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Dice loaded in favour of big builders
With new Punjab colony policy in place, small-time realtors may soon be edged out, says
Chitleen K. Sethi
The Punjab government’s new policy for the establishment of residential colonies in the state has certainly not been received with accolades that had been expected. While the policy has simplified a large number of counter-productive issues that were involved in setting up of residential colonies by private builders in the state, the policy is bound to hit the medium and small colonisers hard. From the buyers’ point of view, this could mean access to only high-priced housing facilities in the larger cities. The state has been divided into three zones based on the growth potential of the area. The Greater Mohali area has been placed in the hyper zone while Amritsar, Jalandhar and Ludhiana have been placed in the high potential zones in the state. All those areas, which are within 5-km along both sides of NH1 (Grand Trunk Road) have been placed in the medium potential zone. All other areas fall under the low-potential zone. According to the new policy, a residential colony (plotted) will be of minimum 100 acres in the high potential zone, 50 acres in the medium potential and 25 acres in the low potential zone. For a group housing scheme, the minimum area required for the coloniser in a high potential zone will have to be 10 acres independent and five acres as part of a plotted colony. The rule remains the same for the medium potential zone. In low potential zone, such a colony can be established in 5 acres. A coloniser will now have to gather at least 100 acres of land in Amritsar, Jalandhar and Ludhiana to set up a residential colony. This leaves only big national players in the field. A local enterprising builder, who is ready to follow the rules but can afford only, let us say 20 to 30 acres to set up a colony, cannot dream of it. This, in turn, means an end to the availability of low-priced small colony houses for the middle-class. It is also bound to lead to mushrooming of illegal colonies in the state, say colonisers. The department has also laid down two acres as the minimum area requirement for the setting up of a “commercial colony” in the state. The minimum area of plotted development within the jurisdiction of urban local bodies has been fixed as 5 acres and would be 4,000 square meters in case of group housing and commercial use. For a commercial activity, the minimum frontage is 30 meters and minimum road width is 100 feet. For group housing, the minimum frontage has been laid down as 20 meters and minimum road width 100 feet. Not only has the government made the minimum area requirement too stringent, but has also sharply increased the external development and change of land use charges (see box). At some places these charges have been doubled. So even if a local coloniser manages to procure the land, it would be very difficult for him to dole out crores upfront as EDC and change of land use charges. Needless to say, in the end, the burden would have to be shouldered by the buyer. The government’s logic is that the policy encourages only serious players in the field of private housing so that instances of colonisers taking buyers for a ride are reduced. Fair enough. But encouraging national players at the cost of a local enterprising builder is probably not the best way to do it. Strengthening the regulatory mechanism of licensing authorities is where the key lies. In the last regime, more than 35 colonies were given a nod by one of the many licensing authorities within a record time of one month. Obviously field officers never visited these projects. So if a coloniser has not provided what he claimed to the resident, both the coloniser and the government’s licensing authority are to be blamed equally.
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Local area plan to boost realty
Regulation means towns will have better infrastructure, says Jupinderjit Singh
The much-awaited notification issued in mid July eyes year 2020 as the benchmark for envisaging planning for the growth of cities and villages around it. A gazette notification now means the government has legally laid out a broad plan by identifying the areas for the districts. The next stage is to prepare a master plan for these cities. For this, views of the masses and representatives would be highly significant. The most interesting aspect of the notification is the inclusion of Phillaur town in the Ludhiana plan. The town, located geographically nearer Ludhiana but administratively under Jalandhar, was bereft of major development due to this technicality. Along with it, a number of villages situated across the Satluj but falling under Ludhiana can now hope of not being ignored. Nearly 300 villages around Ludhiana have been taken into the boundary of the new notified area. Though farmers of the villages are scared that their land would be acquired for the purpose, official sources said the plan does not necessarily mean acquisition. It is aimed at providing city-like facilities in villages around it. The planning, as well as the land acquisition for colonies, would not be a major one. It would be mainly for road expansion. The activity would be a major challenge for the Badal government. The government had already announced it would take land at prevailing market price with 30 per cent dislocation compensation. Such a plan was urgently needed, not only for better urban facilities, development of satellite townships and infrastructure but also to meet the legal requirement of having a set plan for residential, commercial and industrial areas. A number of cases were pending in various courts where in the absence of the master plan, no one knew what exactly the area was, where the industry had to be located, a road would pass through and where the green area was supposed to be. Sources in the state town planning department concede that one major impact of the notification would now be that people, especially developers, would follow the Town Planning Department rather than the department following them. “It is precisely for this reason that the lal dora regulations would be strictly followed. Dozens of haphazardly developed colonies have already come up in the areas. The regulation means land owners would have to take permission so that the future planning
is not negated. After all, the master plan would be of no use if such colonies continue to mushroom while government makes drafts for proper development.” Under the Ludhiana plan, townships like Doraha, Sahnewal and Mullanpur were likely to be developed as satellite towns for the city. They would take the load of population by better network of roads, railways and have modern markets as well. Similarly for Jalandhar, satellite townships would be Kartarpur, Adampur and Phagwara. Amritsar would have Rajasansi and Majitha while Bathinda would have Goniaana. For Patiala, a plan is already in place. For it, Kauli, Bahadurgarh, Nabha, Ghanaur and adjoining places can expect major development. Kisan unions are, however, skeptical of the new plan at the moment. With the interest of farmers in mind, Balbir Singh Rajjewal, president, Bharatiya Kisan Union has already announced they would resort to agitation if the land was forcibly acquired at lower rates. They however, reportedly, welcomed the development of the areas. Dharamjit Singh Gill, vice-chairman, Sugar Mill Buddewal and ex-sarpanch Jandiali village situated on Ludhiana-Chandigarh highway, said initially the villagers were panic-stricken at plan notification fearing land would be acquired. “Later on, we understood, the notification means organised development. It would provide urban facilities in villages, wide streets, drinking water and other benefits.” Rajesh Kumar of Mullanpur was of the view that the plan should have come long time ago, “Even now, the SAD-BJP government should ensure the plan does not remain on paper only. The government should live up to the promises made in the plan. The government has ample time to translate the dreams into reality,” he said.
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Real estate sector seeks industry status
RBI policies have affected market sentiments, CREDAI director tells
Despite Reserve Bank of India’s initiatives over the past six to nine months, no perceptible changes have taken place at the ground level. CREDAI (Confederation of Real Estate Developer’s Associations of India), the apex body of the organised real estate developers/builders across India, says the RBI’s measure has curbed easy flow of fund to the realty sector. “There are curbs in the flow of funds to the realty sector resulting in developers putting on hold new projects and holding on to the land banks. This is resulting in increase in the prices of houses, contrary to what RBI had intended by these monetary curbs,” G.P. Savlani, Resident Director, CREDAI, says. He says the government has further tightened the flow of fund to the realty sector by changing the rules of external commercial borrowings (ECBs). As per National Housing Bank estimates the country would require 48 million houses during 2007-12 as against estimated requirement of 31.1 million during 1997-02. It would require more than $25 billion during 2007-12, of which $22 billion would be for the construction of additional houses. Salvani says RBI policies have affected the market sentiments and the brunt of it has been borne by the low cost-housing segment. He says there is a need for the government to make available land for the supply to meet the demand. This would call for policy measures of metro redevelopment, slum development and allowing vertical growth even in tier II and III cities. He says the presumption of over-heating of the realty sector is a fallacy as the input costs have gone up and there is no drop in demand amidst limited supply. “When the input costs like cement and steel prices have gone up, how can one expect the prices of housing sector to fall,” he asks. “Why the real estate sector is being singled out to control inflation. If it can play a crucial role in bringing down inflation, why is the government not granting industry status to it, so that the developers could get access to other benefits, which would flow down to the buyers and result in increase supply,” he says questioning the RBI’s move to squeeze the flow of funds to the realty sector for inflation control.
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Profit from natural vegetation is not farm income By S.C. Vasudeva Q. I have sold an agricultural land, which is within the limits of municipality as laid down in the Notification No. 9447 (F. No. 164/3/87-ITA-1) dated January 6, 1994. Apart from the agricultural land, I have also sold some trees in the relevant year, which had grown naturally and spontaneously without the intervention of any agricultural process. The capital gains arising on the sale of agricultural land is taxable in view of the above notification. However, I would like to know whether the sale of trees and wood, which grew spontaneously on that land, could be treated agricultural income? — Ram Chander, Palampur A. The income from sale of trees, which have grown spontaneously without any efforts by anyone, is not an agricultural income. For the purposes of an agricultural income some basic operation such as tilling, sowing, planting and similar operations must be carried out by a human agency. The income derived from agricultural land after carrying out such operations is treated as income from agricultural operations. In this connection your kind attention is invited to a decision of the Privy Council as reported in 16 ITR 330. Capital gains
Q. I have a residential plot, which was purchased in 1982 for a sum of Rs 50,000. I sold the same in May 2007 for a sum of Rs 20 lakh. Please let me know the amount of capital gains, which would be computed thereon by taking cost inflation index into consideration. Can I save the above capital gains tax? — Raghubir Singh, Gurgaon A. On the basis of facts given in the query, the indexed cost would work out at Rs 2,52,752. The capital gain would be Rs 17,47,248. The indexed cost has been computed by taking into account the index for 1982-83 at 109, for the year 2007-08 at 551. The tax payable on the above amount would be @ 20 per cent plus surcharge of 10 per cent and education cess of 3 per cent thereon. You can save capital gains tax by investing the amount of capital gains in the acquisition of Infrastructure bonds issued after April 1, 2006, by National Highway Authority of India or Rural Electrification Corporation Limited. These bonds have a lock-in period of three years.
Accommodation
Q. I am doing job and residing in rented house. The facts of my case are 1. My parents are not living with me and they own self-occupied house 2. Their house has been financed through SBI 3. Ownership of the said property is on the name of my parents 4. My income is above taxable limit i.e. I am entering in the slab of 30 per cent 5. Income of my father is below taxable limit 6. My mother is a housewife 7. I am paying the EMI of house loan through account payee cheque. 8. My father is filling his return as an individual i.e. there is no HUF on record. I want to claim the exemption of principle repayment of the said loan. Is it possible? If yes, how? — Sandeep Narula A. Section 80C of the Income-tax Act, 1961 (the Act), deals with the deduction of the principle amount paid towards the repayment of loan borrowed for the purpose of acquisition or construction of a house. The said section provides that in computing the total income of an assessee being an individual, there shall be deducted an amount paid in the previous year towards the repayment of loan borrowed from a bank for the purposes of purchase or construction of a residential house property, the income from which is chargeable to tax under the head ‘income from house property’ or which would, if it had not been used for the assessee’s own residence, would have been chargeable to tax under that head. The section, therefore, does not permit the deduction to be allowed to a person other than the assessee, which in this case would be your father or mother as the case may be. In case you want to avail the benefit allowable under Section 80C of the Act, you will have to be the owner of the house in respect of which the borrowing has been made for acquisition or construction.
House in Canada
Q. I migrated to Canada 10 years back. I have a house in Hoshiarpur, which had been let out to a company having its factory near Hoshiarpur. It is still under the occupation of an employee of the said company. I intend selling the said house. The sale would result in a huge amount of capital gain. I understand that such capital gain can be invested in buying or constructing a residential house and if it is so invested, no capital gains tax is payable on such sale. Can I invest capital gains so earned on buying a house in Canada? — Prem Parkash, Hoshiarpur A. Section 54 of the Act provides for the exemption of capital gains arising from the transfer of a residential house property (being building or land appurtenant thereto, the income of which is chargeable under the head, income from house property) where such residential house is a long-term capital asset held by an assessee for a period of more than 36 months. The exemption can be claimed if the assessee purchases a residential house property or constructs a residential house property within the specified period as given below: Purchase of a new residential property: It should be purchased within one year before, or within two years after, the date of transfer of the residential house property. Construction of a new residential property: The construction should be completed within three years from the date of transfer of residential house property. The section does not provide that the investment in the house property should be made in India. The Income-tax Appellate Tribunal in the case of Mrs. Prema P. Shah vs. ITO (100 ITD 60) (Mumbai) has however held that such new house may be in India or outside India. You can therefore take the benefit of the above decision, I may add that there is no High Court or Supreme Court decision on this issue and, therefore, the matter may involve litigation for which you should be prepared.
The writer can be contacted at sc@scvasudeva.com
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No child’s play this!
Designing kid’s room needs a lot of imagination, says Devendra
Malik
When it comes to designing children’s room, possibilities are endless. Ideas for kid’s room designing include using colours, prints, and themes. Keep in mind that there are some major areas of interior designing and a child’s room is no exception. These areas include floors, walls, lighting, accessories, furniture, plants, and fabrics. Starting with the floor, decide what type of floor covering you will use in the room. This can include throw rugs, or even great rugs with game boards. Walls can include pictures, photos, wall hangings, and paint of choice. For lighting tips, one needs to choose from ceiling fixtures to stand-up lights. Furniture has to be a major highlight of room’s décor. You can choose from a variety of kid’s style furniture - from plain to extravagant theme beds. Plants may consist of borders, wall stick on, or fake flower trellis climbing up on a bedpost for little girl’s room. Your choice of fabrics and textiles will include bed covers, pillow fabrics and curtains. Accessories consist of little items that can be used to pull the theme of the room together. One of the best tips that anyone, who is designing a kids room can receive, is to let the kids be involved. It is their room, and in the long run, they will be the ones who will spend most of their time here. Let the kids pick out the theme they want. If they need ideas, help by letting them browse through photos, and then you can draw up a designing plan together. While designing a child’s room, don’t overlook the power of kids bedding and curtains. By choosing great kids beddings and curtains, you can complete the room and pull all accessories together. The colour of bedding and curtains are an important feature in the whole “feel” of the room. You may decide to go for bright and vivid colours, or may want to keep everything in calm pastel tones, that will help encourage bedtime. No matter which colours you choose, make sure your child is a part of the decision-making process. You may also decide to choose kids bedding and curtains that have a theme rather than a solid colour. Choose a pattern that will help reinforce bedtime, and not keep kids up all night. There are plenty of options to choose from. You can find bedding and curtains for kids in nearly every print imaginable. Try choosing a theme that compliments the rest of the room’s décor and also child’s personality and hobbies. As long as your child participates, you will find that you can create a perfect room and have a wonderful and positive time redecorating. When a child has a room that he or she loves, not only are they happy, but you will also find that their room stays well organised. A child will gladly go to bed in a room that he or she loves. The writer is a New-Delhi based interior designer. His email id is devendramalik@yahoo.co.in
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Hedge in privacy
Satish Narula discusses a few plant varieties that are excellent screens The hedge is the face of the house and may also be called the frame of a canvas called the grass lawn. But privacy is the basic concern. A good hedge comes handy where there are restrictions of raising concrete walls beyond a limit. The concept of hedging is not new but what makes it a better privacy tool is the proper selection of planting material as also the beauty factor. After a hectic day when one wants to relax in the confines of a lawn during the evenings, unwelcome gazes can make a person uncomfortable. A gardener with imagination, however, while making the best use of the plants, protects the house owner from such perpetual problems. The concept of privacy with hedges has also changed with times. For the best provisions of effective curtains, hedging has to be very thick. This can only be done if the plants selected can take repeated pruning well to provide a thick cover. Hedging material also has to be fast growing. The conventional use of shrubbery plants for raising hedges has also been replaced by some with closely planted high-rise columnar trees like Ashok (pendula) that provides a thick screen or Casurina that is clipped at a height of 10 to 12 feet. For plantings, the distance is kept as close as two to three feet from plant to plant. Climbers have also been used for this purpose with the best advantage that they do not need to be clipped time and again. You can take them to any height and give any direction to do the needful. For this you can use a thick ‘telephone wire’. Some of the best climbers used are Golden Shower with orange flowers, for sunny locations and Clarodendron, with bunches of deep red flowers for shady aspects. Vernonia, also called a Curtain climber, is one of the best to justify its name. However, it does not bear distinct flowers. Plants that are normally used for hedge making are Clerodendron inerme, Duranta (golden, variegated or all green), Murraya, Hibiscus, Aliar, bougainvillea, Inga dulcis (Jungle jalebi), mehndi etc. There are plants like acalypha, that are used as ornamental foliage hedge to provide colour to a garden during winters but that is not for high growth. Dwarf bamboos are also used by some for hedges. They look unconventional and ornamental. Clerodendron inerme is one of the best plants used for the hedge. It is drought resistant and also not palatable to wandering cattle or goats. It is also evergreen and gives neat growth right from the foot to the top. You can also give it graceful curves or topiary effects. Duranta, another hardy species, gives an effective ornamental hedge due to the golden colour, variegation or all green effect depending upon the species selected. Hibiscus and bougainvillea are the wrong selections if you are not aware about their flowering times. A pruning to keep shape at wrong time will give no flowers. Murraya gives shiny ornamental leaves but is prone to powdery mildew and at any stage, even in mature plants, if neglected, may create gaps due to plant mortality. Jungle Jalebi is a fast-growing hedge that is impregnable due to sharp spines but needs frequent pruning. So is the case with Mehndi. For making an effective hedge grow fast, one should plant properly. For this, a trench could be dug about two feet deep and one and a half feet wide. This should be filled with equal quantity of soil, well-rotten farmyard manure and sand (where the soil is heavy). To keep white ants at bay, one may use lindane dust that should be mixed at the time of trench filling. Repeated treatments need to be given against this menace using chlorpyriphos. Close planting is done and repeated pruning has to be given from day one so that there is no gap left in the growth. However
fast you may be to device a way to make an effective hedge, it takes
time. You can have an interim arrangement by erecting bamboo jaafri or
training some fast-growing annuals like sweet peas for instant results.
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Subprime woes may hit India, says RBI
RBI says emerging markets like India can become a casualty "given the herd mentality"
The Reserve Bank of India has said continued defaults in the US housing loan market pose a risk to India, whose capital market has already taken a hit on fears of the credit crisis spreading to other economies. "Conditions in the subprime mortgage sector in the US have deteriorated significantly as reflected in the rise in delinquencies on adjustable-rate loans. "Further deterioration in subprime deliquencies could lead to reassessment of risk by investors across products and markets and retrenchment of capital from emerging market economies (EMEs)...like India," the apex bank said in its Annual Report 2006-07. India's benchmark stock market index lost nearly 1,500 points earlier this month on concerns that housing loan crisis in the US could affect profitability of Indian firms with exposure in the world's largest economy. Although Indian bankers had earlier ruled out any major impact on India, the RBI said emerging markets could become a casualty "given the contagion and herd mentality". Lenders in the world's largest economy have been hit by high default ratio as their customers are mostly borrowers with poor credit history. The defaults had risen on account of increase in interest rates. Since then, the US Federal Reserve has cut interest rates by half a per cent to ease concerns. Further, US Fed Chairman Ben Bernanke has dropped broad hints that the Federal Bank was prepared to act as needed to wipe away credit market woes. But the RBI warned if the contrary happens - "any further monetary tightening in major economies... has the potential to accentuate volatility in global financial markets and adversely impact growth and stability in EMEs."
— PTI
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DLF ties up for luxury hotel
Mumbai: Real estate developer DLF Ltd has tied up with Four Seasons Hotels and Resorts to operate a luxury hotel at DLF Golf Links in Gurgaon. The hospitality arm of the company, DLF Hotels has signed an agreement with Four Seasons for the 230-room hotel in Gurgaon, the Delhi-based realty firm said in a communiqué to the BSE. Targeted to open by 2010, the hotel would overlook the picturesque 18-hole, Arnold Palmer Signature Golf Course and would feature several dining options, a full feature spa as well as facilities for meetings and functions, it said. — PTI Gammon moves to hospitality
New Delhi: Gammon India Ltd has said it would foray into the hospitality sector by entering in the lucrative hotel business by forming an alliance with the Wyndham Hotel Group international Inc (WYNDHAM) of the USA. The agreement between the Gammon and WYNDHAM envisages development of budget hotel brands Super 8 and Days Inn properties across India, said a statement. The other brands of WYNDHAM are Howard Johnson, Ramada Travelodge, AmeriHost Inn, Baymount Inn & Suites. — UNI
Kajaria Ceramics to raise Rs 38 cr
New Delhi: Kajaria Ceramics has said it would raise Rs 38.10 crore through issue of 1.27 crore warrants on preferential basis to the promoters. The board of directors at its recently held meeting approved the proposal to raise the amount through the issue of the convertible warrants on preferential basis at Rs 30 each, the company said in press note. Kajaria Ceramics is the leading manufacturer of ceramic wall and floor tile with a capacity of 26.4 million square metres per annum. It has two plants, one each at Sikandrabad and Bhiwadi.
— PTI
Emaar MGF in Uttarakhand
Mumbai: Premier real estate developers, Emaar MGF has signed an agreement with the Uttarakhand government for designing, constructing, operating and managing a five-star hotel and convention centre in Dehra Dun. The five-star hotel property and the convention centre is part of an integrated facility comprising retail and entertainment space spread across 10 acres of land and has been planned with an investment of Rs 200 crore over two years, a press note said here.
— PTI
Sahara inks hotel deal
Lucknow: Sahara India Club Royale Corporation Ltd, the hotel business wing of Sahara Infrastructure and Housing, in agreement with Carlson Hotels Worldwide, will construct international standard Radisson Hotel at Sahara City Homes township in Lucknow with an investment of Rs 100
crore. — UNI
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Real estate activity in the region is set to get a fillip with the Punjab government finally notifying the local area plan for Ludhiana, Jalandhar, Bathinda and Amritsar districts. So are the controversies.
Increasing emphasis on infrastructure is giving a fillip to the real estate boom. However, this fast-paced growth has resulted in high prices in the housing sector as the demand and supply mismatch continues.