Thursday, July 30, 2009

Court asks neighbour to pay for property damage

If you are aggrieved at the damage to your property by your neighbour’s reckless constructions, then a recent court ruling holds out hope.

“It pays to be a good neighbour,” Additional District Judge (ADJ) Kamini Lau ruled some days ago, before awarding a compensation of Rs 2 lakh to complainant H N Kukreja. Kukreja had hauled to court his neighbour at Lajpat Nagar’s B-block, Uma Dhawan, and her builder Vishal Chopra, arguing that the renovation carried out at Dhawan’s home had spoilt the walls and woodwork in his basement.

The order stated: “It pays to be a good neighbour and conversely a person oblivious and unconcerned about the life and property of his immediate neighbour can be made to compensate.”

The judgment also sounded a note of caution on the irresponsible and break-neck manner in which constructions march on these days, and said a neighbour cannot escape duty towards adjoining houses.

Kukreja claimed the slipshod work next door had severely damaged his basement floor. The walls were damp, the plaster was peeling at places, the floor had developed cracks, and the doors and windows were damaged, Kukreja said in his petition.

Challenging it, Dhawan and Chopra denied the remodelling had harmed the neighbour’s property.

In their defence, they also argued that Kukreja had illegally constructed certain structures in the basement. However, a report by an executive engineer on Kukreja’s property disproved Dhawan’s claims, prompting the court to dismiss the argument.

ADJ Lau said: “In civilised society, every person owes a duty of exercising due care and caution towards the life and property of his neighbour. He is under an obligation to ensure that his individual right to enjoy his own property does not come into conflict with a similar right of his neighbour to enjoy his property as well.”

The court then asked Dhawan and Chopra to equally share the monetary penalty of Rs 2 lakh and pay it as damages to Kukreja so that he could repair his house.

NRI property: Vigilance to issue notices

As UT vigilance department has failed to arrest any of the four persons accused in the case pertaining to a fake deal with regard to
NRI Tara Singh’s property, the investigating agency has now decided to issue notices to all of them, asking them to join the probe.

Preliminary investigation suggested that England-based advocate JB Singh, who is running a firm named Chess International abroad, is the mastermind of the plot as the name of culprit Harnek Singh, who had forged the original general power of attorney of the NRI, was referred to complainant Tara Singh by JB Singh.

A VB official said Chess International had claimed it solved property disputes of NRIs in India and Tara Singh had approached JB Singh through an advertisement in England. A branch of the company is in Jalandhar and staff there was also questioned. Accused Harnek Singh was a munshi with a city-based lawyer and JB Singh, also an NRI, had advised the complainant that he appoint Harnek Singh as the holder of his general power of attorney (GPA).

However, the investigation has also established the negligence of the superintendent Sant Parkash and dealing assistant Virender Verma of the estate office and assistant estate officer (AEO) Ashwani Kumar. A senior vigilance official said Verma and superintendent Sant Parkash had overlooked the copy of original GPA stating Harnek Singh was entitled to sale and purchase of the property when assistant estate officer (AEO) Ashwani Kumar had passed a no-objection certificate (NOC) to Harnek Singh.

Questionable records

The official website of UT administration still shows accused Harnek Singh as 50% shareholder of Tara Singh’s property in Sector 20. A visit to estate office revealed that half of the share of the NRI’s property is registered in the name of Harnek, who is absconding.

Rs 1 crore looted from Noida property dealer

Armed car-borne miscreants shot at and looted Rs 1 crore from a property dealer in Noida on Tuesday afternoon in supposedly the biggest
on-road loot from an individual in the state. The victim has been admitted to Kailash Hospital in Noida where his condition is stated to be stable.

Till now all the robberies of over Rs 1 crore had either taken place within a premises like that of a bank or an office or the money was collected from a number of people. This is the first time that the money belonged to an individual moving on the road.
The police, however, suspected that the victim was infact carrying Rs 1 crore and even questioned him and the six persons accompanying him. Later, the victim showed them documents of the bank from where the money was withdrawn on Monday to buttress his claim.

The incident took place around 1 pm on Tuesday when a property dealer, Chatar Singh, of Vilaspur locality in Noida was on way to the office of the district registrar with six others for a land deal. Those accompanying him included the party whose property was to be purchased by Chatar.

Chatar’s Scorpio had barely reached Usmanpur village when an Esteem intercepted his SUV and even before he could understand what was happening, a group of armed men jumped out of the car. While two of them covered the occupants of the SUV from two sides, two others walked up to the seat where Chatar was sitting and tried to snatch the bag containing the money. When Chatar resisted, one of them opened fire at point blank range.

Chatar took the bullet on his hand and loosened the grip on the bag. The miscreants then took the bag and sped away in their car. The whole operation lasted barely a minute.

Chatar later told the police that those accompanying him in the SUV included his brother and some distant relatives who had offered to sell their property to him.

Tonic to builders and buyers Assetventures

Middle and lower-income subscribers to new home loans stand to save as much as Rs 1.5 lakh on interest payment under concessions announced by the Centre today while wrapping up discussions on the budget.

Finance minister Pranab Mukherjee, replying to the debate on the Finance Bill that was later passed in the Lok Sabha, also offered some concessions aimed at easing the burden of the downturn-hit industry. (See chart)

The measure that will help middle-income earners most is the 1 per cent interest subsidy on home loans up to Rs 10 lakh to buy houses worth up to Rs 20 lakh. The subsidy will translate into a total saving of Rs 28,920 on interest payment during the tenure of a 5-year loan and Rs 1.51 lakh over a 20-year period.

As many as 70 per cent of home loan borrowers fall in the Rs 10-lakh bracket, industry sources said. The government’s offer to underwrite 1 per cent of interest is expected to cost it about Rs 1,000 crore, according to the finance ministry.

“It (the subsidy) is a welcome step as it will improve affordability. Any such step tends to improve activity in the real estate and construction sectors, which are among the largest employment generators,” said Renu Sud Karnad, joint managing director of HDFC.

The subsidy announcement came a day ahead of the RBI’s credit policy which analysts do not expect to offer interest rate cuts.

Mukherjee did not confine the incentives to real estate to the subsidy alone. He also offered a tax holiday to projects that more or less got off the ground at the start of the downturn if they finish construction by March 2012.

Builders of projects that got approval between April 1, 2007, and March 31, 2008, need not pay tax on profits if they are completed on or before March 31, 2012. Given the euphoria of 2007, builders had rushed to launch a slew of projects that ran into rough weather when the tide turned in the latter half of 2008. Realtors have been pleading for relief after housing prices fell by as much as 15 to 25 per cent in many cities.

“The incentive is expected to help more big developers who are stuck with high leverage and low sales but the impact could be felt by all,” Pradip Chopra, director of Calcutta-based developer PS Group, said.

Rajiv Talwar, the executive director of developer DLF, agreed: “These measures will help to a large extent to sell stocks of affordable housing and boost overall demand.”

However, all real estate players were not enthused. Arun Puri, chairman of property consultant firm Jones Lang La-Salle Meghraj, said: “Such tokenism may not really perk up the market… larger gestures like reduction in interest rates and incentives for developers are needed to rescue the market.”

Mukherjee also addressed an accounting concern of industry, clarifying that changes in service tax would be implemented only from September 1. Industry associations had requested the government for time to make changes in their tax software.

Industrial growth had shrunk in December and January, but Mukherjee asserted today that the measures already announced in the budget and earlier as part of two stimulus packages could push the growth in gross domestic product to 8 to 9 per cent by end-2010.

Mukherjee said he would stick to his promise of placing a draft direct tax code within 45 days of taking over as finance minister and it would be tabled in the winter session of Parliament. “We will make some major changes in the tax administration and related laws in the country,” he said.

The minister promised to push through a nationwide goods and services tax by April 1, 2010, “with cooperation from states….”

The measure is expected to reduce taxes on goods and services and make taxation uniform throughout the country.

Mukherjee had a message for those disappointed by the lack of reforms in the budget. “Reforms will be very much on our agenda. It is a continuing process... it will not be a mantra to be chanted occasionally,” he said.

Govt to provide 1% home loan subsidy Assetventures

Finance Minister Pranab Mukherjee today announced an interest subsidy of 1 per cent for one year on housing loans of up to Rs 10 lakh for properties worth less than Rs 20 lakh, a move that has been widely welcomed by realtors and home loan companies. The measure is expected to cost the exchequer Rs 1,000 crore.
Pranab MukherjeeMukherjee also allowed developers of housing projects a tax holiday under section 80 IB(10) of the Income Tax Act on profits from projects approved between April 1, 2007 and March 31, 2008, provided the projects are completed on or before March 31, 2012. Mukherjee asked developers to pass on the benefits of this tax break to consumers.

Mukherjee made these announcements in the Lok Sabha today as part of his reply to the discussion on the Finance Bill. Both houses of Parliament passed the Finance Bill 2009-10, which included a raft other concessions.

Assuming a monthly saving of Rs 60 per lakh, today’s announcement implies that a borrower saves about Rs 7,200 on a 15-year loan of Rs 10 lakh. The interest rate subvention will be routed through the scheduled commercial banks and the housing finance companies registered with the National Housing Bank.

Pranab Mukherjee

Banks to offer subsidy on home loans, says FM. Assetventures

minister Pranab Mukherjee said that the interest rate subsidy for mid-segment housing would be routed to customers through
commercial banks and housing companies registered with the National Housing Bank. He said to further provide stimulus to the housing sector, it will be allowed a tax holiday in respect of profits derived from projects approved between April 1, 2007 and March 31, 2008, if such projects are completed on or before March 31, 2012.

‘‘I expect the developers to pass on the benefit of tax holiday to home buyers by appropriately reducing their prices. I am sure that both the expenditure and tax-foregone initiatives would provide relief to a large segment of prospective home owners and help revive the real estate sector,’’ he added.

The interest subsidy is aimed at mid-segment housing loan borrowers from the lower middle to middle-income groups. Even on Monday, Congress MP from Mumbai (North) Sanjay Nirupam, while speaking on the finance bill, said 42.4% of Maharashtra’s population was urbanized and trends pointed to increasing migration to cities. With home loan rates climbing steeply, there was a case for providing relief to borrowers. Providing an interest subsidy and a targeted tax break also answers in part the demand that the becalmed real estate sector needs a leg up.

The government’s message to the real estate developers is to lower prices and make housing more affordable for the aam aadmi.

The housing loan subsidy came with a slew of other concessions such as exempting road repairs and maintenance from the ambit of service tax while extending the sunset clause for tax holidays for industrial parks by a further two years up to March 2011 to boost growth in infrastructure. The FM clarified that service tax on new services and any alteration in the existing services as announced in the Budget would be effective from September 1, 2009.

‘‘It’s a welcome step from the government. The decision is sure to improve loan eligibility and affordability of a large section of the Indian middle class. It will also lead to increased activity with regard to real estate in the affordable housing segment which in turn will create employment,’’ said Renu Sud Karnad, Joint MD, HDFC Ltd.

Fresh real estate sops to spur revival . Assetventures

Eyeing fresh signs of a revival in the economy, which should nudge growth back to 9% level by end-2010, finance minister Pranab Mukherjee announced fresh tax giveaways for housing and renewed the government’s commitment to more economic reforms and introduction of a single goods and services tax (GST) by 1 April.

The move, expected to further boost housing demand in the economy especially in tier II cities, also seeks to quell growing criticism that the Congress-led United Progressive Alliance (UPA) is averse to second-generation reforms.

Replying to the debate on the Finance Bill, which was approved by a voice vote by the Lok Sabha, Mukherjee renewed his efforts to strike political consensus on key areas of tax reform, including the introduction of a direct tax code.

The reply also calibrated a few of his 6 July Budget tax proposals, which are not expected to result in big revenue giveaways, thereby precluding the possibility of a marked increase in the Rs4 trillion fiscal deficit forecast for 2009-10.

The stand out feature of Mukherjee’s calibration of tax proposals in the Finance Bill was the emphasis on boosting real estate through both budgetary support and tax changes. The budgetary support in the form of a 1% subsidy on the interest rates paid by people with a home loan of up to Rs10 lakh would cost the exchequer Rs1,000 crore in the current fiscal year, Mukherjee said.

Under Section 80 IB (10), income-tax deduction was given to real estate developers for housing projects approved before 31 March 2007. This has now been extended to projects approved between 1 April 2007 and 31 March 2008, provided these projects are completed on or before 31 March 2012.

“We have been asking for an extension for a long time and I am happy that this step has been taken,” said Kumar Gera, chairman of the Confederation of Real Estate Developers’ Association of India. “The extension will benefit only those projects that were approved during this period, so it may not have an impact on all housing projects in all markets. It could have an impact on certain micromarkets.”

Among other key tax changes were the removal of service tax charged by contractors repairing and maintaining roads, and extending tax benefits given in the Budget to firms producing natural gas under the new exploration licensing policy to those producing natural gas from coal-bed methane blocks.

The finance minister admitted he had to ignore many other post-Budget representations, which came his way, as the tax proposals had to mesh with the broad strategy of providing fiscal stimulus. “We must generate internal demand,” he said.

The spillover of the fiscal stimulus provided last fiscal year and proposals introduced in the 6 July Budget have cost the exchequer Rs2.4 trillion, Mukherjee said. The fiscal deficit (extent of borrowings needed to bridge the gap between expenditure and revenue) is estimated to touch 6.8% of the gross domestic product in 2009-10.

The Budget estimates of the Centre’s net tax revenue in 2009-10 is Rs4.74 trillion, an increase of 0.19% over the previous year’s revised estimate.

Economic growth, which received top priority in the Budget’s overall strategy, is showing signs of recovery, Mukherjee said, though he remained cautious about signals provided by an improvement in economic indicators such as May’s factory output. “I would not say we are out of it. Situation is still difficult.”

Mukherjee assured the House that the government would continue putting in place reforms, including tax reforms, to facilitate growth.

In the area of tax reforms, Mukherjee said he was confident India’s indirect tax system could stick to the 1 April deadline for transition to GST, even though some states such as Madhya Pradesh and Tamil Nadu have said the deadline might be premature.

“On broad national interest, there is no discordant view,” Mukherjee said, explaining why he remained upbeat about meeting the deadline.

GST is India’s most ambitious indirect tax reform, which seeks to dismantle tax barriers that fragment India’s market according to state boundaries. The transition requires cooperation between Centre and individual states.

The country’s tax reforms could, however, be negatively affected by the Opposition’s displeasure with the way the UPA has directed policy in areas such as international affairs.

“A mere call for consensus is not enough. To have consensus on issues, the government should pre-consult the Opposition on issues of national importance. Unfortunately, the (government’s) conduct in the last two months does not reflect this,” said Prakash Javadekar, spokesperson of the Bharatiya Janata Party.

Real estate, infrastructure loans show strong growth

Which sectors have banks been lending to in recent months?

The Reserve Bank of India’s macroeconomic and monetary developments review has data up to 22 May on lending to various sectors.

Consider housing first. Year-on-year growth in housing loans slumped to 5% on 22 May, compared with a year-on-year growth rate of 7.5% on 27 February.

Loans to the real estate sector, or loans to the commercial housing sector, grew by a strong 52% year-on-year, albeit on a much lower base.

On 27 February, loans to the real estate sector grew by 61.4% year-on-year.

Between 28 February and 22 May, housing loans increased by Rs3,138 crore, while bank loans to real estate companies went up by Rs3,734 crore.

In short, loans to real estate companies were more than loans for individual housing.

After a rise in bad loans in the credit card business, banks have started to cut back on lending to this segment.

Between 28 February and 22 May, credit card outstandings went down by Rs1,949 crore. Year-on-year growth in credit card outstandings was a mere 1.4% on 22 May.

The data bears out the fact that most of the slowdown in lending has happened in personal loans.

On 22 May, year-on-year growth in personal loans was 5.5%. Lending to industry grew at a year-on-year rate of 21.2%, while loans to the services sector increased by 20.5% year-on-year.

In the services sector, apart from real estate loans, loans to professionals (up 39.8% year-on-year) and to non-banking financial companies (up 31.5% year-on-year) also showed robust growth.

In the industrial sector, the highest rate of growth was notched up by the construction sector which grew by 44.7% year-on-year on 22 May. But that’s decelerated from a growth rate of 58.8% as on 27 February. Loans to infrastructure were up 35.1% year-on-year on 22 May, the same rate of growth on 27 February. Other industrial sectors showed a deceleration in credit growth.

The oil sector, of course, showed a substantial fall in credit growth as crude oil prices fell and as oil bonds were issued.

Is it good time to buy or sell in real estate mkt now? Assetventures

Is it a good time to buy or sell in the real estate market right now? Chances are that as a prospective buyer or a property owner, you may be
facing a serious dilemma.
Industry players feel that while it may be a good decision to buy in certain locations, a sell off needs to be given a few more months till the market picks up completely.

So which are the best places to buy in right now? According to global real estate consultancy Cushman & Wakefield (C&W), in Delhi NCR, it is Noida, Greater Noida Expressway and areas in Gurgaon along the Golf Course Extension Road. In Mumbai, central Mumbai and western suburbs such as Bandra, Kalina and JVLR are good bets. New emerging destinations in Bangalore such as Sarjapur Road, North and central Bangalore, apart from a few projects within the city can be considered.

Aditi Vijayakar, executive director, residential services India, C&W, says that this is a good time to buy a property for self use as prices have corrected considerably over their peak in 2007-08. “Buyers at this time can take advantage of lucrative interest rates on home loans. However, for investors entering the market, this time should be evaluated keeping the various arbitrage options that they can take advantage of in the current scenario. As far as selling is concerned, this is not a sellers market. The decision should be taken when the owner is confident of achieving the expected appreciation of the capital value of that property.”

While developers such as Vipul, Realtech, Raheja Developers and SVP Group say the market is picking up and one should look at buying, they don’t sound equally enthusiastic about selling off one’s property at this time.