 2013.

With the three-year block period coming to an end in 2012 for revised Self Assessment
Scheme (SAS), there are possibilities of BBMP wanting to collect more tax from property
owners.

“BBMP has not taken public opinion on hiking the property tax. There is lack of transparency maintained. BBMP must cut down on its various unwanted expenses, and thus, save money for itself, and not by collecting more tax,” Opposition leader in the BBMP Council M K Gunashekar said.

He has written to chief minister Jagadish Shettar requesting to stop any kind of proposed hike in property tax.

K.A. Muneendra Kumar, chairperson of the Standing Committee for Taxation and Finance,
claimed that the BJP was also not in favour of hiking the rates. Speaking to journalists here,
he conceded that BBMP Commissioner Siddaiah had sent the proposal to hike the tax rates to the committee. “However, we have not taken any decision in the matter. We only proposed the matter for discussion in the BBMP council.”

The drumbeaters would once again visit Vrundavan Tech Village on Outer Ring Road to
recover property tax arrears.

The standing committee also plans to inspect Le Meridien and assess whether the tax has
been paid correctly.

No Penalty on Pre-Closure

The Reserve Bank of India (RBI) has directed all nationalised banks not to impose penalty  for pre-closure of housing loans. The notification issued by the RBI has brought some smile of middle class families who now have the opportunity to shift their costly and high interest loans to other banks, particularly HUCO, a public sector entity.

RBI strictly disallowed banks from charging foreclosure charges / pre-payment penalties on
home loans on floating interest rate basis. “The removal of foreclosure charges/prepayment
penalty on home loans will lead to reduction in the discrimination between existing and new
borrowers and competition among banks will result in finer pricing of the floating rate home
loans,” RBI said in a notification to banks. Though many banks have, in the recent past,
voluntarily abolished pre-payment penalties on floating rate home loans, “there is a need to
ensure uniformity across the banking system,” an official said.

We also advise you to apply for housing loans in the public sector banks. Banks like HUDCO
offers loans at 10 per cent rate of interest up to Rs 26 lakh. Moreover, public sector banks
charge less consultancy fee than private banks in the country. But seek suggestions from
financial experts before obtaining loans either housing or any other loan.

One has to think ten times while fixing the size of the house loan. Larger the size of the loan,
more interest rate burden as well more monthly repayment. Like size of a house required
differs from one family to other, the amount of loan is also differs from one to other family.
Therefore, before buying property, it is advisable to appoint a solicitor to inspect the original
title documents of the property being purchased and later apply for housing loan.

Registering Khata in Bangalore

Khata is important when you apply for any license of building or for trade, applying for loan from any banks or financial institution. Khata is an account which consist all the details of property like name of owner, size of buildings, location of property and all other details that helps to file property tax. 

 Application for Khata: 

Get a Khata application form (costs Rs.10/-), plus copies of five documents - Betterment charges receipt, Receipt of latest Property Tax paid, Building sanction letters, Title certificate, Sketch of layout. It is available either online or at any BBMP office.

 Application for Encumbrance Certificate (EC): 

Get an EC application (Form-22), available free of cost at sub-registrar office. It should be for a period of at least a year. The cost of applying for EC is Rs. 35 for one year. You will need to go back after a day or two to collect the EC. While applying for EC, one has to carry copy of sales deed.

Obtain Notarized copy of documents:

Get Notarized of the following - Sale deed, Form II (if you have), Possession Certificate (if you have), GPA (if used), and fill up the form – green and pink.

Submit the Application: 

Tag the application to the notarized documents, EC, latest property tax receipt, plan of the flat along with the common documents and submit to the local ARO Office. Get the pink acknowledgement with submission number, stamped and signed by respective officer.

Follow up: 

Go back after 15 days to check the status. Keep doing this till you get the demand note.  Demand note indicates the amount you need to pay as Khata registration fee.

Assessment of Property: 

Once you submit the Khata application, the BBMP Revenue In-charge and Assistant Revenue Officer personally visits the property to assess the property. After the property is assessed BBMP formally communicates this mentioning the property dimensions (in sq feet), its value as per BBMP assessment and the tax liability thereon.

Pay Registration Fee: 

Submit the DDs as per the demand note to ARO Office and get a stamped acknowledgement. Once you get acknowledgement, it means the process has begun. The administration fee or demand note amount is two per cent on the stamp paper value. Most people confuse this to be two per cent of the property value mentioned in the sale deed. The demand note is issued in batches. So do co-ordinate with others in your building whose names are in the demand note to get all the DDs.

Follow up:

Go back after 15 days to check the status.

Khata notification: 

Check the notification to see that your name is spelt correctly and other information like area of flat, car park, and so on, are correct. Take the Khata notification to the ARO office with an application requesting issue of Khata certificate (pay Rs. 25) and Khata extract (pay Rs. 100).

Khata Registration: 

Once you pay the Khata Registration fee, in about 1-2 weeks, one receives the notice for paying the pending property tax. Without this the Khata Extract will not be issued in your name. But if you have reached this point it means Khata has been technically registered on your name.