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Township Living: The new way of living

Posted on by HomeCapital Team

The concept of township is not new, as it existed in different forms in the past like a FORT can be termed as an ancient version of a township. In addition, various PSU or private sector companies and some institutional campuses give a feel of similar infrastructure developed to accommodate residential and workplace activities within a defined boundary.

Modern townships offer a more advanced and integrated version of community living, which has landscaped gardens instead of natural greenery, cozy commercial and retail outlets, leisure activity places and advanced playgrounds, healthcare, and educational infrastructure, etc. Such townships provide security and other amenities like a standalone building apart from all basic infrastructures inside the township. Homebuyers now prefer peaceful township living away from the urban chaos instead of a small flat with limited open space at a prime location in the city. In fact, homebuyers can also afford larger homes in these townships under similar or less budget.   

During recent pandemic year, working professional have realized the value for better ventilated houses and societies which could also prove to be a sustainable accommodation for all including children, housewives, old age people and work from home individuals. Even, Covid-19 have made people think about a balanced life and if you can get it near your home with secured gated community that is good for all. So concept of owning a dream house is not just limited to a standalone building at a prime location, but the idea have emerged to get access to larger open spaces, proper green area, exercise and sports activity play areas along with other urban amenities at a walking distance, even a workplace or office. So, these add-ons are driving the concept of township living among all age groups to give themselves and family a little more.        

Township Living: Concept and Planning

Integrated townships reflect a mini replica of the main city away from the main city with medical, educational, commercial hubs exist either inside or nearby the township project. For work-life balance such a township also houses plenty of open space covering landscaped gardens, jogging tracks, playgrounds for all age groups, parks and open spaces for enhanced living experience. Fully developed townships offers all the amenities of a city life within the periphery of the project with larger areas to eat, play, study, work and live.

Uninterrupted power and water supply minus urban traffic chaos and pollution, makes township living a different experience in totality. In addition to the amenities and convenience, township also offers balance of serenity and nature, which is a must aspect of living in today’s times. The project is designed in a way that it has better connectivity with main city and has plenty of green cover inside and around the project.  Township living can be defined as urban amenities in nature’s abode, making a holistic living experience for the residents. 

Benefits of Living in Township  

Township living offers residential, commercial, green area and retail space inside the developed project. Homebuyers may get several benefits by choosing a property in township projects such as:  

  • Comprehensive infrastructure for living

Township projects are developed in a way that residents can have access to civic and social infrastructure at a convenient distance from their home. A typical township project houses hospitals, schools, shopping centers, green space along with residential towers.    

  • Work-Life Balance

Work-life balance is a key aspect behind a township living project. Most of these projects are developed strategically in the vicinity of major employment hubs in turn reduce the travel time and stress levels for working professionals.

  • Better resale value and returns

Compared to standalone buildings, the townships score better due to larger landscape and amenities. Commercial spaces like SEZs also prompt buyers to these locations. Since such projects are located outside the city limits, the cost of land is much lower as compared to main city locations, which brings houses under affordable range to give better returns. A township home can be a dream home for most of the buyers, as it fits the checklist of a valued house. Current property market prospects favor homebuyers making it the best time for owning a beautiful home that matches your expectations.

To assist new homebuyers who may need support for down payment amount, we offer affordable financing to them. HomeCapital offers support to purchase your first home with interest-free unsecured personal loan of up to 50% of the down payment, which can be repaid in 12 EMIs.        

Ongoing Living Township Projects:

There are some promising township projects that are worth considering for new homebuyers. Individuals, who are looking for a complete abode that can fulfill their aspiration as well as idea of a healthy lifestyle, can check the specification and amenities these township living projects are offering.

  • Pallava City – is a township project by the Lodha Group and has over 1 Lakh apartments. It is located at the junction of Thane, Navi Mumbai, and Kalyan. Pallava City is spread over 4500 acres and has over 60% open space.
  • Shriram Sunshine One – is a part of the Shriram Grand City township. It is spread over a total area of 314 acres of land in Uttarpara, Kolkata. The project has 2343 units

RBI Monetary Policy: RBI keeps rates unchanged

Posted on by HomeCapital Team

Lower home loan interest rate was one of the major factors for pushing real estate sales in the last two-quarters of pandemic hit year i.e. 2020. The Reserve Bank of India keeps the repo rate unchanged in 2021 under new monetary policy, which means the home loan interest rates will remain unchanged this year also. While the majority of real estate players welcomed the move, the directive will help the home buyers also, especially the first-time home buyers due to subsidy under PMAY (Pradhan Mantri Awas Yojna).

Experts believe that the move by RBI was on expected lines and it will further help boost the confidence of new homebuyers, who would want to avail the benefits of reduced interest rates. The last few months also saw the launch of several real estate projects across major metropolitan cities, which is a positive sign for recovery in this sector. Real estate industry players also believe that while the while revival for the real estate sector is on the way these repo rates will also continue to remain unchanged even after the Covid-19 impact eases out completely.

Other measures by the Government to revive the housing demand  

  • The government’s decision to not levy any additional cess and tax, under new monetary policy, is also a relief for new homebuyers who are planning to buy a home in 2021.
  • RBI’s is also ensuring that banks and NBFCs (Non-banking Financial Companies) pass the rate cut benefits to customers with any lags.
  • To ease out the inventory and complete the stalled project the government has separately announced packages for real estate sector apart from undertaking the stalled project under NBCC (National Buildings Construction Corporation Ltd). Some of these projects are monitored by the Hon’ble Supreme Court.
  • The financial package announced by the Government will increase the liquidity in the real estate sector.            

Impact on the industry

Real estate sector growth also affects its 270 allied industries, right from cement, steel, hardware, paint, manufacturers of home utilities/equipment etc. This means that demand in real estate will also push the demand in other sectors as well, causing SME/MSME revival, job creation, and making the overall economic wheel move faster.  The estimates from fresh project launches and sales of houses in major markets also reflect a renewed confidence of new homebuyers and the sector players. A low repo rate, under RBI’s new monetary policy, will keep these upward tends to continue in near future as well.

The decision will also eradicate uncertainties in the markets. With rural and urban demand is on the rise, along with industry and markets are reviving, the momentum will support residential construction in the coming years. With massive vaccination drive is on its way, the problem with labor, skilled employees, and other manufacturing and transportation-related issues will vanish in coming months and all economic activities will resume at full scale. The severely hit sectors like education, hotel, travel, and tourism are also reviving at a fast rate, indicating a fats recovery in the overall economy and overall demand, which will make up for the lost jobs due to pandemic in 2020 and enhance the purchasing power of such individuals.         

How homebuyers will benefit?

The unchanged repo rate under new monetary policy helps banks and NBFCs to disburse more loans to home buyers, who are planning to defer their plan to buy a house for a year or two, will now prepone their date of home purchase. This will also give more liquidity into real estate sector in turn surge in demand. The call by the government for builders to offer unsold inventory has also clicked among the real estate players and saw an upward trend during festive season in late 2020.

In Addition, the controlled rate of inflation, which is below 6% for several years, is also a plus for home buyers.  Home loan rate of interests are significantly low with majority of banks giving home loan under 7% interest rates, which are not expected to change anytime soon, so it is a good opportunity for homebuyers to own a house. Though, there are less chances of any correction in repo rates and subsequent interest rates any time soon, but the incentives and offers made by the builders may go off the desk once the revival is visible and persistent. So, this is the right time for new home buyers to own their dream house as favorable times for hard bargain is here.     

As a facilitator in the home buying decision, HomeCapital has also been instrumental in offering financial support to first time home buyers. The company offers an interest-free unsecured personal loan of up to 50% of the down payment for first house purchase, which can be repaid in 12 EMIs.         

How did the real estate sector fare in the union budget 2021 – 22?

Posted on by HomeCapital Team

The Union Budget for 2021-22 has been recently presented and it lays a heavy emphasis on ‘Atmanirbhar Bharat’. Health, education, women empowerment, infrastructure development and youth employment opportunities are some of the notable sectors that have received special attention. Though there were fewer announcements for the real estate sector, it received some significant ones such as tax deduction on home loan interest, affordable housing, debt financing for Real Estate Infrastructure Trusts (REIT) and Infrastructure Investment Trusts (InvIT). Though the current budget is favourable for the Indian real estate sector as a whole, experts say it’s a mixed bag. So what did the real estate sector gain in the Union Budget 2021-22?

The good news

The government has prioritised ‘Housing for All’ and affordable housing to boost the real estate sector. This budget has granted Rs 54,581 crores to the Ministry of Housing and Urban Affairs to realise this objective. They are also proposing to increase the safe harbour limit for primary sale of residential units from the existing 10% to 20%. This move is expected to encourage buyers as well as developers to revitalise the real estate market.

Stressed Asset Resolution would be made simpler. National Company Law Tribunal framework will be made more robust, e-Courts will hear cases, and alternate methods of debt resolution will be introduced. Public sector banks with high levels of provisioning for stressed assets will get help in cleaning up their books. An Asset Reconstruction Company and an Asset Management Company would consolidate and take over their stressed debt. It will reduce the burden on banks and facilitate them to reduce the interest rates on home loans.

It is all a part of the government’s drive for affordable housing.

Affordable housing

The common man’s home buying aspirations have also received a boost in the budget. The government had announced an additional deduction of interest up to Rs 1.5 lakhs for a limited time in their July 2019 budget. It was available on loans availed for purchasing an affordable house. The budget announced the extension of this scheme until the year 2022. Thus, any home buyer applying for a home loan to purchase an affordable home before 31st March 2022 can avail of this deduction in the interest.

In addition to these incentives for buyers, the government will also extend the tax holiday for projects in the affordable housing sector up to 31st March 2021. It is expected to keep up a steady supply of affordable homes. The move has prompted some developers to consider entering into the affordable homes market. If it happens, it will revitalise home buying by offering more options.

Infrastructure development

One of the most crucial considerations of home buying is the quality of infrastructure around housing projects. The government plans to set up a professionally managed Development Financial Institution (DFI) to facilitate and enable long-term debt financing for infrastructure. They have allocated Rs 20,000 crores to capitalise the DFI.

Additionally, they are pushing to fast-track Metro projects in important cities such as Kochi, Chennai, Bengaluru and Nagpur. They plan on harnessing new technologies to develop Metros in Tier-2 cities that will offer the same experience, convenience and safety as the ones in Tier-1 cities, but with one crucial difference. The development costs will be much lower.

The infrastructure sector has been in a slump since the pandemic struck last year. This move, along with significant levels of investment will revive the sector and help it recover from the pandemic slump. The National Infrastructure Pipeline (NIP), announced in December 2019, had around 217 projects worth over Rs 1 lakh crore added to it. It will be a huge undertaking, but one that is vital for the economy in general and the real estate sector in particular.

Real Estate Infrastructure Trusts (REITs)

Now Foreign Portfolio Investors can be a part of debt financing of REITs and InvITs after the government makes changes in the relevant legislations. As a result of this, REITs and InvITs will get easy access to more funds, which in turn will mean more investment in real estate and infrastructure sectors. The budget also proposes to exempt dividend payments to REITs and InvITs from TDS for ease of compliance.

Even though the government had done away with the Dividend Distribution Tax in the previous budget, the dividend was still taxable. If dividend payments are exempted from TDS, it will encourage more investment. The advance tax liability on dividend payments was always an issue as shareholders could not estimate the amount of dividend income. As per the changes suggested in this budget, the advance tax liability will only arise after the payment of the dividend.

Expectations of the real estate sector

Even with all the good tidings that this union budget brought for the real estate sector, it stayed short of fulfilling its biggest wish. The real estate sector still does not get the status of an industry. This has been a long-standing demand of developers. The budget did not to touch upon some crucial topics such as single-window clearance and Input-Tax Credit benefits.

Industry insiders feel that these are crucial oversights but remain hopeful that the government will address these sooner rather than later. They feel these are important factors that could affect the overall pace of development if left unaddressed, especially as the sector is just recovering from the worst effects of the pandemic.

In conclusion

The union budget is clearly aligned towards affordable home buying. The government hopes to fulfil two purposes; reenergise the real estate sector, and make home buying more affordable for all. The latest measures will augment the previous ones like reduction of premiums, hiked differential and RBI’s rationalizing of risk weights. A boom in the real estate sector will have many indirect effects such as increase in employment and more work for other allied industries. But ultimately, it is the home buyer who will benefit the most from these changes, directly or indirectly.

An update of the Delhi NCR residential real estate market

Posted on by HomeCapital Team

Delhi-NCR is one of the largest real estate markets in India, which offers a varied mix of property segments and different micro-markets across the region. Despite an overall dip of 50% in overall sales in 2020 compared to 2019, the post lockdown period gave a much-needed push to the sector with 43% QoQ sales growth in Q4 2020, according to a report by JLL. The sales were pushed by the pent-up demand; festive season and discounted rates; low rate of interest on home loans; and need for larger homes to accommodate the WFH and Kids’ online classes.   

An overview of the Delhi NCR residential real estate market

A report by Knight Frank India, most of the homebuyers preferred plots, near completion properties, and ready-to-move inventories in Delhi-NCR real estate markets. The reduced home loan interest rates and lower prices of property also enhanced the Delhi-NCR’s affordability index to 38% in 2020 from 64% in 2011. After lockdown restrictions were eased and site visits resumed, the Q3 2020 sales recovery increased up to 57% and rose to 90% in Q4 2020, as compared to quarterly average sales in 2019.

Greater Noida and Noida saw about 33% residential project launches in Delhi-NCR, with Greater Noida West, Yamuna Expressway and Noida – Greater Noida Expressway being the major locations for homebuyers as well as new project launches. The twin city of Noida-Greater Noida also sold over 50% of total residential units in Delhi-NCR, which is a positive sign for the real estate sector in 2021. Most of the units sold were ready-to-move properties priced under Rs. 50 lakh.

For Noida, Greater Noida, Yamuna city region, the newly launched projects including Data Centre Park, Film City and Noida International Airport will give significant boost to residential real estate market of this region apart from reviving investors’ sentiment. The extension of metro route to these newer locations is also making future investment scenario very promising.   

Gurugram stood on second position in terms of unit sales accounting for 29% of total residential unit sales in Delhi-NCR in the year 2020, despite a decrease of 18% compared to 2019 sales estimates. Developers in Gurugram are also expanding their portfolio towards plotted developments, mid-income housing and low-rise housing societies to fuel the renewed consumer demand. The remaining markets comprised of Ghaziabad, Noida and Faridabad contributed to 16%, 14% and 2%, respectively.

According to a report by Anarock Property consultants, Delhi –NCR saw total launches of 6810 units in 2020 with 5200 unit sales realizing at an average basic sale price (BSP) of 4580 psf. The unsold inventory in entire region remains at 172630 units. Another plus point from residential real estate market sales in 2020 remains reduction in unsold inventory, which reduced by 9% from 2019 levels.  

Micromarkets of Delhi-NCR

New Gurugram

New Gurugram, including Dwarka Expressway, Golf Course Extension Road and Golf Course Road, attracted most of the buyers in 2020 with over 80% sales across Gurugram. Another metro corridor, which is planned between Gurugram and Faridabad, is also going to boost housing property segment in future.  Average BSP offered in this region was Rs. 6100/- psf.   

Greater Noida West

Best known for affordable housing segment with proximity to Noida and Ghaziabad, this region attracts mid segment buyers who are looking for affordable homes, mostly end users. Upcoming commercial space, proposed metro line and ready to open Delhi Meerut Expressway (DME) also make this location very promising for home buyers. In this region average BSP was around Rs. 3470/- psf.         

NH 24 Ghaziabad

Widening of NH 24 and newly constructed DME has fueled the demand for housing projects across this highway belt. People who were avoiding this location due to congestion on NH24 are now opting for homes across the widened highway that gives swift connectivity to Delhi, EPE, and Noida.  Projects in this location were offered at an average BSP of Rs. 3420/- psf.

Raj Nagar Extension

Construction of flyover at this junction at NH58, RRTS and Hindon Elevated road have removed many hurdles of connectivity and congestion for this location. Affordable rates also attract lots of homebuyers to this area, which stood at a BSP of Rs. 3260/- psf.

Sector 150 Noida

Located along Noida – Greater Noida Expressway, this sector is surrounded by corporate hubs and SEZs with Metro connectivity and direct access to Taj Expressway. Better prospects for jobs and well developed infrastructure have made this location a preferred choice for most of homebuyers. The sector also has some premium projects in its vicinity along with mid-income units that are being offered at an average price of Rs. 5100/- psf.   

The prices during last quarters of the year 2020 remained stable across Delhi-NCR and various micromarkets. The prices are expected to remain unchanged over next few months as some infrastructure projects are underway. But, once all major projects (including Road, Rail, Metro and commercial projects) will near completion, the prices will soar for sure. So the year 2021 is a good time to buy property in upcoming micromarkets.

Lower property prices, attractive home loan rates, and discounted schemes are favoring the buyers at present. This seems to be a good period to buy a new one or upgrade the existing residential unit. Though, some prospective buyers might may not have adequate initial capital to buy the one, especially the young professionals. For such individuals HomeCapital offers support to purchase their first home with interest free unsecured personal loan of up to 50% of the down payment, which can be repaid in 12 EMIs.       

Ongoing projects in New Gurugram:

There are some great upcoming housing projects in New Gurugram which have nice location and offer better prospects to residential market investors.

Some of these are:

  • Godrej Nature Plus in Sohna, Gurugram – is nestled in the lap of greenery and fresh air.  The project is spread over 15.59 acres and has 70% open space.
  • Godrej Air in Sector 85, Gurugram – is spread over a total area of 10.04 acres of land and has a total of 5 towers. The project has every care taken to offer enriched air quality. Be it inside or outside the house, every breath taken will be filled with the freshness and goodness of purifying plants and the aroma of flowering trees.  

An overview of stamp duty and registration in Mumbai

Posted on by HomeCapital Team

Buying a new property is a step-by-step process and involves many expenses that are not apparent upfront. Stamp duty and registration charges are one such expenditure. Buyers must factor in all the allied costs, before moving ahead with a property purchase plan. Hence, they must know how much money is to be paid during property registration.

Stamp duty is a tax levied by respective state governments on the purchase of any immovable asset within India under section 3 of the Indian Stamp Act, 1899. Just physical possession of a property is not considered legal ownership. The property must be registered in your name to be considered legally yours.

Stamp duty on property purchase in Mumbai

Owing to the pandemic, the Maharashtra government, on August 26, 2020, lowered the stamp duty on property purchases across the state, albeit for a specified period. This was targeted to provide an impetus to the housing sector.

The state had lowered the stamp duty rates by 3 % up to 31st December 2020 and by 2% up to 31st March 2021. The stamp duty rates on property purchases had decreased to 2% from 5% till December 31 2020, currently stands at 3% from January 1, 2021 to March 31, 2021. Thus, these rates will be effective only for a seven-month period, after which the standard 5% stamp duty will be applicable.

In March 2020, the Maharashtra government had reduced the stamp duty by 1% in Mumbai and Pune, making this the second instance of reduction in stamp duty.

Stamp duty rate till December 31, 2020Stamp duty rate from January 1, 2021 to March 31, 2021Stamp duty after March 31, 2021
2%3%5%
Stamp duty in Mumbai

Property registration charges in Mumbai

Registration charges on residential properties are INR 30,000 on properties over INR 30 Lakh. In the case of properties priced below INR 30 Lakhs, they have to pay 1% of the property cost as the registration charge. Thus, the registration amount is capped at INR 30,000 for residential properties in Mumbai.

How is the stamp duty rate calculated in Mumbai?

Stamp duty that is payable is based on the agreement value as specified in the sale agreement. The property cannot be bought or sold 20% below the prescribed ready reckoner (RR) rates. The government had doubled the differential and raised it to 20% for new homes valued at up to ₹2 crores. This measure is in place till 30th June 2021. This means, the property value must be calculated based on the current RR rates and the stamp duty must be calculated accordingly. In case, the house is being registered at a value higher than the RR rate, the buyer will have to pay the stamp duty on the higher amount. If the property is being registered at a value less than the RR rates, the stamp duty will be calculated according to the RR rates.

How is stamp duty calculated?

With the differential now doubled, developers can now sell their properties at 20% lower than the area’s RR rate without incurring additional tax burden. Let’s take the case of a property with a carpet area of 1000 sq ft where the circle rate is INR 7,000 per sq ft. The RR-based value of the house would be 1000 x 7000 = INR 70 lakhs.

In case the property is registered at the value of Rs 70 lakhs, the buyer will pay 3% of this amount as stamp duty, i.e., INR 2,10,000.

Now, the property may also be registered at INR 65 Lakhs which is an amount lower than the RR based value. In such a case, the buyer will have to pay 3% of Rs 70 lakhs towards stamp duty.  This is as the property cannot be registered below the RR rate. Now, suppose the property is being registered at Rs 75 lakhs, the buyer will have to pay 3% of INR 75 lakhs (INR 2.25 Lakhs) towards stamp duty.

How to pay stamp duty to the government in Mumbai?

Due to the benefits and convenience of digitalization, we’ll look at how homebuyers can pay stamp duty and registration charges online through e-stamping. The payment can be done online through the Maharashtra stamp and registration departments, Government Receipt Accounting System (GRAS).

Homebuyers would need to log on to https://gras.mahakosh.gov.in/echallan/# and provide all the property as well as personal details. Post that they can make the payment online.

Here is a step-by-step process to pay stamp duty charges:

Step 1: Select ‘Inspector General of Registration.’ In case you are not a registered user, select the ‘Pay Without Registration’ option. A registered user can proceed by entering their login details.

Step 2: Suppose you choose the ‘Pay Without Registration’ option, a new page would appear where you have to click on ‘Citizen’ and select the type of transaction.

Step 3: Select ‘Make Payment to Register your Document’. You have the option to pay stamp duty and registration charges together or separately.

Step 4: On choosing any of the displayed options, key in the required input fields to proceed. The details required mainly include district, the sub-registrar’s office, property details, transaction details, etc.

Step 5: After selecting the mode of payment and adding your payment details, proceed with the payment. Post this, an online receipt will be generated. This is a document indicating that you have successfully paid the stamp duty and must be presented at the sub-registrar’s office at the time of the property registration.

An update of the Kolkata residential real estate market

Posted on by HomeCapital Team

Kolkata is one of the seven leading real estate markets in India with potential investment zones at each coordinate. The 3rd most populous city of India has five major real estate micro-markets where key pockets are witnessing significant growth in residential projects. 

Rapid corporatization is attracting more and more job seekers into Kolkata’s industrial hubs, giving a boost to the real estate sector in the city across major locations. Buyers hailing from diverse socio-economic backgrounds are looking for both luxury and affordable residential properties. The preferred choice for owning a compact and affordable home is 2 BHK flat with more than 50% demand is for a 1000 sq ft apartment, while demand for a 3 BHK is close to 42%. 

Various zones in Kolkata including South, East, West, Central, and North offer a range of affordable housing projects with ample connectivity, employment hubs in the vicinity, and efficient local transport including existing and developing. Some 2 BHK apartments are priced as low as INR 20 lakh, while bigger sizes are available under INR 50 lakh, depending up the location and the project.  

ZoneArea
SouthNarendrapur, Joka, Garia Baruipur, Tollygunge Alipore, Sonarpur
EastEM Bypass, Rajarhat, New Town Tangra, Salt Lake City
WestHowrah, Maheshtala , Andul Kona, Expressway , Makardaha 
CentralKankurgachi, Machuabazar Entally, MG Road
NorthBarasat, Madhyamgram BT Road, Uttarpara Serampore, Dum Dum
Major real estate development area in each zone

South Kolkata has plenty of land for the mid-segment residential projects, which is popular for its employment hubs along with upcoming metro connectivity. Joka area is a hotspot in the South zone while Sonarpur is also witnessing good residential activities to make it a promising future investment hub.       

East Kolkata is emerging as an IT and corporate hub that also houses various shopping malls, restaurants, educational institutes making it a favorite place to reside in with Salt Lake, New Town and Rajarhat top the demand chart.       

West Kolkata houses cities old and well-established civic and social infrastructure. Howrah still charms homebuyers, which will be soon connected by the underwater metro East-West corridor.    

North Kolkata has a well-developed infrastructure with major localities including Uttarpara, Barasat, and Dum Dum. The zone has some key commercial centers in its vicinity and soon will have airport connectivity via Metro rail.       

What actually drives the real estate market in India is a combination of multiple factors including low home loan rates, falling property prices, and rising middle-class income slabs (Excluding the pandemic period). The banking and financing institutions are transferring the home loan interest rate cut benefits to the customers, which is pushing the real estate sales.   

In addition, the affordability for buying a house has also increased significantly in the past decade. Even in 2020, the pandemic hit year, the affordability has increased despite a huge reduction in annual household income due to a lower home loan interest rate of around 7%. Eligible household income, the minimum household income to qualify for a home loan to purchase a 1000 sq ft flat, has grown in past few years.

An overview of Kolkata’s residential real estate market

According to a research report by ANAROCK, Kolkata realty sector has launched 1,350 units in Q3 2020, an increase of 24% over Q1 2020 or pre-Covid levels. The data shows that the city posted the second-best recovery among top realty markets in the country. From sales recovery point of view, the city’s realty sector up by 66% in Q3 2020 over Q1 2020, registering a sale of 1650 units.

Out of the total launches in Q3 2020, North and East Kolkata saw 56% and 22% unit launches, respectively. More than 50% of units come under the affordable category, while more than 20% of units are in the middle segment. East and South Kolkata pushed the sales in Q3 2020, accounting for 33% and 36% of total unit sales, respectively. Despite the sales growth and reduction of 2% in unsold units, the unsold inventory remains at 42,650 units with the majority of them being in the affordable category at 66%.

What favors Kolkata real estate market?

Kolkata has registered 100 point growth on Home Purchase Affordability Index (HPAI), which is best across all promising real estate markets in India. In 2020, Kolkata has overtaken Hyderabad for being most affordable residential market in the country. The ongoing economic revival, corona vaccination, and construction activity resuming in full swing will boost investors’ confidence in the real estate sector.   

Kolkata is the only real estate market in the country that has registered up to 8% price rise for residential properties in 2020. The trend reflects a smart strategy adopted by major developers to focus on the affordable segments. The trend will pick up in the coming one to two years. Residential real estate will be a good investment option in Kolkata in 2021 with lower home loan interest rates is a plus. The two most promising projects including Shriram Sunshine One in Uttarpara; and Godrej Seven at Diamond Harbour Road offer the best value for money to homebuyers.  

Buying a home is considered the safest and wisest investment, especially since property negotiations favor buyers right now. However, the lack of savings is affecting first-time home buyers. The majority of them are young professionals. While a bank might lend you a home loan for part of the amount you need to buy a house, you would still have to come up with a certain amount yourself. If dipping into savings isn’t appealing, HomeCapital can help you purchase the home you always desired by providing an interest-free unsecured personal loan of up to 50% of the down payment. This can be repaid in 12 EMIs.

Ongoing Projects in Kolkata:

There are some great upcoming housing projects in Kolkata which has an amazing residential market. Some of these are:

  • Godrej Seven in Joka – is spread over a total area of 10.23 acres of land and has a total of 7 towers. It is well-connected to the rest of the city by the Diamond Harbour Road and James Long Sarani – the two major roads of South Kolkata.
  • Shriram Sunshine One in Uttarpara – is an upcoming affordable housing project in West Kolkata by Shriram Properties. It is a part of Shriram Grand City, spanning across 314 acres, and has 78% of open space.

Maharashtra’s real estate development premium’s cut by 50%, homebuying will now be more affordable

Posted on by HomeCapital Team

There’s good news if you’re looking to buy a home in Maharashtra. In a bid to boost homebuying, the state government has reduced the development premiums by 50%! This latest announcement, coupled with the previous cuts in stamp duty, will surely encourage more home buyers to step up and fulfill the lifelong dream of buying a home. The move is expected to benefit developers and new home buyers without significantly impacting the government’s revenue stream. As of now, Mumbai has the highest number of premiums that a real estate developer has to pay to the government. Construction premiums are paid by the developers to various government bodies including local municipalities and environmental regulatory agencies for additional building space. These premiums add to the burden of developers, and increase the development costs, which are then passed on to the home buyers.

What are these premiums that developers have to pay?

Currently, developers in Mumbai have to pay 22 premiums to avail additional buildable area, which is a significantly higher number when compared to other major cities. For instance, Bengaluru has 10 premiums, Delhi has five and Hyderabad has three. These premiums are divided under various heads which include the floor space index (FSI), lobbies, lift well, and staircases. These premiums are to be paid to the city’s municipal corporation.

All together, these payments account for almost 25-33% of the overall project cost. That’s a big amount, considering the costs of these projects. Ultimately, it inflates the home prices, and these additional costs are borne by the home buyers. With this new concession, developers stand to save almost 12-17% in overall project costs. It is also expected to boost developers’ execution capacity and enable them to launch and complete more projects. And it will even mitigate the issue of project delays.

But perhaps more importantly, this move will rejuvenate homebuying as developers will pass on their savings to their customers.

What does this mean for new home buyers?

The first and foremost effect of this move on homebuying is the reduction in development costs. When developers have to pay less for their projects, they charge less from the customers. We can expect reduced property rates for residential projects which will drive the demand for new homes. The stamp duty in Mumbai is already slashed to 3% up until 31st March 2021. The reduced premiums will stay in effect until 31st December.

For new home buyers this is a chance to realise their homebuying dream. It not only increases their purchasing power but also opens up more choices for them. They can either choose to upgrade their home buying plans and opt for a bigger home or take advantage of the reduced prices and reduce their home loan burden by paying a higher down payment. Either way is a win-win for those looking to buy a new home.

Speaking of down payment…

Other than considerations like the area, price and size of the new home, the amount of down payment is an important consideration for new home buyers. A buyer’s earning capacity decides the amount of home loan they can avail. This in itself is a big commitment that has to be fulfilled over a long period, up to 25 years in some cases. One way of reducing this load is to pay a higher down payment. When you pay more money up front, you have a couple of choices.

  1. You can either reduce the tenure of your home loan, or
  2. Reduce the amount of EMI you pay every month

Different home buyers will opt for different benefits, depending on their needs. It will reduce their burden either ways.

And they can further choose to get assistance on their down payment with HomeCapital’s Home Down Payment Assistance Program. HomeCapital offers up to 50% of a home’s down payment amount as an interest-free loan. It can be paid back in 12 monthly EMIs over a pre-determined period. This enables home buyers to reduce their financial burden to an appreciable degree. When you combine all these latest relief measures, it translates into significant savings for you. If you were on the fence before, this the perfect time to get down on the right side and buy yourself the home of your dreams.

Understanding home loan eligibility for a smooth home buying process

Posted on by HomeCapital Team

A home loan is a borrowing tool with attractive interest rates used by a majority of Indian home buyers. Apart from low-interest rates, a home loan offers other benefits like tax savings, managing liquidity and opportunity for future savings. And whether you have enough funds or not, understanding the home loan process and its services a must for a smooth sail home buying experience. The first step in this regard is understanding the home loan eligibility. Before considering a home loan, one needs to determine their eligibility which is nothing but your repaying capacity. Understanding your eligibility criteria helps you determine loan affordability and helps you manage your funds assertively.

Factors affecting home loan eligibility

While home loan prerequisites are often lender dependent, there are some universal determiners for calculating it:

  • Age: The minimum age to apply for a home loan is 18 years, and the maximum age at the time of maturity should be 65 years. Age often is the determining factor for the home loan tenure. The full loan term is usually 30 years; thus, lenders often cap the age of retirement as the maximum age limit. However, the longer the tenure, the lower will be the EMIs for a given loan amount and interest rates.
  • Financial position: A borrower’s monthly income is a determiner of how much EMI can they afford. Monthly pay is an indicator of how much surplus a prospective borrower makes to repay his/her EMIs with all other financial commitments in scope. For many lenders:
  1. Salaried Employees: Salaried individuals should have a minimum of 3 years of working experience and a minimum salary of ₹ 25,000 per month for eligibility.
  2. Self-Employed: For self-employed borrowers, the business should be running for a minimum of 5 years period with a minimum business income of ₹ 5 Lakh p.a.
  • Prior Loan Commitments: Borrowers current financial liabilities impact their home loan eligibility. For instance, you may not be eligible for a home loan if your current liabilities exceed 50% for your current monthly income. A higher debt-to-income ratio means that a considerable portion of your salary is paying off existing debts and decreases your chances for a home loan.
  • Credit Report: Just like your income reflects how much loan you can afford; your credit score reflects your creditworthiness. It is a major deciding factor for procuring a home loan. A credit score of 700 and above is considered suitable for home loan eligibility. In short, it the closer it is to 900, it increases your chances of loan approval.
  • Regulations: As per RBI guidelines, the Loan-to-value ratio on a home loan cannot exceed 90% of the property’s value. It is an indicator of the upper limit of home loan you can avail on the property you are interested in buying. Understanding the loan-to-value ratio can help you plan your down payment well in advance and increase your overall eligibility for a home loan.

Checking your maximum loan eligibility

Wondering how much home loan can you avail?

Let’s understand this with an example.

Every bank has its prerequisites for offering home loans. The home loan amount is based on the Fixed obligation to income ratio – FOIR or Loan to value – LTV (whichever is lower is considered to determine the home loan amount). Let us consider the FOIR to be 50% and LTV to be 90%, for a property with an agreement value of ₹ 90,00,000. Considering that you have no other obligations and you have a monthly salary of ₹ 75,000, then the maximum amount you can pay each month is ₹ 75,000*50% = ₹ 37,500. If the tenure for home loan is 30 years, then as per the FOIR, your loan amount = ₹ 37,500*12*30 = ₹ 1,35,00,000. However, LTV is ₹ 90,00,000*90% = ₹ 81,00,000. So, the home loan you can get on ₹ 75,000 salary is ₹ 81,00,000. (depending on your lender’s conditions).

Before availing of housing finance, you must remember that your EMIs must ideally not be above 45-50% of your net take-home salary to avoid any financial stress.

It is also helpful to remember that the larger amount of down payment you make, the lesser is the home loan amount. So, it is best to pay up about 20% of the property value as a down payment. This also enables you to improve your home loan eligibility. In case, the required down payment is a challenge, you can always approach HomeCapital, India’s first Home Down Assistance Program, and get 50% of the down payment amount at zero interest rate.

Final Home Price Decoded for Home Buyers

Posted on by Pradumna Kamani

Everyone has dreamt of a perfect home at some point in their lives. But to get there, it takes meticulous research and planning. A vital part of home buying research is to understand the components of your final home price.

One may tend to consider the base home price of the house and might end up neglecting a host of other expenses. It puts a spanner in the wheels since the actual amount required to own a home is much higher than quoted by the developer. Let us break the costs down and understand the components of the final home price.

Agreement Value:

The agreement value is the primary cost of house. It consists of the basic cost charged by the developer. Let’s look at the break up in detail.

Consider a 2 BHK apartment on the 1st floor with a carpet area of 622 sqft in Thane. It is due for possession in December 2023. Considering the cost per sqft of the property to be ₹ 18,000, the agreement value would be ₹ 1,15,07,000.

Basic cost of apartment on 1st floor = 18,000*622 = ₹ 1,15,07,000

This is the basic cost of the house, basis which the other charges are calculated. It has various components like car parking, floor rise charges, and preferred location charges(PLC). Floor rise charges are for the floor you have selected. PLC comes into the picture when a particular unit is chosen based on its location like sea/park facing, corner, east-facing, etc. The floor rise charges are usually included in the agreement value. Considering a floor rise charge of ₹ 200 per sqft and the apartment to be on the 5th floor, the agreement value of the apartment would be ₹ 1,21,29,000.

(A) Basic cost of apartment on 1st floor + (622*200*5) = ₹ 1,21,29,000

The super built-up area consists of individual components like carpet area, shared spaces, and the external wall thickness. A buyer should understand the concept of the super built-up area before negotiating the prices. The carpet area is the actual area that a homeowner will use. It is exclusive of the wall thickness or any open space like a balcony. Shared spaces are the area the homeowner shares with other homeowners like a shaft, corridor, etc. 

Taxes on Home Buying:

There are various statutory fees that one needs to pay the government while buying property. They are categorized as follows.

  • Stamp Duty

This is a onetime amount levied by the state government upon processing the sale deed. Stamp duty charges may vary from state to state. They range from anywhere between 2% – 7% of the property value. Stamp duty also varies based on gender. To promote female property ownership, some Delhi offers a 2% cut for women buyers. Calculating 3% stamp duty on the property, the amount payable to the government is ₹ 3,63,870.

Stamp Duty = 3% * 1,21,29,000 = ₹ 3,63,870

  • Registration Charges

A majority of states levy 1-2% of the agreement value or ₹ 30,000 (whichever is lower) as a registration fee for registering the house with the government. Haryana, on the other hand, charges a fixed amount irrespective of the property value. Registration charges towards the property taken into consideration is ₹ 30,000.

  • Goods and Service Tax (GST)

GST has to be paid only on the under-construction properties. After its rollout in 2017, all other taxes like Sales Tax, VAT, etc. have been subsumed by GST. The same has significantly reduced off late based on the home price. A house below ₹ 45 lacs attracts 1% GST, and anything above that attracts 5% of the home price. GST is payable on every instalment. Based on the above example, the amount of GST payable to the government is ₹ 6,06,450.

GST payable = 5%*1,21,29,000 = ₹ 6,06,450

(B) Total Taxes paid = ₹ 3,63,870+30,000+6,06,450 = ₹ 10,00,320

Miscellaneous Charges, fees and costs

  • Building Maintenance charges

An advance on the amenities provided like common-area lighting, parks and recreational area maintenance etc. collected on a periodical basis which is taxable under GST. Once the society welfare association is formed, it is their responsibility to take care of the society maintenance.

  • Sinking fund and Campus corpus fund

Sinking fund is the money set aside by the society for future insurance for heavy-duty repairs, structural changes etc. in the farther future. Campus Corpus fund is set aside for the development of common recreational facilities. Both are usually onetime charges.

  • Charges/fees by external entities

Legal fee for the home agreement, sale deed registration is an additional charge. Some more expenditure, like document handling charges and Memorandum of Deposit of Title Deed (MODT) charges, should also be planned.

  • Interior Costs

When one buys a house, it usually lacks basics like woodwork, painting, furniture etc. which make the house inhabitable. Such expenditures need to be planned for in advance as they have no limit.

  • Infrastructure development charges:

To make your house habitable, it needs basic amenities like water, sanitation connections. Also, the developers have to cater for sewage treatment plants, water treatment plants, fire fighting equipment and other facilities. All these necessities fall under infrastructure development charges. The homebuyer will have to pay for their electricity connection to the electricity board.

Let us consider the following miscellaneous charges:

  • One time clubhouse charge towards membership – ₹ 2,00,000
  • Society Formation Charges – ₹ 5,000
  • Legal Expenses – ₹ 40,000
  • Electric Connection Charges – ₹ 30,000
  • Water Charges – ₹ 15,000
  • 12 months advance Maintenance Charges – ₹ 72,000
  • Infrastructure Development Charges – ₹ 1,56,000
  • Pipeline Gas Connection – ₹ 15,000

(C) Total miscellaneous Expenses = ₹2,00,000+5000+40,000+30,000+15,000+72,000+1,56,000+15,000 = ₹ 5,33,000

Total cost of the house (A) + (B) + (C) = ₹1,21,29,000 + 10,00,320 + 5,33,000 = ₹ 1,36,62,320

In conclusion, it is advisable to budget for all the components of the final home price by doing thorough research so that one doesn’t face any surprises on the way to realising the home buying dream.

Benefits of having a co-applicant while buying your first home

Posted on by HomeCapital Team

Purchasing a home is a huge decision, and most often, it is a joint decision of the family, especially a husband and wife. It holds as much an emotional value as it has an economic relevance. Thus, joint ownership of a house is the best bet. It not only increases the emotional bond of possessing something together but also gives some great financial benefits. Let’s have a look at all the reasons for adding your spouse as a co-applicant while purchasing a home.

1. Stamp Duty

Adding your wife’s name as the first owner of the property helps in the reduction of stamp duty, which is quite a sizable chunk of the total home amount. This has been done to encourage an increasing number of women to own property. 

In fact, in many states, the stamp duty amount for registering a house is much more for a male than a female. For instance, in Haryana, a woman has to pay 6%, while a man has to pay 8% stamp duty. Similarly, in Delhi, a woman pays only 4%, but a man pays 6%. However, if the property is owned jointly, they have to pay 5%.

2. Ease of getting a home loan

One of the most significant advantages of having a co-applicant in buying a home is to apply for a joint loan. For instance, if both the husband and wife are working, the lender will consider the co-applicant’s income separately while assessing the repayment capacity, which will help get a higher loan amount. Thus, you can buy a bigger house in your preferred location.

Also, if you have a woman co-applicant for the loan, the interest rate would be a few basis points lower than the standard home loan rate. However, to avail this benefit the woman might be required to be both the co-owner of the property and the co-applicant of the home loan.

3. Repayment of loans

Repayment of loans becomes more comfortable and faster if two people are repaying the EMIs. This also offers better terms of the loan for the borrower. For instance, the larger amount of down payment you make, the lesser is the home loan amount. So it is best to pay up about 20% of the property value as a down payment. This becomes possible when there is a joint loan and two earning members to pay for the down payment. 

Suppose payment of the down payment is a challenge. In that case, you can always approach HomeCapital, India’s first Home Down Assistance Program (DPA), and get 50% of the down payment amount at zero interest rate.

4. Tax Benefits

In addition, taking a joint home loan will give you double tax benefits as both entities will get benefits from the home loan, provided they are the co-owners of the property. However, these tax benefits will be in proportion to the contribution towards repayment of interest and principal.

Under section 80C of the Income-tax Act, the overall tax exemption for home loans is Rs 1.5 lakhs towards the principal, and under Section 24(b) of the Act, up to Rs 2 lakh annually can be saved towards the interest paid for the home loan. With a joint home loan, you can claim this tax deduction individually, as per the ownership share.

5. Ease of succession of property

Joint ownership of property is great in terms of succession. Legally, the co-owner (which is usually the spouse) will not have too much trouble in claiming rights on the property in case of the partner’s demise. It also saves money involved in the transfer. It will only need you to do a fresh registration of the property in the co-owner’s name.

On the other hand, in the case of single ownership, succession can be time-consuming and difficult. Often unethical means are used to claim the property by people.

Conclusion

Buying a home is a dream of most people, and a lot of emotions are involved in it, but it needs to be a prudent decision too, as a lot of money is spent on this venture. Having a co-applicant for buying a new property fulfills both these desires. So go ahead and pick up the house of your choice with your partner and take advantage of all the financial benefits.