INDIAN BANK'S REVERSE MORTGAGE SCHEME FOR SENIOR CITIZEN

Indian Bank has introduced Reverse Mortgage Scheme for senior citizens. Senior citizens availing this scheme will be able to earn a monthly lifetime annuity against mortgage of his/her property, an attractive monthly annuity @ Rs. 555/- per Rs. 1 lakh loan. The loan will be adjusted after the lifetime of borrower/spouse. Pre- closure option is also available.
Senior Citizens above 60 years are eligible to avail of the benefits of the scheme. Married couples will be eligible as joint borrowers for financial assistance provided one of them is above 60 years of age. They should be owner of self acquired residential property with absolute, clear title / conveyance and self occupied and it should be Principal residential house / flat, located in India. The residual life of the property should be more than 20 years.
The amount of loan will depend on market value of the residential property as assessed by the Bank. The maximum amount of loan along with interest is restricted to Rs. 100 lakh i.e. maximum loan amount would be Rs.40 lakh. The purpose of the loan can be to meet any genuine need. BPLR + TP minus 3.00 % (presently 10% fixed), with reset clause. The interest rate will be reset once in five years. The residential property should be mortgaged in favour of Indian Bank. Commercial property will not be eligible for RML. Settlement of loan along with accumulated interest to be met by the proceeds received out of sale of residential property. The borrower / his / her / their legal heirs will have option to settle the loan along with accumulated interest, without sale of property

                                                                                                                                  Courtesy: ET, dtd: 13th Nov. 2007

A LANDMARK JUDGEMENT ON DELAYS IN POSSESSION COULD HELP EMPOWER CONSUMER

Now builders may have to shell out amounts equivalent to the current market value of the flat, if there is an undue delay in giving possession to consumers. National Consumer Disputes Redressal Commission in its landmark judgment dated-17-5-2007 directed the builder to give possession of an alternate flat in the same locality where the buyer had booked or compensate the purchaser at the current market rate. The builder was held liable under section 2(1) (g) of the Consumer Protection Act, 1986 for deficiency of services.

The National Commission in the case of Asiatic Estate Developments vs Shri Shyam Sunder Paliyenkar upheld the decision of the State Commission directing allotment of an alternate flat or compensation at the current market rate. This verdict will have widespread ramifications in the country.

Aggrieved by the order of the District Forum, the developer approached State Consumer Forum. However, the State Commission ordered that alternate premises of similar dimensions and in the same locality be given to the complainant along with 18 per cent interest per annum on Rs. 1,84,000 paid by the purchaser in installments from 1/08/1991- the date on which the developer is required to give possession of flat till its actual realisation towards compensation for the loss and mental anxiety. Alternatively, the developer shall pay the amount corresponding to three times the amount paid by the purchaser towards the flat price.

Vijay Samant, Vice-President, Maharashtra Societies Welfare Association says, "This unique verdict is a blessing for consumers. In the majority of consumer court cases there was only relief of refund of the amount paid with interest once the builder defaulted."

However, developer Niranajan Hiranandani says, "Reputed builders do not delay in giving possession. The fact is there are some genuine reasons for delay, which may have to be condoned, where the situation may be beyond the builder's control. The crux of the delay is 97 per cent regulatory policies of the government. If there is a deregulation of real estate, over 90 per cent of the problems faced by developers in developing real estate will get solved leading to timely delivery of the property. Agreed, there are some bad guys who do it deliberately, but the whole builder community cannot be defamed."

Balram Sharma,VP Corporate (Commercial), Keystone Group (Rustomjee) says, "There are various factors that influence delay in completing the project. If there is a delay the builder's goodwill and reputation suffers. It is not in the interest of builders to delay in giving possession of flat as finances are involved. To start any project, it requires several clearances from various authorities where almost eight to nine months are wasted. Moreover certificate of commencement to start the project is not given in one single stretch; various stages are involved."

Advocate Vinod Sampat welcomes the verdict stating that this order will bring in more accountability and discipline.

Sunil Bhagwe, President Hingoli District Consumer Dispute Redressal Forum says, "This verdict will be a remarkable precedent that will empower the consumers in the country to take the cudgels against such offence and assert consumer rights.

                                                                                                                          Courtesy: ET, dtd: 19th Oct. 2007

The Supreme Court has added a new twist to the government’s land acquisition policy. In a ruling that may cause further discomfiture to the Centre and states on the SEZ issue, the court has drawn a distinction between land acquired by the government for public purposes and that for a private company while saying a notification can’t espouse both purposes simultaneously.

A bench of Justices S B Sinha and H S Bedi said: ‘‘the state is obligated to issue a notification clearly stating whether the acquisition is for a public purpose or for a company. A declaration is to be made either for a public purpose or for a company. It cannot be both.’’

This part of the judgment might also have ramifications for the land acquired by the West Bengal government in Singur. The state government’s July 21, 2006, notification for acquisition of land in Hooghly district under section 4 of the Land Acquisition Act, 1894 appears to have cited both the purposes — public as well as the establishment of a private company.

The SC ruling came in the wake of a dispute over setting up a tractor factory in Punjab. The court asked for strict interpretation of land acquisition rules and said: ‘‘When properties of citizens are being compulsorily acquired by a state in exercise of its power...the existence of public purpose and payment of compensation are principal requisites.’’

SC says

Govt can issue a land acquisition notification either for public purpose or for a company. It cannot be for both When acquiring land for cos, govt must make sure it’s not good agricultural land Good agricultural land is defined as any land with average productivity, including gardens and groves

Only land not suited to agriculture should be acquired: SC

The Supreme Court has said that the Land Acquisition Act, 1894, stipulates that agricultural land should not be acquired for setting up a factory or for any other corporate purpose. Striking down acquisition of land for the ‘Ganesha Project’ of International Tractors Limited in village Chak Gujran by the Punjab government, the Bench laid down extensive guidelines, culling it out from the statutory rules.

ITL had entered into an agreement with Renault Agriculture, France, which holds 20% shares in ITL, for manufacture of latest technology tractors to boost exports. The Punjab government had issued the land acquisition notification saying establishment of the factory would contribute to the general welfare and prosperity of the whole community.

The Bench said: ‘‘when the state intends to proceed with the acquisition of land, it must form an opinion that lands which are going to be acquired are not good agricultural lands. The rules, by and large, lay down a statutory policy and the question of ignoring it by the state does not arise’’.

‘‘Good agricultural land’’, as per rules, means ‘‘any land which, considering the level of agricultural production and the crop pattern of the area in which it is situated, is of average productivity and includes garden or grove land,’’ the court said.

Whenever a company makes an application to the appropriate government for acquisition of any land, that government shall direct the collector to submit a report to it after satisfying that:

The company made its best efforts to locate land in the locality suitable for acquisition

The company failed to acquire the land despite reasonable efforts to get such land by negotiations with the persons concerned on payment of reasonable price

The land proposed to be acquired is suitable for the purpose

The area proposed to be acquired is not excessive

The company is in a position to utilise the land expeditiously

Where the land proposed to be acquired is good agricultural land that no alternative suitable site can be found so as to avoid acquisition of that land

Where the land proposed to be acquired is agricultural land, the court put the onus on the collector to consult the senior agricultural officer of the district to ascertain whether it is ‘‘good agricultural land’’ or not. After doing so, the collector is also to ascertain the approximate amount of compensation likely to be paid for the land and also whether the company offered a reasonable price, the court said.

                                                                                                                      Courtesy: TOI dtd: 17th Oct.2007

Timing it right — just before the arrival of Japanese Prime Minister Shinzo Abe — the government on Thursday rushed through its approval for the $90-100 billion Delhi-Mumbai Industrial Corridor (DMIC) project. A good chunk of this is expected to be realised from the private sector over a 10-year period, with Japanese assistance.

In addition, the Union Cabinet also approved the 1,483-km Dedicated Freight Corridor (DFC) between Delhi and Mumbai for high-speed connectivity for high-axle load wagons, according to I&B minister PR Dasmunshi. Briefing the media after the meeting of the Cabinet, he said that work on the freight corridor would begin during 2009-09 and end by 2012.

The clearance comes in the wake of news reports that serious differences have broken out between India and Japan on the funding and specifications of the ambitious, dedicated freight corridor here that both countries have been working on jointly for the last two years. The reports held that while India had estimated the cost of the freight corridor at $7 billion, the Japanese end has estimated this alone at a significantly higher $11-12 million. Other differences have also been hinted at in the reports, involving technology, length and the alignment of the proposed corridor.

The development of DMIC Phase-I, which will cover six states of Uttar Pradesh, Haryana, Rajasthan, Madhya Pradesh, Gujarat and Maharashtra, will coincide with completion of the DFC project. As many as 100 to 120 projects are likely to come up under the DMIC alongside the 150-km (in depth) DFC.

Under Phase-I, six investment regions of more than 200 sq km each and six industrial areas of about 100 sq km would be developed. The short listed investment regions are Dadri-Noida-Ghaziabad (UP), M a n e s a r- B a w a l ( H a r y a n a ) , Khushkhera-Bhiwadi-Neemrana (Rajasthan), Pitampura-Dhar-Mhow (MP), Bharuch-Dahej (Gujarat) and Igatpuri-Nashik-Sinnar (Maharashtra).

The shortlisted industrial areas for development under the project are Meerut-Muzaffarnagar (UP), Faridabad-Palwal (Haryana), Jaipur-Dausa (Rajasthan), Neemach (MP), Vadodara-Ankleshwar (Gujarat) and Alewadi/Dighi (Maharashtra).

                                                                                                                         Courtesy: ET dtd: August 17, 2007

The plans to provide women property buyers with a uniform 3% stamp duty may fall into the ‘green box’. At present, the stamp duty on real estate purchases range from 7% to 12%, depending on states. However, the Capital city is the only exception with a 4% stamp duty for woman against 6% for men.

The move is aimed after seeing a growing requirement of incentivise high property in the name of a woman. However, the execution of proposed policy will be the prerogative of the individual states.

Not all the states are following the same stamp duty structure for women. Recently, Haryana has reduced the stamp duty for women to 8% against the men which is 10%. Although, there are some states that provide a lower stamp duty for female property buyers as compared to male. Still, the rate is higher than what has been suggested by the central government.

Revenue collections of some of the states may bottom due to a reduction in the stamp duty. For example, Karnataka has been able to get the revenue of over Rs 2,373 crore in the year 2005-06 under stamp duty collections. Indeed, a 1% reduction can bring a fall of nearly Rs 240 crore, which would be a heavy loss in itself. For that reason, the implementation has been kept on hold for sometime.

There is also a proposal to move towards uniform stamp duty rates as contrary to what is the trend prevailing in the states: 10% in Uttar Pradesh, 11% in Rajasthan, and 12% in Himachal Pradesh.

Last year, finance ministry has put forward the proposal before all states to adopt a uniform stamp duty of 5%. Following the suggestion, some states such as Maharashtra and Bihar went for a reduction in stamp duties.

Paving the way for greater transparency in Indian real estate, the Urban Development Ministry is bringing stringent rules into the sector. According to the newest, builders will now be required to give a performance guarantee based on the project value.

The Ministry has placed the proposal in the Real Estate Regulatory Management Bill to regulate builders who delay in completing residential projects or develop low-quality houses. The society of property developers has criticized the proposal saying it will put real estate development at risk.

Builders have to deposit the performance guarantee (which would be calculated on the size of the venture.) with the housing regulator. It would be forfeited in case the builder defaults. The move will serve as an insurance to bail out the investors and buyers.
The basic idea behind bringing such a rule is to protect the interest of property buyers. Relevancy of the move gets more vivid after seeing the recent building collapse in Mumbai.

However, the proposal is getting mixed responses. Chairman and CEO of Orbit Corporation Pujit Agarwal calls it a grey area and a tough task to execute. He also adds that if there would be a lack of transparency in the sector then big developers will have a problem implementing it. And small time developers would come out as the worst sufferers.

Supreme Court Advocate Dr DC Vohra sees the proposal as a boon for buyers. The state government is bringing legislation which will make it mandatory for builders to register in the forthcoming winter session due to recent building collapse. After making the registration, the builders will themselves find it important to monitor the quality of the construction.

Sharing the same opinion, Arun Goel, CEO of Dewan Housing Finance Corporation (DHFL) also feels in favor of the proposal. The performance guarantee will strengthen the collateral security of the bank and safeguard the buyers’ interests.

REGULARISATION COMES TO INDEPENDENT FLOORS

If you own only a floor in a plotted property and were unable to get your property regularised, you can breathe easy. The Municipal Corporation of Delhi (MCD) on Tuesday announced floor-wise regularisation of residential properties.

Until now: all the floor owners were required to apply jointly for regularisation. This provision in the building by-laws was a hurdle in regularisation of excess construction permitted by relaxed by-laws in the Master Plan 2021, Vijender Gupta, MCD's Standing Committee Chairman told the media.

"We have made the procedure easy. Property owners can get their architects to measure the excess construction and make the payment on self-assessment basis. They will have to submit two sets of building plan, a structural-stability certificate, proof of ownership and an architect's certificate that the unauthorised construction is permitted under the relaxed building by-laws," Gupta said.

The scheme will come into force in a couple of days and there is no time limit to apply for regularisation.

It is introduced because no individual is likely to buy an entire property and at the most can only afford to buy individual floors. If there are two flats on one floor, then both the flat owners will have to apply jointly Ownership rights through simple sale deed or power of attorney will also be accepted but the owners will have to give indemnity that there will be no liability on MCD in case of dispute over title of the property.

Those who have purchased property on the third floor, however, cannot avail of the regularisation scheme owing to the Supreme Court stay on sanctioning of third floors after May 7, MCD's Building Department officials said.

MCD has retained the regularisation charges approved by the Urban Development Ministry last year

Regularisation charges vary from Rs 800 per square metre to Rs 4,900 depending on the category of the colony and degree of violation.

Figures in Rupees

                                                                                                                           Courtesy: HT dtd: August 8, 2007

DELHI-MUMBAI CORRIDOR LIKELY TO BE HOT SPOT FOR JAPANESE INVESTORS

The proposed $90-billion Delhi-Mumbai Industrial Corridor (DMIC) project is likely to emerge as the hot spot for Japanese investors over the next few years. When Japanese Prime Minister Shinzo Abe visits India later this month, he will be accompanied by about 150 top businessmen from the country –– half of whom would be CEOs. Such is the interest in the project that companies like Mitsui, Hitachi, Mitsubishi, Honda and Orix have already started identifying potential areas of investment around the corridor.

Officials from the ministry of economy, trade and investment confirmed to ET that the PM was likely to announce Japan’s willingness to contribute to the $250 million project development fund for the corridor in New Delhi. Japan is also hopeful that the detailed report for the DMIC project will be compiled by the end of the year. “The DMIC project is very important for both India and Japan. It will provide investment opportunities for Japanese companies on an unprecedented scale,” said vice minister for international affairs (METI) Masakazu Toyoda.

The work on the 1,483-km industrial corridor is expected to start next year. As many as 250 projects would be part of the corridor in sectors such as roads, ports, industrial parks and SEZs.

Japanese financial services group Orix, which has already launched a $100 million project development fund in India together with ILFS last year, is upbeat about the investment prospects in DMIC. “This project is huge. We want to invest in a large number of sectors including real estate development, SEZs, road construction, technology and training and ports,” said Yukion Yanase from Orix.

Mitsui corporation, which is investing in a free trade warehousing zone in Noida, wants to create more such zones along the DMIC. “We are planning to construct major logistics centre around the DMIC, especially cold chain facilities and port facilities,” said Mitsui general manager (strategic planning department) Takao Omori. He added that Japanese shipping companies keep complaining about port congestion in India which needed to be addressed.

According to Jetro chairman Yasuo Hayashi, the project would transform the way the Japanese investors look at India. “Earlier Japanese investors were only selling products in India. But now it could become a manufacturing base for exporting to countries in the EU, Middle East, CIS and Africa,” he said. Jetro is organising seminars in Japan to increase awareness about the potential of the project among the small and medium enterprises.

Another Japanese company with big plans for the DMIC project is Hitachi which has more than ten years of experience of doing business with India. “We want to invest in a large number of sectors including transport, power plants, elevators and escalators,” said Hitachi’s senior manager (Asia business department) Takafumi Kimishima.

He, however, said that there was a lack of clarity on how the project would take shape. “Although we know about the project, things are just a bit hazy at the moment,” Mr Kimishima said.

International affairs minister Mr Toyoda pointed out that there needed to be a number of follow-up meetings after Mr Abe’s visit and also after the project report is finalised to ensure its smooth implementation.

                                                                                                                           Courtesy: ET dtd: August 3, 2007

The above article provides a golden opportunity to all our valued patrons, who are visiting to our reputed website, for medium and large scale investment in infrastructure projects alongwith Delhi-Mumbai Industrial Corridor (DMIC) which is likely to emerge a hot spot for Japanese investors.

SENIOR CITIZENS CAN NOW AFFORD TO RETIRE

Senior citizens hoping to earn a regular income by pledging their homes can sit back and relax. They will not have to pay tax on the payments they receive from the lender for a reverse mortgage loan.

The logic: the payout from a reverse mortgage scheme is set to be treated as a “loan” and not “income” in the hands of the borrower. A loan is an amount that has to be repaid and hence cannot be charged to tax. “The borrower will be spared of tax, irrespective of whether he receives the money as a lump-sum amount or a periodic payment,” said a government official.
In a reverse mortgage, a borrower or the senior citizen mortgages his house to a lender. The lender, in turn, makes payments to the borrower. The borrower does not have to service the loan during his lifetime. So the loan has to be repaid, along with interest, only by his legal heir.
The legal heir can sell the property to repay the loan. Alternatively, he can repay the loan without selling the property and have the mortgage released. A capital gain will arise only when the property is sold. The legal heir who sells the property will have to pay capital gains tax, said the official.
Going by the income tax law, if the property is sold three years after the date of acquisition, the profits are treated as long-term capital gains and taxed at 20%. Short-term capital gains are taxed like any other income: the maximum rate is 30% for an individual.
Many housing finance institutions and banks sought clarity in the tax treatment under the reverse mortgage scheme after the National Housing Bank (NHB) released the operational guidelines. The scheme, announced in this year’s Budget, will provide a regular cash flow to senior citizens and address their financial needs.
Punjab National Bank (PNB) launched the scheme in April this year. State-owned Andhra Bank is ready with a reverse mortgage scheme, but yet to launch it. “We are waiting for a clarification on the tax treatment from the Central Board of Direct Taxes,” said Andhra Bank chairman and managing director K Ramakrishnan.
The scheme, according to NHB’s guidelines, will be open only to those who are 60 years and above. The loan amount will depend on the market value of the residential property, as assessed by the primary lending institution, the age of the borrower or borrowers and the prevalent interest rate.
Borrowers can only mortgage residential property. Commercial property will not be eligible for a reverse mortgage loan. The maximum tenure of the loan is 15 years. There are some end use restrictions too. The loan amount can be used for renovation of residential property, supplementing pension or other income, medical emergencies, repayment of an existing loan taken for residential property to be mortgage and meeting any genuine need.

Courtesy: ET. dtd: July 30, 2007

THIS ONE’S FOR HOUSE-HUNTERS

PVT. COMPANY SEEKS HARYANA GOVT’S NOD FOR SPECIAL HOUSING ZONES IN 6 TOWNSHIPS

This could well be the opportunity for property buyers who missed the chance of owning low-cost plots, last offered by the Haryana Urban Development Authority (HUDA) under the Group Housing Scheme (GHS) 2005, through draw of lots.

Even as the HUDA failed to float another such scheme this year a voluntary organisation has decided to invite cooperative and welfare societies to offer plots at subsidised rates in its proposed Special Housing Zones (SHZs). This organisation has already approached the Haryana government, seeking in-principle approval for setting up SHZs in Gurgaon, Faridabad, Panchkula, Sonepat, Rohtak and Panipat.

Last year, against an availability of just 321 plots, more than 15,000 group housing societies had applied for plots under GHS 2005. About 4,700 people applied for 44 plots in Panchkula. There were 4,200 applicants for 133 plots in Faridabad and 3,393 for 33 plots in Gurgaon.

"We have proposed to develop SHZs at a minimum land of 100 acres of land in six districts of Haryana. These SHZs will accommodate genuine housing societies that failed to win plots in GHS 2005. We plan to include 5,000 societies out of 15,000, and have already shortlisted their names. We will seek land at subsidised rates from HUDA," said Sudhir Kalra, chairman of Lord Tirupaty Balaji Group. The group has offered to develop the civic infrastructure of SHZs on its own and maintain these housing clusters.

"We are seeking the formulation of a policy that will allow non-government organisations like ours to promote SHZ and offer housing units to those who cannot afford to buy from the open market at exorbitant prices. We plan to launch our Group Housing Scheme 2007 on August 15 this year," Kalra said.

B.K. Tiwari, president of New Life Care Cooperative Group Housing Society, said the members have been desperately waiting for GHS 2006.

"Most of the members of our society live in rented accommodations and dream of owning their own house. But none of us have the financial capability of buying either land or built-up apartment at the market price. The only way out left to us is the subsidised land offered by HUDA under the group housing scheme," he said. skahujal3@gmail.com

LOW-COST HOUSING OPTIONS IN GURGAON

If a three-bedroom apartment in the open market in Gurgaon costs about RS 45-75 lakh, HUDA's Group Housing Society apartment would cost RS 18-20 lakh only.

The cost of construction per member for a three-bedroom flat of 1700 sq foot comes to around Rs 14 lakh. The total cost per member is estimated to be around RS 20 lakh.

In 2003, HUDA had offered low-cost plots to group housing societies, but skipped the offer in 2004 and 2005. Last year, for the first time, HUDA allowed non-Haryana residents to form societies and apply for plots in Haryana under the Group Housing Scheme. It is because of this that group housing societies from other states like Delhi, Uttar Pradesh and Rajasthan, and even Maharashtra, had applied for the plots.

Courtesy: HT. dtd: July 30, 2007

DELAY IN POSSESSION MAY ATTRACT INTEREST @ 1% PER MONTH