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Role of advanced payments in homeownership

Posted on by HomeCapital Team

The aspect of homeownership is of a great emotional value. It is indeed a journey of different milestones, right from identifying and finalizing the home through a series of documentations and number of payments across periods of time. In case of every home bought, the parameter of ‘advance payments’ leads the equation. 

The concept of advanced payments

In smaller or larger transactions, apart from the purpose of the transaction, there is a principal process called “peace of mind” which runs in parallel. This process is significant, especially in larger transactions, and advance payment initiates it.  Advance payment is a payment made prior to the final sale. It is a small amount, usually amounting to 1 -2% of the property value. It safeguards the buyer’s interest, and the developer gives an assurance that the house has been booked for the homebuyer.

Relation of advanced payments and the developer

Buyers usually have a budget and certain criterion for the property to be bought. Homebuyers usually search for a few properties that fit their criteria. Post that they finalize one. Thus developers need to decipher that who is a serious homebuyer.

This is the scenario where the developer asks for an advance payment. Some developers also choose not to discuss some terms of the selling transaction till they are sure that the purchaser genuinely have interest.

Types of advanced payments

Since decades, advance payments are existent. It has become a kind of custom or financial trend of business. At times, developers ask more than the advance payment. The maximum percentage, a developer can ask is 10 %.

Now, let us have a look at the five types of advance payments.

Type 1 – Earnest money deposit

Earnest Money Deposit (EMD) is the amount of money paid by a buyer to a developer as a good will expressing his interest in the purchase. Thereafter, buyer arranges the balance amount to complete the transaction in a period defined by the developer.

Type 2 – Tax deducted at source

TDS is amongst the first part of advance payment which has to be paid to the government. This tax is to be paid by the homebuyer, on behalf of the developer by deducting the amount from the final amount of the property value. At the time of disbursement of funds, most banks demand that buyer should pay it in advance and submit the TDS certificate to the bank and the developer. By furnishing with Permanent Account Number (PAN) of buyer and developer, TDS of 1% of the final value of the property is to be deducted if the property is valued more than Rs. 50 lacs. For example, if the property is worth Rs.70 lacs, the TDS will be Rs. 70,000/-.

Type 3 – Token money

For a purchase deal of property to be initiated the homebuyer has to show his genuine interest in buying by paying small percentage of the total property value to the developer. This small amount is referred to token money. Generally, to be on a safer side, a legal document is made along with the token money.

Type 4 – Booking amount

This is another type of advance payment, where the buyer pays a certain percentage of the property value to the developer. Instead of just having a receipt of the booking amount, it is advisable that a sale agreement is registered at the time of payment. The property is blocked under the name of the buyer so that the developer cannot make any other sale agreement. Also, it safeguards the buyer for the booking amount paid by them. Some developers have started to allow customers to book a house from INR 9999 as well.

For example, a 500 sq.ft apartment in an under construction building in Vile Parle @ Rs.35,000 per sq.ft valued to Rs. 1.5 crores, a buyer pays Rs. 70,000 as booking amount along with sale agreement. Balance amount may be agreed to be paid as per the milestones of the project.

Type 5 – Stamp Duty and Registration

Stamp duty is the tax levied by the government on a legal document of ownership which is Sale Deed in this case. Its percentage varies from state to state. Before digitization, it had to be paid in the sub-registrar’s office, following a long-winded, step-by-step process. Though this option is still available, it can now also be paid online. It is easy, convenient, and goes a long way in taking on counterfeiting. Currently, Stock Holding Corporation of India Limited (SHCIL) takes care of all online registrations all over India except Mumbai. In Mumbai, online stamp duty is to be paid through the Government Receipt Accounting System (GRAS) of the Maharashtra Government.

Registration fees is the last part of advance payment and it is paid along with the stamp duty. It is 1% of the property value.

In a nutshell, it is best to ensure that agreement is made along with minimal advance payment.

Trying to assist homebuyers, CREDAI – MCHI seeks extension of property registration deadline

Posted on by HomeCapital Team

Registration of a newly purchased house is a mandatory requirement after the deal is through and all necessary transactions are completed between the developer and the homebuyer. Besides the transfer of property in the name of the buyer, the legal documentation serves as a proof of sale-purchase deal between two parties for any future transaction and also relieves both at the same time. A delay beyond four months from the date of agreement signing may attract heavy penalty on homebuyers, as per the registration laws.

*Disclaimer: Let the reader note that the following is a request by the CREDAI- MCHI and hasn’t really been accepted or implemented yet by any of the regulatory bodies.

By when should you get your new house registered?

According to the section 24 of the Registration Act of 1908, the property documents need to be registered within four months of the date of the signing of the agreement. In case not done so, a fine, not exceeding 10 times the registration fee, is to be levied each month in different slabs. In purview of the current pandemic situation, the CREDAI Maharashtra has requested the State government to provide four months extension for registration of the property deals executed. The move is expected to relieve the buyers significantly, by avoiding a heavy penalty for delayed registration, who could not register their property yet.

Request put forth by CREDAI – MCHI for homebuyers

The developers’ body has specifically asked the Government of Maharashtra to consider buyers’ dilemma and not charge the penalty amount mentioned under the law. The communication by CREDAI Maharashtra has stated, “The Inspector General of Registration and Stamps (IGR) of the state is conferred the powers under section 70 of the Registration Act to remit wholly or in part, the difference between any fine levied under section 25 of section 34. We request you extend it for a further period of four months.” The State IGR office has confirmed about receiving the request letter sent by CREDAI, and they have forwarded the letter to the concerned State government’s department.

Due to the pandemic, several home buyers in Maharashtra would not be able to meet the four-month deadline to register their property. The Association has always advocated in interests of homebuyers and developers and this time has also urged for relaxation in fine. Earlier also, due to the requests put forth by CREDAI-MCHI a 3% waiver in stamp duty by the Maharashtra government helped the homebuyers significantly that boosted the confidence of all homebuyers.

About CREDAI-MCHI

CREDAI-MCHI is a recognized body of real estate developers that comprises members from the realty sector across Mumbai Metropolitan Region (MMR). The body has always been instrumental in pushing the concerns of homebuyers and the developers. Formed in 1982, the MCHI is also a member of the Confederation of Real Estate Developers’ Associations of India (CREDAI). At present, CREDAI MCHI has a robust membership of more than 1400 developers in MMR region. Recognized by the Central Government and Government of Maharashtra, CREDAI-MCHI helps both State and the Centre in meeting their goals of providing homes, a basic necessity indeed.

An emerging trend – Office at home: Real estate developers consider layout changes

Posted on by HomeCapital Team

The pandemic has caused a revolution in the mindset of real estate buyers. Indeed, the work culture has changed and work from home has become the new normal. The concept of office has found home at home now. Without a doubt, this new normal of work from home has boosted the safety and hygiene reducing the crowd of the region.

Importance of buying a home

The last decade has seen a many people staying in rented houses, especially in young populace. However, now people have realised that buying a home is a better investment than to invest in the stock market which now looks like an uncertain sinusoid. In addition, buying a home gives an emotional security rather than a rented one which is marked with an unpredictable volatility.

Work from home culture has been now widely adopted by many micro, small and medium enterprises (MSMEs) and even large enterprises. This has in turn also resulted in savings on real estate, transport and working equipment expenses has thus increased the importance of home as all the time of a professional is spent at home forms another reason of buying a spacious home.

New homebuyer demands

Gradually, “work from home” is happening to be an integral part of corporate culture, home buyers’ principal demand to real estate developers is to have an office space included in the home to be bought.

Office space is the current demand of the young professionals, upper-middle-class as well as elite class homebuyers. Elite class buyers have shown a propensity towards spacious homes of 2.5 BHK, 3 BHK, and 4 BHK flats. Areas near the airport and corporate hubs like Bandra, Santacruz, and Vile Parle have upcoming residential projects tailor-made to the work-from-home demand. Other homebuyers are shifting to suburbs as per their affordability fulfilling this demand. Some homebuyers are also migrating to the peripheries of the city towards thinly populated areas considering social distancing and safety aspects.  

According to an industry poll conducted on homebuyer behaviour, 91.9 percent of participants prefer owning a house with decks/balconies. It also mentioned that 82 percent showed an inclination towards outdoor spaces such as gardens and sports complexes.

There is an increasing demand for lifestyle oriented real estate projects offering amenities focusing on all-in-one aspect fulfilling all the needs in limited areas securing the health-hygiene-safety triangle.

Real estate offerings

Understanding the homebuyers’ demand and the need of the hour, real estate developers have been meticulous in designing the layouts to fulfilling the same.

Leading real estate developers have already started making changes to their ongoing projects to accommodate a separate office space. They have started providing a perfect office environment with an office space inclusive of basic infrastructure like power points, broadband Wifi, air conditioning and power back up. In addition, providing washroom cubicles just outside the entrance is an amenity being pondered upon. Furthermore, in cities such as Chennai, the altered design layout for the office space may not attract a heavy price but may be as low as Rs.100 per sq.ft.

While Mumbai based developers are contemplating to include washroom or powder before the living room as one of the aspects in the new design layout. They also considering the introduction of kitchen garden and a separate room for kitchen supplies storage. These concepts are the off spring of the challenges faces by the people and the rise in the importance of mental and physical well being. Kitchen garden will have a dedicated space to grow vegetables following the concept of “Be your own farmer”. A separate kitchen supplies unit will facilitate the storage of groceries for longer time periods. 

The advent of integrated townships

Integrated townships have been existent in the metropolitan cities to a smaller extent than in tier 2 and Tier 3. They mostly include schools, hospitals, health clubs, malls, swimming pools, shopping strip, sports arena etc. However, now the focus is more on Green spaces, long walkways, jogging tracks and spacious decks or exclusive terraces to facilitate freedom of movement and the joy of breathing fresh air. Some developers are allotting a separate room in the clubhouse with workstations making it a perfect office environment.

Thus, due to the introduction of work from home culture and higher consciousness for health in the current era homebuyers and developers together are making an effort to define a healthier and an efficient lifestyle.

How developers are leveraging technology

Posted on by HomeCapital Team

Home buying is an enriching experience that homebuyers will treasure for the rest of their life; especially, buying their first home! The process of home buying has evolved with technology in the past few years from mobile consulting to web portals to apps to virtual tours to chatbots to drones and much more. With each technological development in Proptech, the concept of home buying attained a new level. This technology leverage in the real estate sector not only made home buyers well informed in advance but also relieved developers significantly for selling and advertising a project.  

Developers have now taken technology route beyond advertising across various stages of their project development such as monitoring the progress of the project via drones, offering virtual tours of the site, online booking of the project, 360-degree view of the property, handling customer queries through chatbots etc. Even most advanced technologies including artificial intelligence (AI) and virtual reality are becoming the part of Proptech space. There are various advantages of technology based applications in realty sector.

Benefits of Proptech

Homebuyers can now access all the basic information about the property at the convenience of their home through mobile or laptop. It saves lot of money and time apart from giving a 360 degree view to the project site, location and exact view from the balcony etc. Home buyers can also compare various projects without physically visiting the site and make a well-informed decision.     

Assistance from advance Proptech tools have also benefited residential real estate developers, as it helps them save a lot of money and time in arranging the site visits. Virtual tours allow developers to reduce manpower deployment and save on transport expenses. The 3D tours give homebuyers a holistic perspective of the project, resulting in quick turnaround for the deal. For ready to move projects, developers can also showcase best amenities and features of their projects for enhanced transparency and to convince the buyers. Some advance applications of Proptech are enabling developers to manage home buyers’ queries by using AI-based chatbots apart from monitoring the quality and progress of the project through drone surveys.   

Further use of sophisticated Proptech tools like virtual reality, 3D walkthroughs, drones and artificial intelligence to help potential homebuyers virtually tour their desired property and be aware of its neighbourhood while sitting in the comfort and safety of their homes. The virtual chat medium and social media platforms have created a transparent environment where homebuyers can find ample information about the property of their choice. Launch of property applications provided homebuyers with trends, forecast of the property value and other insights while cloud computing and statistical analysis helped them in decision-making. 

Virtual site tours

Such home tours are usually hosted on videotelephony proprietary software programs such as Zoom, Google Meet, WhatsApp Video Call etc. These virtual tours are helping developers in creating trust and transparency while negotiating with new homebuyers, who are unable to do real-time visits.

Drone technology

Real estate drone video tours offer a great bird’s eye view of the neighbourhood. Also, the combination of aerial content and zoom-ins captured by advanced drone cameras helps new home buyers to study the features of the property in detail from the comfort of their homes.

Virtual and augmented reality technology

Property developers are using advanced virtual and augmented reality technology to showcase a 3D, 360°, lifelike view of their properties via virtual tours. Where the customer gets to review a lifelike blueprint of the site, home, or neighbourhood on their mobile devices.  

Online bookings

Developers have now launched end-to-end online booking facilities on their websites. This will enable homebuyers to not only select the property of their choice but also complete the entire booking process online. This includes booking the unit and making payments. Broadly, homebuyers have to choose a project from the available options, followed by which they choose a unit of the desired configuration, view the payment plan, confirm their personal details and block the unit online. Post this they pay the minimum booking amount online. Homebuyers can use their credit and debit cards, net banking, or UPI, to pay the token amount.

Artificial Intelligence (AI)

Broadly AI lets machines perform compound tasks in a smart method, related to human minds. With the help of AI, property searches have become more refined and comprehensive with numerous information layers being made accessible for homebuyers such as approximate return on properties, good neighbourhoods, amenities around the home, facilities provided in the complex etc. Also, chatbots are being powered by AI. These digital marvels allow personalized property recommendations and even facilitate scheduling an appointment. Thus, the information is based on user inputs and not pre-scripted answers.

Changing landscapes and prospects for real estate sector

Proptech is changing the operational aspects of real estate sector by becoming a prominent face of India’s largest economic activity segment. With growing ease of access, the real estate information exchange platforms are continuously evolving with technology. Dedicated apps give key information about a project with just one click through smart phones such as value projection of the property, market trends along with other insights based on statistical analysis and cloud computing. The added information helps homebuyers in decision-making.  

Easy navigation supported apps also allow homebuyers, including NRIs (non-resident Indians), to select and book a property online. These apps also provide information about property law and regulations in India, making the process more transparent. The feedback and ratings provided by existing buyers give a crucial insight about a project to the prospective buyers apart from allowing digital real estate platform to upgrade their service. Leading developers such as Sobha Limited, Mahaveer Group, Hubtown, Puravankara, Provident, Shriram Properties, Group Satellite and many more are following the newer technology developments and leveraging their Proptech tools aggressively.     

Just like other sectors, where newer technologies are making inroads, Proptech is also changing the operational aspects of real estate sector. The technology is hugely benefitting the sector during the current pandemic, as an alternative to frequent visits and physical verification of the property, project site and ambience. Proptech tools kept the hope afloat during the pandemic as movement restrictions imposed.     

The way forward for Proptech

Even when the pandemic ends, Proptech is here to stay. Note that, although technology cannot replicate an actual buying experience with human interaction and personal visits, the synergy between technology and physical interaction will continue. However, now with the prevalence of Proptech, physical interactions, including site visits, will be pushed forward from the initial phase of the home buying process to the last stage. Finally, we believe that technology-led innovations will keep changing the face of real estate in India over time.

HomeCapital assists first-time homebuyers by offering an interest-free unsecured personal loan. The program is specifically designed to support young professional who may not have sufficient savings to fund the initial amount for the down payment required to buy a house. The amount offered under this scheme is up to 50% of the down payment, which can be paid back in 12 EMIs. Through its completely digital journey, anyone can achieve their dream of becoming a homeowner.

Applicability of GST on Plots and Plotted Development

Posted on by HomeCapital Team

Are you planning to buy a plot and wondering about the Goods and Services Tax (GST) ruling by Authorities for Advance Ruling (AAR) on land purchase would impact the sale? This blog will give you a clear idea about the applicability of GST on plots or plotted development. First of all, a buyer must understand the difference between plots and plotted developments. On the basis of this, the sale deed will be prepared either with exemption of GST or levying the applicable GST charges.            

What are plots and plotted development?

In general, a piece of land is referred to as a plot and the transaction/deal of land is done under two categories including ‘Plot’ and ‘Plotted Development’. When an individual sells a piece of land that just involves the transfer of title to the buyer is referred to as a plot. But when an individual or a developer offers various basic amenities along with the land is called plotted development. The amenities of a plotted development may include the construction of roads, sewerage line, underground water, and cable pipes, landscaped gardens, drainage systems, overhead tanks, water harvesting system, demarcation of each allotted piece of land, boundary walls, and leveling of land along with other infrastructure.  

The plotted development can be either done by government authorities or an individual landowner or the developer or under a joint development model (JDA) by a developer and the landowner. Whoever carries out the development viz. developer or landowner or the authority will have to pay the GST charges on the sale of developed land. The plotted development is carried out under the approved plan by the development authority, after acquiring all necessary permissions for a specific land site. The developer charges GST on super built-up basis and not the actual measure of the developed plot.

The sale of plots is made to end buyers who may build their houses on the allotted piece of land. Sometimes the sale is done after developing the entire infrastructure or by showing the development plan while such an infrastructure development project is in progress.           

When is GST applicable?

According to the ruling by AAR, the sale involves exclusively transfer of title for ownership of the plot only. Selling a piece of land does not attract GST charges but when it is being sold with basic amenities such as necessary pipelines, roads, cables etc. that come under ‘supply of services’, hence liable for GST charges. The sale of an allotted piece of land without any developed amenities is termed as immoveable property and is kept out of the GST net.        

  • According to clause 5(b) of the Schedule-II of the CGST Act, 2017, construction of a building, complex, civil infrastructure or a part thereof, comprising of a building or complex intended for sale to a buyer is a Supply of service and, hence, is liable to the Goods and Services Tax (GST).
  • While under the Schedule III of the CGST Act, 2017 the sale of immovable property or land that doesn’t come under the supply of services or goods, hence only stamp duty is payable on plot purchases.

The GST applicable on sales of developed land with basic amenities is charged  at 18%, while if there is no construction, then 0% or no GST is applicable. In case, a developer charges development charges separately then GST is payable @18% on these development charges also.

Becoming the owner of a plot or plotted development requires a down payment. HomeCapital provides down payment assistance for lands. This assistance is highly beneficial for young buyers who usually do not have enough savings to pay the entire down payment upfront. The amount borrowed from us can be repaid in 12 easy EMIs.

Buyers need to understand that when the developer of a plotted development offers the allocated piece of land to a buyer, this includes the charges of basic amenities in the sales price. Thus the cost of a developed plot is higher than the cost of sale of land, but with basic amenities, in place, the buyers may not need to make efforts separately for sewerage lines, roads, water pipes, electricity cables, etc. While in the case of a plot title transfer deal the buyer needs to pay for getting such basic infrastructure or will have to wait until authority starts developing the same. Also, the plotted development with all approvals in place from the development authority enables a buyer for a home loan for construction, which is a plus point.           

How you can do slot booking for online property registration

Posted on by HomeCapital Team

Considering the current pandemic, to avoid crowding at the Sub-Registrar office (SRO), Maharashtra Government has initiated online facility of slot booking for Online Property Registration. The buyer doesn’t become the official owner of the property just by making the payment and receiving a payment acknowledgment from the developer. They have to pay the stamp duty, registration fees and submit the full & final agreement between him/her and the developer to the office of the Sub-Registrar.

There are a total of 519 Registration offices in Maharashtra but due to the current situation, the people of Maharashtra have been advised not to come to these offices without an online registration procedure. On this official portal, people can book their time and date slots for their property Registration. Only 30 people can register their properties in each office. Also, due to the guidelines issued by the government, the SRO would be operational only on weekdays from 10 AM to 6 PM.

Process for user registration to book your slot

Using the e – booking process, people can easily book their slots online from anywhere. The process defined below is a step by step guide on how a new user can register themselves online prior to the booking their slot:

  • Step 3: It redirects to the next page where you need to click on ‘register (citizen)’ option to initiate the process of creating an account.
  1. Step 4: A detailed application form for registration will appear on the screen. Here you would need to enter the name of the Authorized Person. You would require to fill in  First Name, Middle Name and Last Name. Also, enter the personal contact address of the authorized person such as building name/number/floor, street/locality, city and pin code.
  • Step 5: Post that select the details such as state, district, and taluka from the drop-down options. Next, enter the contact person ID details like email ID, mobile number, select ID proof, ID proof number, and unique identification (UID).
  • Step 6: Enter the username, password, captcha. You would then need to confirm your password entered. Select the hint question as desired and enter your answer, which would help you retrieve the account if you forget your password. 
  • Step 7: Finally, click on submit to complete the registration process.

It is indeed a self-explanatory and user-friendly registration process.

Process to book your slot to register your house via e-step-in

e-Stepin is web application that facilitates citizens to obtain token to register documents soon after citizen enters document details in PDE. Now we will have a look at the steps to book the token online for SR Office visit. Here’s a step-by-step guide to do slot booking for online property registration for you:

  • Step 1: Visit the official portal of IG Maharashtra.
  • Step 2: Click on e-Step-in and then on ‘process’.
  • Step 3: Select the district name and preferred shift from the dropdown options.
  • Step 4: Select the date for token booking.
  • Step 5: Select One SRO Office of your choice and click on continue. (If the booking is available, then the only booking is allowed.)
  • Step 6: You would then need to enter the ISARITA or MKCL public data entry number. Then click on verify.
  • Step 7: Post that select a timeslot of your choice and click on ‘book’

It then completes the online slot booking process and generates an acknowledgement that you should submit when visiting the office. It shows a booking message containing the SRO office name, time slot token ID and assigned booking ID. It is essential to note that only those who are required for the registration process would be allowed inside at the SRO to ensure minimum footfall.

Haryana RERA – Homebuyers to pay for carpet area

Posted on by HomeCapital Team

Haryana RERA has declared that home buyers must buy the house based on carpet area. Thus, protecting and safeguarding the interest of the property buyers. It was mainly intended to avoid the possibility of buyer’s exploitation by developers.

Carpet area and saleable area

It is important to consider the definition and understand the meaning of carpet area and saleable area according to the RERA:

  • Carpet Area – It is a smaller area compared to a saleable area. If a carpet is spread from wall to wall throughout the apartment, then this usable area is called carpet area. The degree of accuracy is highest in its calculation. So there cannot be any room for errors to create a difference in pricing.
  • As per RERA, Saleable Area” includes Carpet Area plus veranda or balcony area which is exclusively meant for the allottee plus the proportionate share of common areas and any other area as agreed between the promoter and allottee in the agreement of sale for which a proportionate cost has been collected from the allottees.

RERA regulation to sell apartments

Prior to reaching to the stage of buying or selling, RERA has made it mandatory for the promoter to register themselves as well as the project

As per the Maharashtra RERA, Section 3 of the Act, the promoter of an ongoing project shall not advertise, market, book, sell or offer for sale or invite persons to purchase in any manner any plot, apartment, or building, unless he registers the project. In the ongoing projects, developers may still advertise but this could be subject to state rules.

Now, developers will also have to compulsorily register themselves as well as their projects with the authority. Unless they do so, they won’t be able to either advertise or sell their project. This will ensure better governance of the sector and also help buyers

Haryana RERA has included the above clauses in Sec.1, Chapter 3 of the Act.

Furthermore, it has also mentioned that the price of an apartment in a real estate project shall be charged by the promoter from the apartment buyers only on the basis of the carpet area of the apartment. With regard to the price of the plot in any real estate project shall be charged by the promoter from the plot buyers only on the basis of per square meter of net usable area of the plot i.e. actual dimensions of the plot.

How Haryana RERA protects the buyers before the purchase of the property

If the plot area of the project is more than 500 sq. meters or the number of tenements to be developed exceeds 8, then it is mandatory that the promoter, as well as the project, have to be registered under RERA.

Prior to registering the developer, RERA has the process of conducting thorough due diligence. Some of the documents are listed below:

  1. Developer’s firm/company registration details
  2. Details of the projects completed in the previous 5 years and that of ongoing projects.
  3. Copy of the approvals and commencement certificate, the sanctioned plan, layout plan, and specifications of the proposed project
  4. Proforma of the allotment letter, agreement for sale, and the conveyance deed proposed to be signed with the allottees.
  5. Land/plot title clearance details

Most developers tend to have multiple projects being developed simultaneously. Earlier, developers were allowed to transfer funds raised from one project to that of another. However, now under the RERA, a minimum of 70% of the homebuyers’ and investors’ money is kept in a separate account. These funds will then be allotted to the developer only for construction and land-related costs only after certification by an engineer, a chartered accountant, and an architect.

Developers can only ask for up to 10% of the home’s cost as an advance payment towards booking the apartment before the sale agreement is signed.

RERA makes all the information available to homebuyers on their portal through a unique registration number allotted to the project.

Benefits to the homebuyer to buy a home based on carpet area

Since the carpet area transaction has been introduced by RERA, home buyers get what they are promised. This makes it clear to them as to what they are paying for which was not the case when they when the transaction used to take place based on built-up area. Earlier, there was no standardization of the calculation of the area and the price asked for. However, RERA’s move of carpet area has brought the much-required standardization and accuracy. Now, the buyer will know his buying area precisely before construction as well as post-construction as RERA has established transparency throughout all the stages of the project.

For a buyer as well as the developer, RERA is a complete ecosystem comprising a detailed information portal as well as a strong grievance resolving interface.

Under construction versus ready to move in houses: Which one is better for you?

Posted on by HomeCapital Team

The constantly reducing gap between ready-to-move-in (RTM) and under-construction(UC) properties is putting a serious question before the homebuyers that whether they should buy an under-construction house or a ready-to-move-in apartment. Each has its own pros and cons depending upon buyers’ needs and purposes. For a homebuyer, it is always easier to purchase an under-construction property than a ready-to-move-in home due to significant differences in financial requirements. Before RERA implementation, there were some associated risks with under-construction projects such as delay in projects and increase in project prices. But after the formation of this regulatory authority, these risk factors have been mitigated with stricter norms in place.   

Difference between ready to move in and under construction

Let us understand with an example of buying a 1 BHK in Kandivli in Mumbai. The locality, area, developer and flat types are the same. The only difference is one is ready to move and another one is under construction. The table below shows the clear payout difference in annual outgo during first year.  

 Parameters  Ready to Move In  Under Construction 
 Agreement Value                 70,00,000                   67,50,000
 GST Payable                              –                       3,37,500
 Price inclusive of GST                 70,00,000                   70,87,500
 Down Payment                   7,00,000                     7,08,750
 Home Loan                63,00,000                   60,41,250
 Home Loan EMI for 20 years @ 7%                      48,844                        46,838
 Interest Paid on EMI in 1st year                  5,86,126                        50,747
 Annual Rent Outgo                              –                       3,85,000
 Home Décor and Furnishing                  3,00,000                                 –  
 Tax Savings on Interest Paid                       45,000                                 –  
 Total Annual Outgo in first year                15,41,126                  11,44,497

From the example above, we see that overall in a ready to move in apartment, the homebuyer has a higher annual outgo of around 25%. This varies from project to project based on the location, configuration and other related factors. This highlights the fact that an under construction property is much better for a first time home buyer enabling him to take care of their required cash flow.

Buying your first house is always exciting and a fulfilling experience as the current scenario favors homebuyers. However, sometimes, young professional may have insufficient savings to fund the initial amount for down payment to buy a house. HomeCapital  is a platform that supports such individual to help them purchase their first home by offering an interest free unsecured personal loan of up to 50% of the down payment that can be paid back in 12 EMIs.

Pricing trends in leading markets for RTM and UC categories

According to a report, the price difference between under construction and ready-to-move-in properties is decreasing in seven leading real estate markets in the country. The gap between these two categories has reduced to 3-5% in 2021 from 9-12% in 2017 and 5-8% in 2018. The report also suggests that two largest markets Mumbai and Delhi-NCR have not seen a significant hike in ready-to-move-in properties also.

The Mumbai region and Delhi-NCR has just 3% difference in pricing for Under Construction and Ready-to-move-in homes. The average price for Under Construction and Ready-to-move-in categories are Rs 10,350 per sq. ft. and Rs 10,700 per sq. ft.; while it stood at Rs 4,500 per sq. ft. and Rs 4,650 per sq. ft., respectively for these two cities. In other promising markets including Chennai, Hyderabad, Pune, Kolkata and Bengaluru, the difference in prices of these two categories remains below 5%.    

Advantages of buying an under-construction property

There are several advantages of purchasing an under-construction home as the first house primarily due to the homebuyers cash flow. Below are some of the advantages of purchasing an under-construction house:

  • As of now with stricter norms under state RERA rules, there is no escape for developers and homebuyers are being heard by the regulatory authority on apriority basis. For under construction homebuyers, RERA compliance is like a boon, as it mandates all under construction properties being build after May 1, 2017 will have to comply with fair practices of the trade. The regulatory agency not only provides necessary information about the RERA registered projects but also ensure speedy redressal of the home buyers’ grievances.   
  • Another benefit of purchasing an under-construction property is higher returns, in case the buyer wants to relocate or upgrade the existing configuration. The timeline between the project launch and completion gives sufficient window for significant hike in the property price.   
  • One more reason to go for an under-construction property that it requires less finances as compared to the ready-to-move in property. A homebuyer can easily differentiates between the pricing for an under construction and ready-to-move-in property even if the developer, area, location and configuration are same. The average price difference may vary from 10 to 30%.

Home buying is a collective decision taken by the family for their betterment, which hugely impacts the finances of a buyer as well the familial expenses. Under construction, houses help in maintaining the financial stability of homebuyers, which is indeed a requirement in the current situation.      

How to pay property tax online in Delhi?

Posted on by HomeCapital Team

The Municipal Corporation of Delhi (MCD) collects property taxes annually from residents. The MCD sets a deadline. Based on the area in which your property is located, property tax would need to be paid to the respective municipal body. These are either the South Delhi Municipal Corporation (SDMC), the North Delhi Municipal Corporation (NDMC) or the East Delhi Municipal Corporation (EDMC). For East Delhi residents it has been made mandatory to pay property tax online from 24 April 2021. Payments to the EDMC be made through the MCD website by following a few easy steps.

Step 1:

Visit the official MCD website by clicking on this link: https://www.mcdpropertytax.in/`

Step 2: 

Once you get onto the MCD’s website, you will need to choose from the following three options: South Delhi Municipal Corporation (SDMC), North Delhi Municipal Corporation (NDMC), East Delhi Municipal Corporation (EDMC) depending on which corporation your colony falls under. Note that the names of the colonies are listed on each of the south, north and east municipal corporations’ websites.

Step 3:

Now you will be redirected to a new page where you’ll have to read and accept certain terms and conditions. Once you do that, proceed further by selecting the Click Here to File Property Tax button.

Step 4:

Again, you will be redirected to a new page where you have to feed in your Property ID. In case you have paid property tax earlier then you can find your property ID in previous tax receipts. Alternatively, you can search for your Property ID online through the following links: North MCD, South MCD, East MCD.

Step 5:

If you are paying the property tax for the first time, then select the First Time Online Tax Payers option.

OR

If your property ID has already been allotted, then enter it and select the Submit option.

Step 6:

Now you will be directed to a page where you need to fill in the ownership details of the property. Once you enter the property details as required, your property tax will be automatically computed by the system. Check the calculations and click on Submit.

Step 7:

Once the return is submitted, you can pay your property tax using your debit/credit card or via net banking. Please remember to click on Generate Challan after paying so you have a record of the tax payment made for future reference.

Final Precautions To Take While Paying Property Tax Online

After you make your payment on the MCD’s website, ensure that the system updates your record and no outstanding amounts are shown against your account.

How is moving to an online tax payment system beneficial?

Moving to an e payment system has several benefits to the homeowner as well as to the MDC specially in the current situation. The primary benefits are mentioned below:

  • You can pay taxes from any location, at any time, through net banking.
  • There’s an instant and hassle-free transfer of funds from your account.
  • On successful tax payment, an e-challan is directly sent to the revenue department.
  • The need for cumbersome data entries with banks is eliminated.
  • You can save/print the challan and receipt copy at your convenience.
  • The transaction ID of the e-payment of tax reflects in your bank statement.
  • You can instantly verify whether your money has reached the authorities or not.

Continual growth in the housing market in top 8 cities

Posted on by HomeCapital Team

The year 2020 marked many significant changes in the economy due to the pandemic and the housing market was not an exception. Nevertheless, gradual movement in Mumbai and Pune markets were seen. Since, the property prices were reduced this was an opportune time for the first home buyers.

However, in the Q4 of 2020, there was a whopping surge of 84% QoQ and housing sales reaching 100% of the pre-pandemic threshold. This was the result of the Maharashtra Government’s stellar move of reduction in stamp duty rates followed by Karnataka for affordable housing. In addition, it was reinforced by the flexible payment terms offered by the developers.

Spike in housing market sales in the first quarter of 2021

Continuing on this rejuvenating path, housing market witnessed Mumbai and Pune leading with 53% sales in top 8 cities in Q1 of 2021.

According to a report by Anarock, the sales across the top 7 cities increased by 15% compared to the previous quarter. The cities recorded growth in the range of 10% to 23%. In the newly launched inventory, Pune is the leader with 13,820 units and Kolkata being the last with only 1,810 units. Chennai was ranked at the bottom for available inventory of 36,220 units.

Ahmedabad has shown steady growth in its housing market. A gradual increase in residential demand by 7% and 3% in supply and an increase in price.

According to Q1 reports of this year, new launch affordable housing soared by 30% while mid segment remained mostly the same as previous quarter. Mumbai, Pune and Delhi constituted 71% of the affordable housing launches across the top 8 cities. Amongst, the mid-end and high-end segment Pune was the leader yet another time with 89% of inventory partnered with Hyderabad.

Homebuyers paradigm shift

After experiencing a slowdown in Housing Market after Q1 of 2020 though the prices had a reduction the growth rate was slower than expected. With the government and developer’s trend-changing move, people have now become keen in buying residential property now. Homebuyers have seen a wide spectrum of an unusual slowdown to a resilient housing market.

In addition to the government and developer’s move, there is a segment of homebuyers that require financial assistance towards the down payment for becoming a homeowner.  HomeCapital has accelerated homeownership with its Home Down Payment Assistance Program. The program offers up to 50% of a property’s down payment amount as an interest-free loan which can be repaid in 12 EMIs. They partner with leading residential developers all over India to maximize the benefits of their program for home buyers.  

How will the housing market fare in the current situation?

The Trio of Reduction of stamp duty, low interest rates and developers’ offers may last for limited period. However, prices will take up a surge in Tier I cities like Pune, Mumbai and NCR compared to the first half of 2020 due to the flexible offers from the developers as they were low in the first half last year and excess inventory being a factor as well. In the current situation, the government will take the required measures facilitating the buyer although the prices are soared and considering the excess inventory in Mumbai and Pune. Bengaluru has inventory overhang period of 30 months labeling it to be the healthiest market.

Fortunately, for all the first home buyers opportunity is still available with the Trio as mentioned above.