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Handover from builder and Corpus fund for Apartment maintenance

Friday, February 5th, 2010

The apartment owners association plays vital role in maintaining apartment and its amenities. But before the formation of apartment owners association, it is duty of builder to maintain the apartment and its amenities. Most developers provide a corpus fund for maintenance of apartment and its amenities. The builder collects maintenance fund from each buyer which will not be shown in basic sales price of an apartment. The maintenance fund collected from each apartment owners is deposited as corpus fund.

Corpus Fund for apartment maintenance

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Corpus fund is also known as maintenance fund. The term “Corpus” literally means main part or organ of body. It is also known as capital of organization. Normally corpus fund or maintenance fund denotes a permanent fund kept for the basic expenditure needed for survival of organization. Corpus fund is generally not allowed to be utilized for the attainment of the purpose but interest or dividend on such fund can be utilized.

An amount of say for example Rs 1.5 lakhs for 2 years will be collected from each Apartment buyer as Building Corpus Fund and the interest earned on this Fund will be utilized for payments to the Facilities Management company. Many mid size builders collect fund to manage the maintenance fund till the society is formed. The Builder shall transfer the corpus fund to the Association after its formation.

Handover from builder

The builder completes project within 24 moths or 2 yrs from the date of booking or allotment of apartment. The buyer pays the apartment price in installment depending on the progress of project. When the contractual obligations of the builder have been completed, buyer will receive a notice of completion and a final payment claim. In case possession of the flat is not offered to the Buyer within a period, the Buyer shall be entitled to receive compensation. In case the Buyer fails to clear his account and take possession of the apartment, the Buyer shall be liable to pay holding charges.

Before handover of the flat, builder has to get completion certificate and No objection certificate from concerned department. The certificate is issued by the municipality only if the project complies with the approved plan. A completion certificate is necessary to register your house, get utility connections and even resell the flat. However, while handing over the possession of the apartment, complete list of fitting & fixture shall be handed over to the Buyer. Once payment has been made the builder will give the client possession together with keys and warranties.

Documents required for handover from builder

Following are important list of documents required for handover from builder to Apartment Owners Association

  • Copy of Building plan and approval plan
  • NOC from pollution board, electricity, water and fire department
  • Completion certificate
  • Proof of approved floor plans
  • Transfer utility connection (electricity, water connection from builder to apartment owners association)
  • Handover of Office room, departmental stores, function hall etc. to the association.
  • Handover of original registration documents, parental documents, drawings, CMDA/BBMP or concerned authority approvals etc. to the association.

Apartment owners association

The maintenance will be carried out by the Builders till the formation of Apartment Owners Association. Apartment owner’s association is voluntary association of apartment owners residing in apartment. All the owners of apartment complex are members of the association forming general body. General body elects members by and from general body as Management committee. Management committee represents association before all official and non-official bodies concerning building and other member’s rights and interests.

In many cases, builder keeps all income generating areas with themselves though the flat owners have paid for these areas. The builder has to handover the corpus fund and all common facilities to apartment owners association. The Act gives apartment owners alone the right to generate income from common areas and facilities in apartment. After formation of RWA or apartment owners association, builder has to handover maintenance fund or corpus fund to apartment owners association. Please contribute your knowledge of handling corpus fund at your apartment.

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National Building Code for Residential Apartments in India

Thursday, December 17th, 2009

National Building code is a document containing standardized requirement for the design & construction of most types of building in the country. Although codes may sometimes seem fussy, they are the result of years of experience and testing. Building codes exist to protect the public’s health, safety and welfare. National Building Codes (NBC) regulate building construction & building use in order to protect the health, safety & welfare of the occupant. You must always take the correct precautionary measures to assure the safety of your family members.

National Building Code

National Building code is a document containing standardized requirement for the design & construction of most types of building in the country. The Code was first published in 1970 at the instance of Planning Commission and then revised in 1983. Thereafter three major amendments were issued, two in 1987 and the third in 1997. Considering a series of further developments in the field of building construction including the lessons learnt in the aftermath of number of natural calamities. As a culmination of the Project, the revised NBC has now been brought out as National Building Code of India 2005 (NBC 2005). The NBC 2005, formulated by the Bureau of Indian Standards, spells out new regulations for adoption by infrastructure departments, municipal administrators, public bodies and private agencies. It contains mainly administrative regulations, development control rules and general building requirements, fire safety requirements, stipulations on use of materials, structural design and construction and building and plumbing services.

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General Building Requirements

The National Building Code (NBC) is now a national instrument that will guide the regulations for construction activity. It contains all the important aspects relevant for safe and orderly building development. The building that does not satisfy building code or violation of National building code will lead to penalty, cancellation of sanction or demolition of the building.

Lift shall be provided in all building: In case of Building having height more than 13.0 Mts. lift shall be provided. Lift shall be provided from ground floor and shall have minimum capacity of six persons. On the basis of detailed calculations based on the relevant provisions of National Building Code the number of lifts can be varied.

Fire Safety or Fire Protection: In the case of apartment buildings exceeding three storeys above ground level, a certificate of approval from the Director of Fire Force or an officer authorized by him shall be obtained before issue of the building permit. All other requirements in respect of fire protection shall conform to part IV, Fire Protection National Building Code of India. Every floor of a flat, apartment or residential accommodation exceeding 150 sq. meters of floor area with a capacity for accommodating more than 20 persons shall have at least 2 door ways as remote as practicable from each other. At least one stair-case shall be provided as a fire staircase as defined in the National Building Code. This shall not be applicable if any two sides of a staircase are kept totally open to external open air space. The detailed plan showing the arrangement of pipe lines, booster pumps and water-tanks at various levels shall be submitted for approval of the concerned authority along with the plans and sections of the buildings. Every building having a height of more than 25 Mts. shall be provided with diesel generators which can be utilized in case of failure of the electricity.

Foundation & Structural design: All materials and workmanship shall be of good quality conforming generally to accepted standards of Bureau of Indian Standard specification & codes as included in National Building Code of India. All materials and workmanship shall be of good quality conforming generally to accepted standards of Bureau of Indian Standard specification & codes as included in National Building Code of India. No building or part of a building shall be constructed or reconstructed or no addition or alteration shall be made to any existing building in the intervening spaces between the building and any overhead electric supply line. The height of the handrail in the staircase shall not be less than 90 cms and if balusters are provided, no gap in the balusters shall be more than 10 cms wide. Every slab or balcony overlooking any exterior or interior open space which are 2 meters or more below shall be provided with parapet walls or guard rails of height not less than 1.20 meters and such guard rails shall be firmly fixed to the walls.

Plumbing Services: A plumbing or sanitation code is a set of rules and regulations imposed by cities or counties. Anyone doing work on drinking water and sewer or toilet facilities systems are responsible to make the work in a specific, safe manner to avoid accidents and spread of disease. Water conservation and the health aspects of plumbing have become important in the construction sector now. The National Building Code offers only guidelines for construction. Plumbing has to be attuned to the general design of the building. Many technical aspects such as water pressure, venting and concepts of wet and dry areas in toilets have to be looked into in any structure. Recently, the International Association of Plumbing and Mechanical Officials (IAPMO) developed a Plumbing Code for India. The Indian Plumbing Association (IPA), country’s apex body of plumbing professionals, has launched ‘Uniform Plumbing Code’ (UPC).The World Plumbing Council’s uniform plumbing code was mended as per Indian needs and created the code for India.

Lightning Protection: Locations, surrounded partially or fully by unbroken metallic surfaces or nets do not allow lightning to penetrate to the interior and hence a person is safe inside. Lightning prefers to strike the tallest of all objects in the location of strike. Also it prefers metal objects. The larger the metal more is the preference. Avoid using metallic pipes to fix lamps on terrace of buildings. Also for drying clothes on the terrace, iron poles with metallic or plastic wires are used. The Lightning Conductor which is also known as Lightning Rod or Air Terminal is one of the best known forms of shielding device and has been in use in protecting buildings and facilities where protection is mandatory. The protective value of Inside buildings is better when at least some unbroken vertical metallic conductors exist, such as rain gutters with down-pipes, water mains, rails for elevators, vertical metal strips, steel braces or reinforcement, electrical installations and wires, etc. Electrical and electronic equipments can be protected to a considerable extent from damage by installing a Lightning Arrestor.

Building Services: The planning, design and installation of electrical installations, air-conditioning and heating work shall be carried out in accordance with part VIII Building Service Section 2 – Electrical installations, Section 3 Air conditioning and Heating of National Building Code of India. The planning, design including the number of lifts, type of lifts, capacity of lifts, depending on occupancy of building, population on each floor and height of building.

Other Building Requirements

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As a property owner you can choose your designs, products or building methods, as long as your building consent application demonstrates that your proposal meets National Building Code requirements. National Building Code regulates building construction & building use in order to protect the health, safety & welfare of the occupant. In order to learn which codes are being used and how they will affect you and your construction project, contact your local building inspection department, developers and concerned Authorities. Other building requirements are as follows.

  • Every room that intended for human habitation shall abut on an interior or exterior open space or to a verandah open to such interior or exterior open space.
  • Every interior, exterior or air space, unless the later is a street, shall be maintained for the benefit of such building exclusively and shall be entirely within the owner’s own premises.
  • Every person who intends to erect, re-erect or make alternation in any place in a building or demolish any building shall give notice in writing to the concerned Authority of his intention in the prescribed form and such notice shall be accompanied by plans and statements in sufficient copies.
  • No Objection Certificate (NOC) from Fire Service, Pollution Control Board, Electrical safety department, Water Supply and Sewage Department and other concerned department.
  • No land shall be used as a site for the construction of building if the Competent Authority considers that the site is unsanitary or that it is dangerous to construct a building on it.
  • Building should be safe for occupant and it is important to inspect when your site is getting marked for dimensions. Inspect construction after every two feet progress.

The building will be inspected by concern authorities and you will get completion certificate for your apartment or building. Issuing of Completion Certificate will ensure that the owner has constructed the building as per approved plan. Without the occupancy certificate, it is difficult to get the electricity, water and sanitary connection. The NBC 2005, formulated by the Bureau of Indian Standards, spells out new regulations for adoption by infrastructure departments, municipal administrators, public bodies and private agencies.

Rain water harvesting system and solar water heater are mandatory for newly constructed building in some states. National Building Code will soon be updated with energy saving methods in construction methods. In order to learn which codes are being used and how they will affect you, contact developers and concerned Authorities in your locality for construction of building or apartment. Deviation from approved plan or violation of National Building Code (NBC) will lead to charge penalty, cancellation of approvals or demolition of property.

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Getting Refund of Service Tax on Purchase of Your Apartment or House

Friday, October 30th, 2009

Service Tax is a tax levied on service providers in India. All service providers in India, except those in the state of Jammu and Kashmir, are required to pay Service Tax. The objective behind levying service tax is to reduce the degree of intensity of taxation on manufacturing and trade without forcing the government to compromise on the revenue needs. On February 24, 2009 in order to give relief to the industry reeling under the impact of economic recession, the rate of Service Tax was reduced from 12 per cent to 10 per cent.

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No service tax for residential complexes

Earlier property buyer had to pay service tax to the builder who provides service or construct the apartment complex. The builders also argued that construction of building is not service but the nature of sale and hence requested to avoid service charge on construction activities. In recent circular, government came to the conclusion that any service provided by such seller in connection with the construction of residential complex till the execution of such sale deed would be in the nature of ‘self-service’ and consequently would not attract service tax.

The circular has reference to only Construction of Residential Complex Service. However this circular would apply equally for both residential and commercial service. The personal user cannot be applied to commercial or industrial construction as the definition does not have such exclusion of personal use.

Refund of Service Tax collected in installment

Some builders have collected Service Tax in installments and not yet remitted to government. If builders have collected service tax from buyer and such amounts are not remitted to the Government, the buyer can claim refund from the Builder. The Board or government has clarified that based on the existing provisions of the law the builder need not charge Service Tax on the sale of flats.

As per the circular dated January 29 2009, the builder cannot ask for Service Tax even on car parking space. Service Tax is not applicable for any residential complex, even if it contains more than 12 units. If you are constructing your own house, the service tax is applicable to the various service providers connected with construction.

Refund of Service Tax in case remitted to government

In case a builder has remitted Service tax collected from the buyer to government, refund is possible under the provision of Section 11B Claim for refund of duty of the Central Excise Act made applicable to Service Tax u/s 83 of the Finance Act. The refund of service tax paid to the Government can be claimed only by the person who has paid the service tax i.e. builder. Alternatively the builder can return the monies separately to each buyer (keep evidence of the same) and then claim the refund.

Procedure for claiming the refund

The refund of service tax paid to the Government can be claimed only by the person who has paid the service tax. The assessee or builder claiming refund can follow the below procedure:

  • Submission of application in prescribed Form-R in triplicate to the jurisdictional Assistant Commissioner ACCE or DCCE before the expiry of one year from the relevant date. (Date of Circular- 29th January 2009)
  • It should be signed and pre-receipted with revenue stamp.
  • The application in Form R shall have valid grounds for refund.
  • The applicant should seek a personal hearing.
  • Proof should be submitted that refund would not result in unjust enrichment. Invitation for authorities to verify the accounts maybe attached. A Charted Accountant (CA) certificate that the Service Tax has not been passed on may also be obtained and submitted where the CA clearly specifies the books, records, payments received verified.

Update:

For more clarity, we have enclosed herewith a notification dated January 29, 2009, issued by Central Board of Customs and Excise clarifying that service tax is not applicable to residential complexes.

1. The Board has clarified that based on the existing provisions of the Law the builder need not charge Service Tax on the sale of flats. Since this is only a clarification it is applicable retrospectively. Your attention is invited to the last paragraph of the Circular No 108/02/2009-ST dated 29th January 2009 which clearly says ‘that all the pending cases may be disposed off accordingly’. Hence this clarification is effective retrospectively.

2. The buyer of the apartment cannot claim the refund from the builder, if the builder has already deposited the money with the Government.

3. The buyer can claim refund from the builder, if the Builder has not yet remitted the service tax collected to the Government.

4. The Service Tax was not applicable right from the beginning of construction, but was to be collected and paid at the time of completion of the project. As such there was no need not collect the same from buyers. Some builders, if they have collected in installments and if such amounts are not remitted to the Government, the buyer can now claim refund from the Builder.

5. The builder cannot ask for Service Tax on car parking space, as per the circular.

7. The service was considered applicable where there were more than 12 units in one project. The number of units was decided on total number of units on one project that may include few blocks, few independent units, few apartments etc. As per the new circular, Service Tax is not applicable for any residential complex, even if it contains more than 12 units.

8. The clarification of non applicability of service tax, as per the above referred circular is only connected with ‘residential complex’. And if you are constructing your own house, the service tax is applicable to the various service providers connected with construction.

9. Service tax as applicable to Association of Apartment owners continues to be applicable.

Useful Link:

http://ibnlive.in.com/news/no-service-tax-for-builders-says-chidambaram/47959-7.html

Disclaimer: The article  contains data collected from various sources and the use of same is at readers discretion. Although we have taken utmost care to provide the updated and correct information, we will not be responsible for any mistakes/omissions/incorrect information. The readers are further requested to consult Chartered Accountants for their specific requirements.

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Things to consider before Buying or Renting an Apartment

Friday, October 23rd, 2009

You need to have clear idea on type of apartment, your budget and location of apartment before you select an apartment for you. When looking for apartment for rent or buying, you need to visit as many apartments  as possible. You need not make decision in hurry and it is always recommended to take someone with you who can help you in making good decision.

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Things To Know Before Selecting An Apartment

Today property is one of the secured investments where you will get profit or good deal on your investment in short period. Whether you are looking for apartment for rent or buying, you need to make good market research and know basic things before having them. Following are things that you must know before selecting your apartment.

  • Research the Market: Ensure that you get apartment that fits your budget and you are getting value for your money. You can contact your local real estate agents, check local newspaper for recent sales in areas and look as many apartments in that area before you select or decide to buy. Don’t blindly rely on advice from the developer or their agent.
  • Location of the property: Location of property must be easy reach to city, restaurants, schools, hospitals, utility stores etc. When you are planning to buy an apartment, it is better that your property location is not in remote or not much distance from or to your work place.
  • Age of building: If you buying an apartment from existing owner or older building, you need to consider the age of building and check whether building need any repair or replacement.
  • Appreciation value of property: Calculate the value of appreciation in past before you buy the apartment. For instance, calculate increase in property value from last two or three years. Ensure there is scope of better appreciation in future.
  • Maintenance charge for apartment: In apartment there will be cost or fee for maintenance of amenities and facilities available in the apartment. In most case, apartment owners form an association of apartment owners and association will take care of maintenance of apartment and its amenities. Usually the more the number of flats in an apartment, the less will be maintenance charges. Maintenance cost includes water taxes, security fees, lift, electricity, lighting available for common area etc.


  • Drainage system: In city, during rainy season most of apartment gets flooded with rain water or drainage water due to lack of proper drainage system. Before you select your apartment, check the drainage system available in the apartment and in neighborhood.
  • Seek Expert’s advice: If you are new to real estate business or if you are not sure of how to go about things for investing or property buying, you need to seek expert’s advice. Today there are number of experts who help you to transact in property buying or selling. You can even get experts help from online.
  • Check for amenities: Before you select an apartment, you need to check the amenities available in the apartment. The maintenance charge will increase with amenities such as multi-specialty gym, garden, park, swimming pool etc. Ensure you get basic amenities such as water supply, electricity supply and security.
  • Know your builder: If you are buying property or apartment from a builder, ensure that you make good research on your builder and his previous projects before you decide to buy. You can contact apartment owners from the project completed by builder to ensure customer satisfaction and know your builder.
  • Transportation: While choosing location for apartment you need to consider access to bus, train and other transportation. If your apartment is at the location of easy reach to bus, train and easy availability of taxi, it would be easy for you to move from your apartment to another. You also check the traffic density in your locality. If the location you choose is high traffic area, you will take more time in traveling from your home to office.

It is always good to check the background of the developer, the architect or the seller whom you are dealing with. You can arrange second inspection of apartment at evening or peak hour traffic to check the noise at peak hour. Also check for any other disturbance in or around neighborhood. Ensure you are getting value for your money, the floor and apartment which you loved to own.

Useful Links to Refer:

Sanctions and Approvals Required For Builders

Investing in a Second Property

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Reverse Mortgage Loan For Senior Citizens

Friday, October 23rd, 2009

Most of the financial institutes or banks will reject the loan application if borrowers has no income or whose age is over 60. If you retired from your existing job which is only source of income, you may need to struggle to meet both ends. This is not only your case, most of senior citizens struggle to meet their both end after their retirement years. Now you can rejoice, you can get loan against your property and you are not required to repay loan. Reverse mortgage makes you this possible. Any house owner over 60 years of age is eligible for a reverse mortgage.

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What is Reverse Mortgage?

Reverse mortgage is a loan available for senior citizens on property pledged to bank or financial institute. The banks or financial institute either releases the loan amount in lump-sum or in multiple payments. In a reverse mortgage, the home owner makes no payments and all interest is added to the lien on the property. The homeowner’s obligation to repay the loan is deferred until the owner dies, the home is sold, or the owner leaves (i.e. moves to aged care). In case your property value increased after taking of reverse mortgage over property, you can acquire new or second reverse mortgage over the increased equity of the home.

How is Reverse mortgage different from Conventional Mortgage Loan?

A Reverse Mortgage is a loan for senior citizens where they do not have to repay loan as long as they continue to live in their home. The owner’s responsibility to pay back the loan is delayed until the owner dies or the home is sold, or the owner moves.

In conventional mortgage loan you will have to hypothecate your property to bank as security for loan. You will have to make a monthly amortized payment to the lender and typically after the end of the term the mortgage has been paid in full and the property is released from the lender.

Workings of Reverse Mortgage

A Reverse Mortgage is a non-recourse home loan. This means there is no personal liability to you or your heirs. The bank makes an evaluation of the current value of the home, decides the likely lifespan of the applicant home-owner (and his/her spouse), and, decides what percentage of the current value they are willing to loan. You will have the option of taking the loan principal in a single lump-sum amount or by a fixed monthly amount instead. The loan becomes due when you sell the property, moves to another house or dies. If one of the spouses dies, the other can continue living in the house. In case you sell the property, move to another house or you and your spouse die your heir can settle the overall outstanding loan and retain the house. If your heir fails to retain or settle the overall outstanding loan, the bank will proceed to settle the outstanding loan and give the rest to the heirs.

Recent reports seem to indicate that a very small percentage of senior citizens seem to have taken advantage of the facility since its beginning. Reverse mortgage is a popular in the West among senior citizens. Valuation of the residential property would be done at such frequency and intervals as decided by the reverse mortgage lender, which in any case shall be at least once every five years. The maximum period of property mortgage is 15 years with a bank or HFC. The amount received through reverse mortgage is considered as loan and not income; hence the same will not attract any tax liability.The maximum loan is up to 60% of the value of the residential property. Now you can enjoy regular income after your retirement.

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Sanctions and Approvals Required For Builders

Friday, October 9th, 2009

Today real estate industry is one of the booming industries which offers good opportunity for investment. The demand for property is very high and availability of home loans, affordable property rate, income tax rebate encourage more and more buyers to invest on property. The builders come up with projects that suit the market demand. Innovative construction techniques and good customer service enable builders to stick in real estate business.

Builder Plan

Builder Plan

Approved Plan

Approved Plan

List of sanctions required for construction activity:

The builder required to have approval or sanctions from concerned authority for the construction of building. The building constructed without sanctions or deviated more than 5 per cent from approved plan levies penalty and authorities has right to demolish the building without any prior notice. Following include the list of approvals or sanctions required for builder for any construction activity.

Building Plan: A builder should submit building plan before starting the construction activities. Building plans are a graphical representation of what a building will look like after construction. Building plan ensures that building complies with building laws. Once the building plan is approved, builder should commence construction work within two years and there should be no deviation from sanctioned plan.

Layout approval: The builder has to get approval of layout plan from concerned authorities before starting construction of residential or commercial building. Constructing building in unapproved layout will not be given permission to occupy or such layout plots will be treated as continuing offense and exemplary penalties will be levied as per Municipal Laws. Land which is sub-divided into plots without permission from competent authority is considered illegal or unapproved layout. No facilities such as roads, drainage, street lighting will be extended in such areas.

Basic amenities: The builder should get approval from concerned authorities for electricity, water for potable and non-potable use. The building should comply with building laws for sanction or approval of basic amenities.

No Objection Certificate (NOC): The builder has to get NOC from pollution board on the project. It is essential for the approval for sewer or water supply. It is also important to get NOC from the neighboring properties to prove that builder is not encroaching any neighborhood property. Builder has to get NOC from municipality or respective authority for digging bore well. Digging bore well without NOC or approval will be levied penalty and material used for digging bore wells would be seized. In case of construction of building with lift facility, builder has to get NOC from lift authorities.

Completion Certificate: Completion certificate is mandatory for building constructed before selling or occupied. Issuing of Completion Certificate will ensure that the builder or owner has constructed the building as per approved plan.

Clear Title: The builder has to get clear title for the land or plot. Clear title ensures that the property is clear, marketable and it traces any charges or encumbrances created on the property and its present status. It enables a prospective buyer to know the chain of holdings, transfers over a period and check any dispute on the ownership of the property.

Approval for conversion of land: Some builders use agricultural land for constructing building for residential or commercial purpose. In such case builder need to get approval form concerned authority to convert agricultural land to non-agricultural (NA) purpose.

Concerned authorities for sanction or approval

The process for applying for sanction or approval is almost similar all over the country. The concerned authority having right to give sanction or approval may vary from state to sate or region to region.

Bangalore: The builder has to approach Bangalore Development Authority (BDA) for approval of layout plan and building plan. The Bangalore Development Authority (BDA) is designated as the Planning Authority under the Karnataka Town and Country Planning Act, 1961. Electricity supply in the city is managed by Bangalore Electricity Supply Company Ltd (BESCOM). The builder has to get NOC from pollution board for his project to get new water connection from Bangalore Water Sanitary and Sewage board (BWSSB). Related Article: Electricity Meter Transfer for Bangalore Apartments

Chennai: In Chennai, Chennai Metropolitan Development Authority (CMDA) regulates all physical developments within Chennai Metropolitan Area on planned lines. Sanctions for building plan and layout plan are approved by CMDA. Tamil Nadu Electricity Board (TNEB) supplies electricity in the jurisdiction or concerned areas of Chennai city. Chennai Metropolitan Water Supply and Sewerage Board (CMWSSB) supply water for citizen of Chennai city. The builder has to approach with true copy of plans sanctioned by CMDA or Corporation of Chennai or Local Authority to get new water and sewerage connection. Application forms are available in depot or Head Office and filled in forms should be submitted at the Registration counter at Head Office.

Mumbai: Mumbai Metropolitan Region Development Authority (MMRDA) is responsible for the development of Mumbai Metropolitan Region (MMR). MMRDA was set up under the Mumbai Metropolitan Region Development Authority Act, 1974. MMRDA does not permit any construction works within 30 m. of the high flood line of the rivers and drainages. Electricity supply in the city is managed by Maharashtra State Electricity Distribution Co. Ltd (MAHADISCOM). BrihanMumbai Municipal Corporation (BMC) is providing drinking water supply to Mumbai City and suburbs.  Related Article: Property Registration Guide in Mumbai

New Delhi: The Municipal Corporation of Delhi (MCD) is among the largest municipal bodies in the world providing civic services. For their convenience, the Municipal Corporation of Delhi/Nagar Nigam has divided the city into twelve different zones and their offices are located in every zone. The electricity supplies in the city are from:

  • BSES (Bombay Suburban Electric Supply) Yamuna Power Limited (BYPL),
  • BSES Rajdhani Power Limited (BRPL) and
  • North Delhi Power Limited (NDPL).

The Delhi Jal Board is responsible for the Production and Distribution of potable water after treating raw water from various sources like river Yamuna, Bhakhra Storage, Upper Ganga Canal & Groundwater and provides treatment and disposal of waste water.

List of documents required to handover to property buyers

The builder can gain good clients with quality work and good customer service. The builder should not only deal as seller of property but also assist property buyers in smooth dealing of real estate transaction. The builder will have to handover the copy of building plan approved and approved layout plan. The builder also need to handover the proof of approved floor plan to the buyer. The builder should co-operate with buyer’s advocate and give copy of document demanded for verification. During construction of building, builder has to get No Objection Certificate from water and sewerage supply board, electricity board and pollution control board. The builder has to give proof of the title of property on which construction work is undertaken and proof of undertaking agreement from landlord. After completion of project, builder has to get completion certificate from concerned authority to ensure that construction of building is as per the approved plan.

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Investing in a Second Property

Thursday, August 27th, 2009

Real estate industry offers you an opportunity for long-term investment. In the past, people often had to save for their lifetime to be able to buy or own a dream home.  But today, increase in income and tax benefit available has made buying or investing on a home affordable. Increasing demand for property, cut down in interest rate and easy registration process has attracted more property buyers to invest on their dream home. Even if you already have a home, investing in a second property is not bad idea.

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Rental Income to meet portion of EMI

If you already have a home, this is not the end. You have still an opportunity to make income or invest on second home. Buying your dream vacation house or another property to rent out may be an option to consider. When you purchase a property during an uptrend, your investment could double in no time.

Banks and financial institutions can offer home loan for second home easily, even though you are still repaying the loan for first home. You can use the rental income that is obtained from the second property towards meeting a portion of the EMI repayments.  Real estate sector holds a lot of promise and higher price for your property in future sale. You need to choose home loan for second home only if you can repay EMI of both home loans.

Getting a home loan is easy

In the past, average age of property buyers are 40s and 50s but today average age is 30s. Banks and financial institutes have started price war to attract potential home buyers with low interest rate, longer tenure period and zero or marginal processing fee. Today getting a home loan is easy and process of documentation or loan sanction has made simple  for property buyers. Earlier loan rate was 17 per cent but today it has fall to 12 percent and further reduced to 8 percent. This has made dream home true for middle income group or low income people. The bank decides on your eligibility after considering factors like age, income level, educational qualification, repayment track record and credit history. If you are managing too many debts, repaying home loans may become a challenge. You need to contact as many lenders as possible and make good market research to get best deal for your home loan.

Easy registration process

Government has taken initiatives to make property registration hassle free process. The cut down in stamp duty,uniformity in documents required for property registration etc has made property registration easy. Guidelines are  issued to Registrar by government on documents required for property registration. This prevents harassing property buyers by demanding for different documents while registering the property.

Affordable Home

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Affordable home enable you to invest on home or property where cost is easily affordable by you. Affordable housing is a buzz word floating around these days. Affordable home adopts techniques or methods to bring down cost of construction of home or apartment. Experts suggest that homes costing no more than five times the buyer’s annual income can be considered affordable. The low cost homes do not compromise in terms of quality of material or safety, but usually they are built on either a smaller space or where land costs are lower.

An amendment to the Income Tax Act, Section 80I(B), has been proposed, where profits from housing projects approved by a local authority between April 1, 2007 and March 31, 2008 will be tax-free if completed before March 31, 2012. Developers that were planning to launch may attempt their projects to fit this limit. Many top developers have already begun to get into the affordable segment.

Tax benefit on second home

Under Section 80 C, Principal repayments made towards the second home loan can be deducted from your taxable income. The entire interest repaid can be deducted from your taxable income. However, the rental income earned (actual or notional) is to be accounted as additional income. Further, 30 percent deduction from rental income is permissible towards maintenance charges. Municipal taxes paid can deducted from rental income.

If you are planning to use your second-home as a vacation retreat, make sure you consider your needs. Vacation towns typically need to be within a two to three-hour drive of a major city, or at least reasonably close to a big airport. There has to be lots of stuff to do beyond shopping, which is why most thriving resort towns are near ski lifts, beaches or mountains. If your second home is mostly for investment purposes, ask your real estate professional about property management options, which can be a crucial financial factor, as well as important to peace-of-mind. Location is also a factor for those buying a second home as investment property, especially if appreciation or rental value is your goal.

Buy a second house that meets your needs, available finances and lifestyle.

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Things to Consider When Getting A Home Loan

Thursday, July 23rd, 2009

Home loan is important source of finance for buying a home. It is important to ensure that your home loan is affordable for you and you are comfortable to repay them. If you are not, it may lead to poor or bad credit history. Here are some points or factors to consider when getting a home loan.

Home Loan Eligibility Home loan

Factors To Consider When Getting A Home Loan:

  • Loan Amount
    It is not always wise to borrow huge sum or apply for different loans as huge debt will make your repayment a challenging that leads to debt trap. Decide your loan amount depending or considering your monthly income, Job stability, your age, other debts and financial commitments. Remember, when applying for a loan, borrowers have to pay down payment or margin money which may be 8 to 20 per cent of your loan amount. You must also arrange the same when applying for a loan.
  • Tenure or Period of repayment:
    Borrowers always want to pay off their loan or debts as soon as possible and opt for short tenure loans. When your loan tenure is for short period, your monthly EMI will be very high. Longer tenure is generally chosen to enhance the loan eligibility of borrower but longer the tenure greater is the cost of borrowing. If you are close to retirement, you will not be eligible for longer tenure loan. If EMI for short term is not affordable and you want to pay off your loan as soon as possible, you can consider middle path for the period of 10 to 15 years.
  • Hybrid Loan:
    When considering home loan it is important to consider interest rate. You can either consider fixed rate or fluctuating rate of interest. Fixed rate of interest remains fixed for the entire tenure of loan irrespective of change in interest. Floating rate is chosen by borrowers who expect the rates to fall in the future and want to benefit by it. A hybrid loan is a combination of fixed and floating loans. Borrower can lock a portion under fixed and leave the remaining under floating rate. It is suited for borrowers who seek to benefit from the predictability of fixed rates and at the same time want to gain from a falling rate. This loan is a blessing for borrowers who are confused about the direction of rate movements.
  • Insurance for Home Loan:
    Home loan insurance enables you to insure your loan and repay your loan in cases of accident, death, sickness or loss of job. If your home loan is insured and in future if you are unable to repay your home loan due to sickness, loss of job or death, your insurance company will payoff your loan and avoid burden of home loan. It is highly recommended for home loan insurance to ensure that your family still has a home in case of your death or sickness or loss of jobs.
  • Penalty and Charges:
    Before applying for home loan, know the rate of charges, penalty or fee charged by your lending company or bank for default in monthly EMI. Know the processing charge and in case you decide to switch your loan from current lender to new lender, current lender will charge penalty or fee for pre-closure of your loan.
  • Tax benefit:
    If you borrow your home loan from recognized lender such as banks and leading lending company, you can get tax relief on your principal amount and interest paid along with monthly EMI. If you are away from your property or city due to your business or employment, you can get tax relief for loan paid and you will be eligible for HRA provided by your employer in that city. Know more on Saving Tax from Home Loan.

Loan Eligibility

When computing loan eligibility, banks take into account the age of the applicant, his salary, repayment/credit history, savings, profession, location of property, and other debts. Some professions are categorized as negative or risky by the lenders while some jobs fall in the preferred list. As a thumb rule, the EMI for your home loan must not exceed 40 percent of your gross monthly income.

Improving Your  Loan Eligibility

When applying for home loan, you can use following methods to enhance the availability of home loan from your bank or lending company.

  • Maximum Down payment: You can enhance your loan eligibility by paying maximum down payment for the loan. This will add confidence in your bank or lending company to provide loan needed for you.
  • Clubbing Incomes: Clubbing income is simplest way to enhance loan eligibility. You can club your income with your father, mother, spouse or son and jointly apply for the loan. Clubbing income enables you to get home loan as your monthly income will increase by clubbing the income.

  • Longer Tenure: When applying for long term loan or bigger loan amount, you can opt for longer tenure. A longer tenure will make you eligible for a bigger loan for the same income level.
  • Co-applicant: Co-applicant helps you to apply for home loan. You can either apply for home loan jointly with your spouse, family members or you can apply with your friends or other relatives. Co-applicants enable both to get tax benefit and get a higher loan amount sanctioned from your bank or lender.

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Guide to Property Registration in Mumbai

Thursday, July 23rd, 2009

Property is one of the investments for long-term investment. When buying or selling a property it is compulsory to register. It ensures legal transfer and ownership of property. Registration act as a proof for transaction and registration is done after execution of agreement. The language of document can be English, Hindi, Marathi or Gujarati so that it can be registered in Mumbai.

Property Registration Property Registration in Mumbai

Documents or Papers Required for Property Registration in Mumbai

  • Adjudication
    Adjudication is process of getting market value and valuing property to ascertain stamp duty by collector of stamps. If the document is signed, adjudication must be done within one month of time else two percent interest per month will be charged. Adjudication is valid up to six months or December 31 of the year which ever is earlier.
  • Registration fees
    Sub-registrar will determine registration fees payable and issue the challan/confirms to accept the pay slip. Pay the registration fees by challan/pay slip from nationalized bank as per procedure laid down by respective sub-registrar.
  • No objection Certificate
    No Objection Certificate under the Urban Land Ceiling Act if the area of land transferred exceeds 500 sq. mts. in Mumbai City and if the land belongs to a government or semi- government body or to a charitable trust NOC of such government or charitable trust is required.
  • Property Card
    Property Card of the land on which the property is being registered or situated.
  • Original document and its copy
    The document must be printed or typed on one side only and in black ink. A photocopy should be taken on only one side of the paper and there should be butter paper between the two sheets of the photocopy.
  • Proof of old construction
    It is better to get the document adjudicated in case the building is very old and proper depreciation is not given by the sub-registrar. If property sold or purchased is in the old building and the benefit of depreciation is claimed on the market value, then any one of the following documents is to be produced as a proof of old construction:
  1. Municipal assessment bill of the building
  2. Building Completion Certificate
  3. Original registered agreement between the builder and Buyer or of any other flat in that building.
  • Proof of identity
    You need to produce id proof with photo it can be copy of driving license, passport, PAN card, driving license, employee id, voter id and proof of your address with some document support.

Steps or Process involved in Registration of Property in Mumbai

The real purpose of registration is to ensure that every person dealing with property can confidently rely on the statement contained in the register. The process of registration mainly involves the following steps.

  • Pay proper stamp duty:
    Ascertain stamp duty either you can find out the market value of your property and the stamp duty amount on it from the Ready Reckoner or get the document adjudicated.
  • Registration Fees:
    Pay the registration fees by challan/pay slip from nationalized bank. This registration fee should be paid a few days before going for registration and the receipt is to be shown to the Sub-Registrar’s Office one day before the actual date of registration.
  • Obtain the appointment:
    Party has to obtain the appointment date, time and token number from Registrar’s Office prior to one working day of intended Registration. All the parties to the documents have to remain present at Registrar Officer to comply with Registration formalities on such appointed time.
  • Two Witnesses:
    The sub-registrar first obtains signature of parties and witnesses in his presence. Thereafter Registrar puts his official seal and affixes unique numbering block on each page including the additional sheets and sheets which generally carries photographs, signatures, details of parties and witnesses.

The copy of such pay order/demand draft of bank for registration is to be submitted on the day of taking token number. Pay the required registration fees and computer service charges in cash as per the receipt when token number is being announced. Submit original document and one copy of each document. After completing the formalities the original document is returned to the party presenting the document for registration. This completes the process.

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