Property Prices In Mumbai Expected To Increase As The Ready-Reckoner Rates Shoot Up

In Mumbai, where property prices are already higher in comparison to other markets, a dream home is becoming a rather expensive dream day by day. The sharp rise in the ready-reckoner (RR) rates set by the government is likely to make real estate in Mumbai more expensive.

Last week, the state government increased the ready-recknon werates, with the highest increase being 30-40% in some of the fastest growing suburbs of the city like Worli and Bandra-Kurla Complex. However, the average hike is between 15-20%. Delhi faced a similar situation in September last year, when the circle rates were increased by 20 percent.

To get a better insight on the consequences of this rate increase, let us understand the concept of ready-reckoner rates in detail:

What are Ready-Reckoner Rates?

Published and regulated by the respective state governments, ready-reckoner rates are set to determine the stamp-duty to be paid to the government for a property transaction, residential or commercial. These rates are revised on annual basis. They differ from state to state and can also differ from locality to locality in the same city. Ready-reckoner rates are known as ‘circle rates’ in Delhi and ‘guidance values’ in Karnataka. The home buyers have to pay the stamp duty on the ready-reckoner value or on the property’s actual value as mentioned in the agreement, whichever is higher.

For example- If the property price mentioned in the agreement is Rs. 75 lac, whereas the ready-reckoner (calculated on carpet area basis) amounts to Rs. 55 lacs, the buyer will have to pay the stamp duty on the property price as it is higher than the RR.

It also has an effect on other taxes like VAT, registration charges and sales tax.

How the Ready-Reckoner Rates affect property prices?

Setting and revising a ready-reckoner rate is important for the governments as a major portion of their revenue comes from stamp duties. An RR rate set for a property by the state government defines its fair value. A ready-reckoner rate, when published by the government, becomes the floor price. And according to the rules of the Income Tax Act, if the property is sold below the ready-reckoner rates, the difference between the selling price and the ready reckoner price is considered as black money. This is why the builders will not sell below this price, nor will the buyers pay less. The differential price is considered as the builder’s business income and also added to the income of the buyer. So, if the seller is an individual, he will have to pay capital gains tax on this amount.

In an upward trending market, the real estate prices are higher than the RR rates. However, in regressive situations like what is prevalent nowadays, high RR can be catastrophic. If the builders in Mumbai and other cities try to maintain the existing profit margin, they will have to increase the price of their product. It will further dampen the demand for real estate.Since the property taxes are also calculated on the basis of these market rates, it is a double whammy for property owners.

5 Best Interactive Activities to Engage Kids in an Apartment Society

Be it a festival or a celebration there is nothing better than seeing kids spending some quality time in creative activity in your apartment society. Often, societies organize activities without keeping in mind the children of the society. Hosting fun and interactive activities for kids in an apartment society is a great way to build a child’s personality and strengthen the bond of community engagement.

Keeping in mind the importance of giving a break to the kids from their hectic schedule devising fun activities which can motivate them can be challenging. Fortunately, there are simple ways to organize fun activities and keep kids in the society busy and content. Here are top 5 activities which fall in this bucket.

Story and Essay Writing-For most kids, literacy begins at home with a crayon. Children should be encouraged to write stories and articles related to contemporary as well as topics of historical importance. The best articles can be published and circulated by the apartment societies as a monthly newsletter.

Sports tournaments-Fewer kids are taking part in sports these days, with television, computer and video games taking precedent in many households. In return, we are getting a generation which is introvert, unhealthy and obese. Simple sports like running, cricket matches, football and badminton matches can be organized to boost their self-confidence.

Planting trees-As kids love getting dirty, gardening and other tree planting activities can be fun. It is educational and kids can learn to appreciate nature around them. Chances are, apart from being just an activity; kids can develop curiosity and learn new landscaping techniques, harvesting and decorating their own garden. Apartment societies need to keep it simple and use light weight easy to handle gardening tools.

Interactive games and Craft sessions-Interactive and craft sessions play an important role in polishing hidden talent in children. Kids should be encouraged to take up drawing, coloring, pottery, origami, collage making which will provide them a platform to showcase their talent and boost self-confidence. Apartment societies can also organize productive activities like candle making, basket and mat weaving for kids which can be later put on exhibition in apartment premises.

Playful and innovative constructions - Literally, everything becomes fun when it is executed in a playful manner. Not many kids know to construct miniature mud playhouses, small animal shelters, so apartment society can organize such sessions and can inculcate learning at an early stage.

HOW & WHEN SHOULD YOU START PLANNING FOR BUYING A HOME?

Buying a home is tricky as you have to work out the payment schemes a couple of years before you actually down pay on property in India. The real estate market has a lot of offers which ease the burden of payment for homes yet you need to think in advance.

There is no fixed age or time as to when you should jump into the property market. If you have the resources, then buying a home is always a good option. Not only does it offer you a sense of belonging and security, but owning multiple homes also acts as an investment avenue. The planning bit is actually more important than simply having the desire to buy a home.

            As soon as you become independent, you should start planning for buying a home. A person’s starting salary is never too high which is why spending it needs to be careful. For instance, if your starting salary is around Rs 25,000 at age 23, then it would take you almost 7 years to be able to buy a house which costs around Rs 50 lakhs or so. To save the amount for down payment, you have three to four years almost.

There are quite a few debt linked savings schemes such as recurring deposits and debt linked mutual funds that are secure and can be pulled out from quite easily. The interest rates offered are healthy and you can save a part of your salary in them. Ideally, you should have 70 to 80 percent of your salary in equity linked mutual funds and have the rest in cash and debt linked plans.

Once you have reached a position to be able to pay the down payment and continue paying the EMI on your home loan, you should start looking around for good home loan schemes. Duration of home loans is usually 20 to 30 years and requires collateral to be deposited with the bank. You can opt for a flexible or fixed interest rate plan depending on the home loan term. The real estate market in India has been modified to the extent that some builders are offering to pay the EMI of your home loan till you possess the property and you should consider such options too. Compare the policies offered by different banks to see which one offers the most competitive interest rate for property in India.

To get your home loan processed quickly, reduce the number of outstanding uncovered loans (personal loans and credit card). Furnishing your CIBIL credit history is a good idea because banks accept it as a sign of a credit worthy customer. If your score is more than 75, then you stand to get swift approval and a good interest rate.

It is better to have a home loan approved in your kitty before you start hunting for properties as it can take a couple of months. Armed with the finances needed, you can start looking for your dream home. 

India eases FDI rules for construction sector

Aimed at attracting foreign investment into the realty sector, government today relaxed rules for FDI in the construction sector by reducing minimum built-up area as well as capital requirement and easing the exit norms.

The revised norms relating to Construction Development Sector, which were earlier approved by the Cabinet, have been notified the Department of Industrial Policy and Promotion (DIPP). India allows 100 per cent FDI in the sector through automatic route.

In view of depleting FDI inflow in construction and real estate sector in last couple of years, the government has reduced the minimum floor area to 20,000 sq mt from the earlier 50,000 sq mt. It also brought down the minimum capital requirement to $5 million from $10 million. 

In case of development of serviced plots, the condition of minimum land of 10 hectares has been completely removed, said the Consolidated FDI Policy Circular 2014. 

Although 100 per cent foreign direct investment was allowed in townships, housing and built-up infrastructure and construction developments since 2005, the government had imposed certain conditions. 

Government expects the new measures would result in enhanced inflows into the construction development sector. The sector is also likely to attract investments in new areas and encourage development of plots for serviced housing given the shortage of land in and around urban agglomerations as well as the high cost of land. 

The measures are also likely to result in creation of much needed low cost affordable housing in the country and development of smart cities. 

The new policy has also done away with the 2-year lock-in period for repatriation of investment.

"The investor will be permitted to exit on completion of the project or after development of trunk infrastructure ie roads, water supply, street lighting, drainage and sewerage," the circular said. 

 

MUMBAI REAL ESTATE: A POPULAR DESTINATION FOR LUXURY HOMES

Luxury real estate has a great marketability in prime metro cities, including Mumbai, Chennai and Delhi. This article talks about the luxury homes segment in one of the most expensive cities across the globe, Mumbai. Read on to know more about the same…

Real estate in India continues to remain the most preferred investment option due to the high returns associated with it. The emerging market for luxury apartments in the country is due to an increase in the demand for modern living in all the parts of the country. Mumbai, known for its lifestyle and culture, is the hot destination for premier apartments. Moreover, such apartments are considered as the reflection of social status for the rich class.

Luxury Home Demand in India

The market segment for luxury homes witnessed the launch of around INR 10,000 crore worth in of such houses across the country 2012.  According to the sources, approximately 5000 luxury and ultra-luxury houses, above INR 5 crore in Mumbai and INR 3 crore in other cities were launched in the major metropolitan cities in India, where absorption rate exceeded the supply rate. Several premium apartments being introduced in cities like Chennai, Gurgaon and Bangalore at a price of above INR 3 crore to INR 4 crore are becoming the major attraction for wealthy and high-end customers.

According to the Executive Managing Director of Cushman & Wakefield, South Asia, the sale of luxury homes in big cities like Mumbai, Pune, Bangalore, Chennai and Gurgaon is recording an all-time high with around 6-23% yearly price rise in the segment. Mumbai luxury realty market alone sold over 789 units against the new launch of 652 units.

Mumbai- The Prime Location for Luxury Apartments

Mumbai, which is the 16th costliest city for luxury homes across the globe, also registered sales that exceeded the supply for the segment. In this segment, to take advantage of the increasing demand, several developers are coming up to offer the best luxury and ultra-luxury apartments. Many realty players are cashing in on the rising trend for premium flats like luxury boutique homes and row houses.

Popular location in Mumbai like Bandra, Chembur, Navi Mumbai, and Juhu are the hot destinations for such premium apartments. Bandra is a hot spot for property buyers as it is home to several celebrities, including cricketers and actors. As per the ‘Wealth Report 2013’, the prime properties in Mumbai are available in Southern parts of the city such as Cuffe Parade, Malabar Hills, and Colaba. Those who wish to buy a house in a location that is not much crowded and yet well connected to the heart of the city, buying a residential property in Navi Mumbai is an ideal option. Navi Mumbai property is the next big realty hotspot in Mumbai city.

Mumbai Real Estate- A Major Attraction for Developers

The luxury and ultra-luxury housing project segment in Mumbai is all set to witness the presence of reputed global realty developers. Trump Organization, a US-based realty player is looking to mark its presence in Mumbai and Delhi/NCR after Pune.

So, Mumbai real estate gives all the reasons to super rich (including entrepreneurs, CEOs, and wealthy NRIs) to rejoice with attractive and well-designed luxury apartments in its high-profile locations.