On wings of Hope
After the roller-coaster ride of the past few years, the Indian realty sector is entering the second decade of the millennium on a positive note. Buoyed by a soaring economy and customer confidence, the residential segment is in for another bright phase in 2011,writes Geetu Vaid

The New Year is the time for new beginnings, new hopes and renewed vigour, and all these are multiplied manifold when the year trapezes in with a new decade. 2011 begins on this positive note for the realty sector as after almost 18 months of steady growth, the sector is all set to scale new peaks in the next few months, thus paving the way for a bountiful decade. The performance of the sector has been rated as a roller-coaster ride in the first decade of the millennium with its meteoric rise in 2005 followed by the bursting of the bubble, and the slow but steady trudge out of the turbulent waters in the past year-and-a-half. The slowdown shock has injected a substantial amount of caution and maturity in the major stakeholders of the Indian real estate. Thus, armed with the key weapons of caution and diligence, the sector is poised to scale new heights in the next year.

The residential segment has gained a firm footing in the past 12 months with a substantial number of new projects being launched as the demand graph continued its northward march. With the market having a huge appetite for residential units, end users as well as investors are forthcoming to dig into the wide variety offered on the residential platter by builders. Estimates have pegged the shortage in the housing sector at 26.53 million units in the Eleventh Five Year Plan tenure (2007-2011). Thus, with a robust economy and an expected $ 1.6 billion investment in real estate projects along with over $ 1 billion budgetary allocation in 2010-2011 for urban development, optimism is in the air for the sector as the New Year dawns. However, keeping the lesson of caution in mind, Himadri Mayank, Manager, Research and REIS, Jones Lang LaSalle, maintains in a study on the trends for 2011, that, "Certain locations that witnessed rapid increments in price, will not only witness resistance to any further price rise but also some downward pressure. We will continue to see rapid sale velocities in the affordable segment for projects that are priced below market averages. The likely hardening of interest rates, coupled with high inflationary pressures and rising property rates, will impact the purchasing power of home buyers in 2011, which will influence the absorption dynamics of the residential sector.''

Unexplored vistas

While the shortfall is the maximum in the housing for the economically weaker sections, this ultra-low cost housing segment remains virtually untapped by private builders. With more government initiative in the offing this segment's huge potential of remains to be explored in 2011.

Affordable dreams

The maximum movement is in the affordable segment as home buyers have regained confidence. A slew of integrated townships and projects launched in the periphery areas of big cities, where land prices are less, have provided ample choice to home buyers. Calling this a win-win situation for both developers and buyers, Manpreet Singh Chadha, Director of Wave Inc, says, "People are talking of stagnation in 2011 but I don't see it as a major threat. The prices might not reach a very high level but sales are expected to increase". Though there has been an average 20-35 per cent appreciation in capital values in the past 12 months, the builders need to guard against the temptation to push more increments as it can make the market overvalued. Citing the low sale volumes towards the end of 2010 as warning signals Mayank cautions, " The two-direction theory of price movement is likely to be seen in the sector during 2011, wherein select geographies would witness a rapid increase in residential rates due to improving infrastructures while others would languish due to an already overvalued market". This was very much evident in the case of the Mullanpur area near Chandigarh where property prices soared due to the entry of big players and better infrastructural development in 2010, while in the Baddi area the prices remained stagnant due to overvalued projections and glut of stock in the secondary market.

New locations

While "leapfrogging" has opened up new locations in the vicinity of big cities, the tier II and III cities are also on the radar of developers in the New Year. Several residential projects planned in cities such as Panipat, Karnal, Agra, Jaipur, Ludhiana, Amritsar, Mohali etc will be completed in the next year bringing organised real estate development to these cities besides opening up new vistas for future growth.

Touch of luxury

2010 also saw a steep growth in the high-end luxury segment with several premium projects being launched in NCR and in cities across the region. With an improved economy and increase in the number of HNI in India, this niche segment is likely to keep rocking in the New Year also.

Trend mill

As for the customer preferences in 2011, internationally-inspired architecture and green homes have gained popularity in the region. The Indian Green Building Council (IGBC) has recently rolled out its first rating programme for residential sector - Green Homes. "It is encouraging to note that sustainable construction has been witnessed across all segments, be it value housing or premium residential towers and as more and more buyers become aware of the benefits of green buildings, more developers would market their products with a green certification", says the JLLM study on trends in the sector.

Voicing his opinion on this aspect, Brijesh Bhanote, Senior VP, Sales and Marketing, The 3C Company, says, "I strongly believe that the trend of green homes would gain momentum in the coming year. The government has shown initiative in this regard. The recent rise in FAR for green buildings is a constructive step. However, we would need further support to help this initiative seep to the grass-root level. A subsidy in loan rates for a 'green home' would attract more end users and would also attract more and more developers to develop energy-efficient projects", says

So the New Year holds out the promise of robust demand and a host of opportunities for the realty sector on the whole and residential sector in particular. Higher consumer confidence and the promise of a sustained GDP growth along with the lessons of the recent slump serving as beacon lights, the investors, end users and developers can all waltz confidentally into the new decade. The party has just begun for the Indian real estate.

(See also page 5 )

TAX TIPS
Change in WILL

Q. I am 67 years old and have one son and two married daughters. My wife expired sometime back. As per my Will, which was prepared and registered by me in 2001, my son will inherit my property and assets. My question is whether this Will is still valid or has it become invalid after the recent amendment in provisions of the Hindu Succession Act. Do I need to revise/amend the Will which was prepared in 2001 before the amendment took place.

— K. S. Arora

A. The Section 6 of the Hindu Succession Act, 1956 as amended, deals with the devolution of interest in co-parcenery property i.e. in respect of the joint family property. It has no relation with the right of a person to make a Will in respect of his self-acquired property. I presume that the property and assets referred to in your query are in the nature of self-acquired property and have not been inherited as a joint family property.

You have not indicated in the query as to whether the Will executed in 2001 is intended to be changed or it is only because of the amendment in Section 6 of the Hindu Succession Act, 1956 that you have raised this query. In case you intend changing your earlier Will, it will be better to incorporate a clause in the new Will that all earlier wills/codicils will have no effect after the execution of the latest Will.

Can’t claim deduction

Q. I have taken a housing loan from a bank which is jointly in the name of my husband and me with equal share. I wish to clarify whether I can claim rebate on income tax if the house is registered fully in the name of my husband and my name doesn’t appear in the Conveyance Deed anywhere. Please clarify the admissibility of exemption of principal and interest amount separately.

— Shalini Goyal aA. A deduction is allowable to an individual under Section 80C of the Act within the overall limit of Rs 1 lakh in respect of the repayments made for principal amount borrowed from a specified source for the construction or purchase of a residential house, the income of which is chargeable to tax under the head ‘income from house property’ or if it has not been used for the self use it would have been so chargeable. Further such deduction is allowable to a person who is the owner of such residential house. The facts given in the query indicate that though the amount has been borrowed by both of you in equal shares, the house is registered in the name of your husband. In view of the provisions of Section 80C of the Act, as discussed herein above, it may not be possible for you to claim the deduction of your share of repayment of principal amount in respect of the loan borrowed for the purchase of a residential house. 

Sale of ancestral property

Q. I sold a 200 sq. yd plot within a residential area in my village for Rs 5 lakh in July, 2010. This was part of our ancestral property and there is no record available about the exact date of purchase and the cost. Kindly inform me about LTCG accruing there on.

— Ram Lubhaya

A. In accordance with the provisions of Section 48 of the Act, the income under head ‘capital gain’ is computed by deducting the cost of acquisition of the capital asset, cost of any improvement thereto and the expenditure incurred wholly and exclusively in connection with such transfer from the sale price of the capital asset. In case of inherited assets, the cost is deemed to be cost for which the previous owner acquired it. It seems the asset became the property of your fore-fathers before April 1, 1981, and therefore, you have an option to get the deduction from the sale price for the fair market value of the capital asset as on April 1, 1981. If that be so, it will be essential for you to get such fair market value ascertained. The same will be indexed for the purposes of calculating capital gains. The period for indexation would be the period for which you have held the capital asset. Long- term capital gain would thus be computed by deducting such indexed cost from the amount of Rs 5 lakh being the sale price of the house. It is not possible to compute the amount of capital gain as the details of fair market value as on April 1, 1981 and the period of holding by you are not indicated in the query. 

Rebate on rent and loan repayment

Q. I am working in Gurgaon and claiming house rent allowance for the rented house occupied by me in Gurgaon. I am intending to buy a flat in Hyderabad, a place to which I belong. I want to buy this house for self occupation. The place would also provide a residence to my parents. I have raised loan from bank for buying the said flat in Hyderabad. Can I get a deduction on the house rent allowance as well as on the interest on the loan raised for buying Hyderabad property?

— P.K. Rao

A. The house rent allowance received by an employee is exempt under Section 10(13A) of the Act if the same is actually spent on the payment of rent in respect of residential accommodation occupied by the assessee. The exemption is limited to the amount to be computed on the basis prescribed by the Income-Tax rules 1962 (the Rules). Even if a salaried employee owns a house in the same city where he is living but is actually spending amount for occupying a rented accommodation, the exemption for house rent allowance can be claimed by him subject to the limit provided in the Rules. The interest payable on the loan raised for acquiring a property is allowable as deduction from income from house property under Section 24 of the Act. In my view you can claim the exemption of house rent allowance to the extent allowable to you as well as claim deduction for the interest paid on loan raised for acquiring a residential house. 

Terms for tax exemption

Q. I sold a residential plot two-and-a-half years ago. In order to save tax I had to use this money for buying a house within two years or construct a house within three years. Now, if I buy a flat which is under construction now (the registration will be done on getting possession after four months) then, will it be considered under the second condition (i.e. construction of house within three years) and will I get tax exemption?

 — Rajat Singal

A. In case you are able to get the possession of the duly constructed residential flat within the period of three years after the date of sale of the plot, you should be able to claim the exemption from the taxability of the capital gain arising on the sale of the plot. I hope you are aware that in case of sale of a plot, the amount of net consideration (full value of consideration received or accruing as a result of transfer of the capital asset as reduced by any expenditure incurred wholly and exclusively in connection with the transfer of plot) is required to be utilised for the purchase or construction of a residential house. I hope you had deposited the amount of net consideration with a bank under the Capital Gain Scheme account before the due date of filing your return in respect of the financial year in which the plot was sold. Non-compliance with any of the above requirements may lead to the denial of exemption by the tax authorities. In case the tax authorities are inclined to do so, you may refer to them an ITAT decision of Jaipur Bench reported in 45 DTR 41 wherein it has been held that the requirement of deposit under the Capital Gain Scheme is of procedural nature and as long as the amount has been utilised towards the purchase or construction of residential house within the specified period, exemption under Section 54 F of the Income-tax Act, 1961 (The Act) should be allowed.

LAUNCH PAD
Jacaranda Heights

Falcon Realty Services Pvt. Ltd, has launched ‘Jacaranda Heights’ as part of its ‘Global Eco City’ project on NH-8 in the Delhi-Mumbai Industrial Corridor (DMIC). Jacaranda Heights is a set of premium condominium with 1 BHK, 2BHK, 3 BHK and 4BHK apartments priced at Rs 13.25 lakh to 45 lakh onwards.

The company is investing approximately Rs 85 crore in the project, furnishing a total of 300 flats. The project is aimed at addressing the residential needs of the global migrating community coming to this region from Europe, Japan and USA to match the lifestyle habits of the residents. Jacaranda Heights is slated to be completed over a period of 12 to 24 months in phases.

Bellevue

Central Park has come up with a new project — Bellevue. The project is jointly promoted by Amarjit Bakshi and K.S. Bakshi. According to Vineet Nanda, Vice-President,Business Development, Central Park, has the rare distinction of having six quality certificates from leading auditors and consultants. “Individual certificates are being handed over to each apartment owner at the time of possession. We are not just in the business of building apartments, we believe in building trust,” he adds.

Bellevue comprises over 400 apartments of sizes in the range of 2350 sq ft to 4650 sq ft. The apartments have been designed by one of the world’s largest and most-respected architectural firms, Hellmuth, Obata + Kassabaum(HOK). The US-based firm is an acknowledged leader in architectural, design and engineering practices and has to its credit such stunning developments such as the Dubai Marina.

The company also has a distinction of being a ‘zero debt’ company, with its market cap has been valued at over Rs 5,750 crore by the PE fund.

Marine Plaza

Ashiana Housing Ltd will be entering the commercial segment with its project — Marine Plaza — in Jamshedpur. The project, requiring an investment of over Rs 50 crore, envisages the construction of seven-storey building, two floors of which would be devoted to a shopping complex while the remaining floors will house a 120-room hotel.

The company has already initiated talks with a few international hotel chains including Hyatt Regency, for building the hotel, which will have four star facilities.

The real estate firm acquired 2 acres on lease from TATA Steel behind Ashiana Gardens — one of its largest local housing projects in Sonari for the ambitious hotel -cum-retail project a couple of years ago.

Vishal Gupta, Managing Director, Ashiana Housing Ltd., said, “Preliminary work like soil testing had begun at the project site and construction work was likely to start in the next two months.”

DELHI ONE

The 3C Company is has launched Delhi One — a mixed use development in Sector 16B, Noida (adjoining DND Flyway). Delhi One is envisaged as “The Destination” for the privileged few. Taking the 3C’s connection with nature forward, the design philosophy of Delhi One is driven by the five elements of nature i.e. bhumi (earth), jala (water), agni (fire), pavan (air) and akash (sky).

Defined as a compact, mixed use, urban and a green development Delhi One is segregated into domicile, entertainment, leisure, hospitality and business areas.

Speaking at the launch, Vidur Bharadwaj, Director, The 3C Company said, “Delhi 1 is the epitome of The 3C Company’s architectural excellence. The exceptional design leads to the seamless integration of the various verticals; Residential, commercial, hospitality & Retail in to one stunning visual treat which is bound to change the way NCR has been perceived. The architecture of Delhi 1, does not only marks the grand emergence of Indian developments but also symbolizes India’s transformation; from third world country, to a developed nation.”

MADELIA

The Anant Raj Group recently launched ‘MADELIA’— a group housing project in Manesar, Manesar Residential M-1A sector, Gurgaon. Spread over 12.45 acres, this newly launched high rise group housing project has been designed by HKR architects from Ireland. The flats will be available in different sizes, from a 2 BHK to a 3 BHK with servant room and a 4BHK with servant room for larger families. Penthouses in two sizes of 4 BHK and 5 BHK, will be on offer for buyers aspiring for luxurious living.

tech park space

Vigneshwara, one of the largest urban infrastructure developers, will be developing a 10-acre business-cum-technology park for the Haryana State Industrial and Infrastructure Development Corporation (HSIIDC) on campus development norms, within the 150-acre technology corridor at Manesar in Gurgaon.

According to Sunil Dahiya, Managing Director, Vigneshwara Group of Companiesinfrastructure development is much more than steel, cement and sand. “One ought to have vision to effect a paradigm shift in industry standards and rewrite trends and utility norms to stand out and ensure scalable and sustainable development, rather than just follow conventional methods and applications. India is on the threshold of becoming a superpower, and we need to have out-of-the-box thinking to build infrastructure compatible with global standards.”

As per information furnished by the developers

GREEN HOUSE
The language of flowers
Satish Narula

Gardens and flower beds laden with blooms surely add a lot of warmth to the chilly air. The bright and glossy colours of flowers make even a simple stroll in a park a memorable experience. Of late, the exchanging of flowers and bouquets has increased and these are in much demand. Our scriptures also have mention of various kinds of flowers.

Brahma is said to have emerged from the naval of lord Vishnu sitting on a lotus. The mythology also has it that when Brahma visited vaikunth, he acknowledged a bold yellow rose to be the best of all flowers. So what better time to talk about flowers than the ‘season of flowers’. A bouquet of flowers is, no doubt, the best way to send greetings and good wishes. Everyone loves to receive flowers. But this time, do it in style and send clear message to the receiver expressing what you want to convey. So let’s talk about the importance of “flower power”. And each flower conveys a different message. Do you know what a yellow rose stands for? When you offer flowers on 15th wedding anniversary, let it be roses and if it is 50th give yellow roses with violets.

The next time when you give your valentine a single rose, make sure it is thornless as it signifies ‘love at first sight’. Also make sure it is red as red rose is still the strongest way to say ‘I love you’. A very important piece of advice, let her accept the flower with right hand as the acceptance with left hand (unless she is a lefty) means rejection! Aster too is a symbol of love.

You never gave a daisy to anyone, did you? Next time do it. It signifies as many good qualities in the recipient as the number of petals it has. Gone are the days when one used to visit an ailing friend with a basket of fruits. Now it is a bouquet but make sure that it has blue flowers as these signify tranquility, health and cheerfulness. You can also go in for freesia as they strengthen friendship and symbolise “get-well-soon” message. If you love chrysanthemums and have attended chrysanthemum shows then you must know that these also convey the “get well soon” message as they symbolise rest and cheerfulness. Sending chrysanthemums also conveys your appreciation for the person.

A visit to Sukhna lake in Chandigarh, especially in the early hours is an ethereal experience. A ‘Garden of Silence’ has also been designed at the Regulator End for meditation and tranquility. Mass plantation of blue irises in raised planters has also been done near the lake entrance. Blue irises signify journey to heaven and friendship, thus justifying there presence there.

With Chandigarh having a number of theme-based gardens, it will be a good idea to have a display of slogans about what different flowers convey. Imagine the Rose Garden with slogans like ‘Red and White roses stand for unity’, ‘White roses stand for innocence, purity, reverence and humility’, ‘Two roses together on a single stem indicate engagement and upcoming marriage’; ‘Pink roses mean gentleness, elegance and grace’ etc. 

Fortnightly alert

Be very careful while watering plants in the extreme cold conditions. As there is not much of sunshine and heat, the water loss is not significant so too much watering can damage the plants and grass. Do not leave a hose running in your garden unnecessarily. As and when you add manure and fertiliser to the deciduous plants like peach, plum, pear etc mix it well with the upper soil layer followed by irrigation. This holds good for evergreen fruit plants, too.

VOICES VIEWPOINTS
Industry mavens share their hopes and aspirations for 2011
Harmit Chawla

VP, Sales & Marketing, Paras Buildtech India 

"The focus of real estate sector has been mainly on affordable housing in 2010 and it is expected to remain so in 2011. A lot of talk about stagnation in real estate market has been doing the rounds. However, I feel that there might not be a massive increase in prices but there will be a healthy growth in 2011 also. The affordable segment is likely to get the maximum attention as many projects will be nearing completion in 2011, and people's first-hand experience of such projects will create more demand for such products. Having said that luxury will also get attention as it has started to pick up in 2010 and 2011 will also witness the same trend. Delhi NCR will see a healthy situation of supply and demand coming up especially in Noida."

Shah Alam,MD, Purvanchal Group

"2010 ended on a good note and 2011 would be a better year with the demand and the prices both being on the upward side. The year would see a lot of new trends being introduced as a lot of new companies are coming up with new and better projects having world class technologies. If you talk about commercial, Green Buildings would be the main focus area. The residential sector would witness projects in the affordable and luxury segment making the scope of the market wider."

Manu Garg,Spokesperson, Raj Nagar Extension (NH - 58) Developers Association

"Sites that had good connectivity gave good returns in the Delhi-NCR region. The inclination towards such places will remain intact in the New Year too. 2011 will definitely add more value to these places because work on projects here will pick up pace. Buyers will benefit as 2011 will see the delivery of many affordable options. Hence the choices for new buyers will multiply and they will have a number of good projects to choose from. What is important in 2011 is that buyers should be extra cautious in choosing a project as developers will go an extra mile to woo them. The buyers must do a thorough check before reposing faith in a project or a developer."

Brijesh Bhanote,Sr. VP Sales & Marketing, The 3C Company

"The real estate sector had picked up momentum in 2010. As the economy recovered from recession, the market improved and witnessed people from all the spectrums investing in the sector. We expect the year 2011 to be better. We would channelise our efforts and focus towards the deliveries/ construction of the projects already sold. The prices are very reasonable at the moment and this is the best time to invest as the prices are expected to appreciate further. However, any correction in the prices is highly dependent on the track record of the developer and the amount/speed of construction happening at the site. The location also plays a vital role in the appreciation of price in a particular project".

RK Jain,

Executive Director, Wave Infratech

"The real estate market has sailed through some of the worst times. The year 2010 turned out to be the year of redemption for the sector. From the second quarter of 2010, the sector started to see a turnover , which meant a lot of demand and launch of new projects to meet that demand. The focus of the sector has been majorly on affordable housing in 2010 and it is expected to remain so in Noida, Ghaziabad, and Faridabad. It is expected that in affordable housing segment the price bracket of Rs 15 lakh to Rs 25 lakh will get attention as the number of buyers in that bracket is the highest. Luxury, too, has made a comeback and the year will witness some good projects in the region".

Emaar MGF

"Looking at 2011, the pent up demand would be significant and actual end users would substitute the waning speculative interest in the realty sector. We expect residential sales to drive near-term growth. Today in the global macro economic context, India is an attractive investment destination. Greater job stability and substantial GDP growth rates will result in significant sales traction in realty. Having said that, high interest rates and the scare of rising crude oil prices could potentially be downside triggers for the economy".

Om Chaudhry

CEO FIRE Capital Fund.

"We expect the demand to continue increasing. Therefore we expect the real estate market to grow, though more in mid-income residential sectors. As per official reports submitted by multiple government bodies, there already exists demand-supply gap of 30 million units, therefore India is primarily an end user's market. However, certain locations like the Gurgaon will continue to attract high percentage of investors. The trend of suburban townships and luxury villas is already popular and will gain momentum in 2011 as well. We expect the residents of Tier II and Tier III cities to become more demanding, especially in the mid-income segment.

Prashant Tiwari,

MD, Prateek Group

"The need of the hour for developers is to keep working hard by bringing good and quality projects and ensuring timely delivery. The buyers are looking for high end facilities at affordable prices and more and more builders are trying to do that. We believe that luxury shouldn't be confined to a limited clientele only. Areas like Chandigarh, Mohali, Amritsar, Ludhiana have a very good scope of growth in the next few years.”

POLICY BLUES
House Tax muddle
Sandeep Goel

Property owners in the urban areas of Punjab are virtually paying a heavy price for laxity on the part of the Present State Government. The thorn in the flesh in this case is the exorbitant House Tax levied by the Municipal Corporations/Committees in the state. The House Tax laws are outdated and have remained unchanged since the inception of The Punjab Land Revenue Act, 1887 (Act No. 17 of 1887).

While taxes like income tax, excise duty and customs duty etc have been reduced drastically with the globalisation and improvement in the economy of the country, there has been no change in the House Tax regime in Punjab. In fact, the common man is reeling under the effects of multiple taxes as the Central Government has already imposed 10.3 per cent Service Tax on renting property and on builders. The House Tax to be levied is equal to 15 per cent of the annual rent/rentable value and the rentable value is worked as 5 per cent of the value of property declared by the Deputy Commissioners also known as Collector Rates.

To make the matters worse, the District Collector Rates of urban property have been enhanced three to five times within a short span of time without any rhyme or reason also leading to confusion for assessment.

Another interesting fact is that the House Tax is assessed at different rates within the same area and market depending upon the how influential is the person whose property is being assessed, says S.K Singh, Chairman Association of Computer Professionals, Patiala, who is running a computer business in Leela Bhawan Market in Patiala. House Tax for his business premises has been assessed at Rs 35,000 per year whereas the House Tax of a premise in the same area has been assessed at Rs 1,500 per year because that premise is in the possession of an “influential” person. Interestingly, the rent of both the said premises is 35,000 per year. There are hundreds of similar cases in virtually all municipal bodies all over the Punjab in which either the affected have moved courts for relief or have just not paid tax as a protest.

As per Chapter V, which lays down regulations for the assessment of The Punjab Land Revenue Act, 1887 a notice is to be issued to the owner/tenant of the property before a final assessment order is passed and he/she has to be been given a chance to file objections and give his/her own calculation of the House Tax. But in reality the valuations done by the municipal staff are final and absolutely no weightage is given to a property owner or tenant’s justifications. In a majority of the cases the assessee is not even informed about the assessment. They come to know after a year or even more only when they get the House Tax bill. By then even the time to make an appeal (as per Chapter V) is over and as such the affected person has no option but to pay the tax or move the judicial court for relief. This leads to harassment of people in urban areas by the authorities concerned.

The states of Delhi and Gujarat had changed the rules in this regard and self-assessment of House Tax on a set pattern and online payment system were introduced, which resulted in massive decrease in the tax collection cost incurred by the government, and increase in revenue generation besides reducing common urban man’s woes.

Change of Ownership of Municipal Properties

In a majority of cases virtually no rent is recovered from the tenants of Municipal Bodies in Punjab as these are in possession of tenants who pay miniscule rent (as low as Rs 2 in some cases). The previous Punjab Government had chalked out a formula of selling/ transferring these properties to the tenants in possession of these properties at District Collector Rate. The move, if implemented, could have lead to the recovery of revenue worth crores for the Municipal bodies all over the state from properties which are giving no return in terms of Revenue since last 15-20 years, to these bodies, as it is virtually impossible to get these vacated due to legal hassles.

The tenants of such Municipal properties were informed about the scheme and certain municipal bodies like the Municipal Corporation Patiala even accepted 25 per cent amount of the value assessed on District Collector Rate at the time of accepting the Commitment Money from those ready to buy the properties, but now the Municipal Corporation Patiala is shying away from transferring the ownership rights of the said properties. As per the Commissioner of Patiala MC, the Municipal Corporation has been writing to the Present Local Bodies Ministry repeatedly since last one year and is awaiting further orders/instructions from the Local Bodies Ministry. But the said Ministry has failed to respond till date. As a consequence while the State Exchequer is losing crores of rupees as revenue, the tenants, too, are in a state of indecision.

The writer is a Mohali-based consultant

NHB to prevent housing loan defaults

To prevent default in home loans, housing finance regulator NHB has asked the lenders to provide loans up to only 80 per cent of the value of property in case individual borrowers seek more than Rs 20 lakh of loans.

Standardising norms for housing loans, the National Housing Bank, however permitted the housing finance companies to give loans up to 90 per cent of property value for loans up to Rs 20 lakh.

“No housing finance company shall grant housing loans up to Rs 20 lakh to individuals with loan-to-value (LTV) ratio exceeding 90 per cent and grant all other housing loans above Rs 20 lakh to individuals with LTV ratio exceeding 80 per cent,” the NHB said in a circular issued to housing lenders.

The new norms by NHB come few days after RBI asked banks to provide loans up to 80 per cent of property value.

“The changes are done with a view to make the system more robust, to create a higher capital buffer and the provisioning which will act as a cushion in the time of downturn in the assets getting stressed,” NHB Chairman and Managing Director R V Verma told PTI.

The NHB also asked housing finance companies to keep 0.4 per cent of outstanding loans to builders, corporates aside.

The provision can be implemented in two phases by keeping 0.2 per cent of loans aside by this fiscal end and 0.4 per cent by September 2011.

The NHB also asked the lenders to keep more money aside in case it is giving at least Rs 75 lakh loan to individual borrowers.

The housing finance regulator asked the lenders to keep 2 per cent of loan aside in case they are giving controversial teaser loans, which are given at concessional interest rates in the initial years.

“The changes will act as a layer of protection for lending institution and also cover the additional risk which they will be exposed to times of volatility and potential default risk,” Verma added. — PTI