Want To Buy A Home? Have You Assessed Your Budget?

Has your landlord been bugging you about the rent and all those things that you aren’t supposed to do within the limits of his property? Well, then we have a solution for you. It’s high time you moved out and start considering the possibilities of your own home. However, there are a few things that you need to consider before you take that plunge.

While an in-depth research of the real estate market is important, you also need to pay attention to your financial resources. It’s important to understand what, where and how much you can afford.

These are the 4 key points that will help you analyze your financial situation and help you decide if you can afford a home:

Savings

The first step is to check and asses your savings. Whether or not you take a loan, there is a certain amount of down payment that you will have to make. Typically, unless there is an attractive subvention plan, you will have to pay 20 – 30% of cost of your home from your savings in 60 – 90 days. Having considerable savings will help you ease the burden of the down payment and the loan. Also, you will have to maintain some contingency fund to fall back on for unforeseen emergencies.

It’s better not to invest all your savings in buying a home as this may create a financial burden.

Monthly Income

Your monthly household income is important in deciding your budget for buying a home. It gets easier to afford a home for dual income families. While one person’s income can be used for the repayment of the loan, the other can contribute to the household expenses and savings. It’s comparatively expensive for single income families as the entire cost of EMI is to be borne by the only earning member. For a single income family, your monthly EMI should not stretch beyond 40% of your monthly take home. Your monthly income also determines the maximum loan you can avail which is 4 – 5 times of your annual salary.

Home Loan Eligibility

All banks and financial organization have eligibility criteria, which they analyze before signing on the dotted line. Your loan amount will depend on the amount of disposable income that you have and also the EMIs that you are already paying. Banks will also check your credit report and other personal details like your income, job stability and also the value of the property that you are planning to buy. Job hopping can lower your chances of getting a loan. The construction stage of the property when you are buying it is also an important factor. It is advisable to take home loan for your home purchase as it also helps you save taxes.

Payment Plan

Once you know how financially stable you are, you can check the different payment plans that are available in the market. Developers offer diverse payment plans which you can choose from. These plans allow you to pay varied sum of money at regular intervals. This again helps in strategizing your finances in a better way and acquire a loan accordingly. Builders offer the following payment plans.

• Construction Linked Plan
• Down Payment Plan
• Flexi Payment Plan
• Possession Linked Plan
• No Pre-EMI Plan

Gift Ideas For Housewarming Parties

Buying a new house is a celebration in itself and the best way to share this joy with others is to throw an awesome housewarming party. But the moment you are invited to one such celebration, you start wondering about what to gift?

Here is a list of ideal gifts for housewarming parties that will surely please the host and are also easy on your pocket:

Artifacts

Whether it is an apartment, a villa, a penthouse or a studio, artifacts make the best pieces of decor for a new home. And if the recipient is an art lover, gifting a work of art will make you his dearest guest. You may choose an item made of silver, brass, marble or terracotta. Vases, artistic table lamps, luminaries, idols, antique clocks, figurines or simply a decorative showpiece will be a priceless gift for art lovers.

Monogrammed Gifts

Monogrammed gifts carry a sense of closeness. You can gift picture frames with the recipients initials monogrammed on it. A monogram on household items like welcome mat and glasses will be good for gifting.

Cooking Ware/Dinnerware

No matter how much one hates cooking, a new and modern kitchen is always an excitement for everyone. So, gifting cooking accessories, cutlery set, dinnerware and dining decor pieces will be a wonderful idea. You can also go for a customized dinner set with your special message written on each unit. A cookbook along with it will complete your gift set.

Gift Cards

One of the best and easiest gifts for a housewarming party is a gift card. A gift card to a restaurant and home decor shops like Home Town will make a useful gift. Such gifts are really appreciated by people nowadays.

Potted Plants

Everybody needs something for the outdoor decor. A potted plant for their patio will be an eco-friendly gift. If your host does not have balcony in his flat, gift him indoor plants like Aloe Vera, Bamboo Shoots, Snake Plant and Chinese evergreen. These are elegant for decor and do not occupy much space.

Wine/Champagne

If your host has got a taste for vintage quality wine and champagne, he will be very happy to see you coming with a nice bottle of his favorite drink. Pair it with a corkscrew or a cool set of bottle stoppers and there you go.

Indoor Games Set

Gift a set of indoor games like Monopoly, Chess, Twister, Cluedo, Jenga and Scrabble and you will make the hosts as well as their children happy. Encourage them to invite you for a game later.

Besides the above mentioned items, you can also gift some special things like luxury candles, candle stand, tool box, bouquet, home appliances, melamine, paintings, showpieces and home appliances. There are many gift options but you should choose it according to the taste and preference of the host.

Renting Tips For First-Time Landlords

Does that ‘FOR SALE’ signboard outside your house look old and worn out after months of inactivity? May be it is time you started thinking about something different. One of the trending ways to get regular extra income is to rent out your house. While most of us think that letting out a house is a cakewalk, landlords who are actually trying to sell their properties would probably disagree. Misuses of the flat, low or no maintenance by the tenant, delay in rent payment are some common problems faced by landlords.

To avoid these hassles in future, one needs to do a little bit of homework before letting out a flat. Here are a few points you need to keep in mind:

Decide the Rent

The first step is to research about the renting trends in your area. Find out the rent of nearby let out homes and then calculate the rent per sq. ft. You can now apply the same to your flat to arrive at an approximate rent value of your house. The main elements to be considered for deciding the rent should be the capital value of the property, amenities offered and the locational benefits. Usually, the annual rent is 2-3% of the capital value of the property but this cannot be considered as a hard and fast rule. If your flat is in a housing society, it will be easier to decide the rent since all flats are more or less similar and so should be the renting criteria. However, if your flat is furnished or offers an exclusive view, you can charge a little more as premium.

Spread the Word

A traditional method to advertise your house is to hire a broker. In addition to bringing the tenant, he can also assist you in verification and other legal processes. But a broker usually charges half-month or a full-month’s rent as his commission. You can also post an advertisement in popular newspapers. And today if things have gone online, then so has the renting process. So if you are an internet savvy, you can advertise your home on the internet. There are a number of websites that provide relevant platforms with advanced listing, searching and sorting options.

Do Not Take That Rent Agreement Casually

Most of us are quite careless about the rent/lease agreement. But it is a crucial document and much care should be taken for its drafting. A rent agreement is document that mutually binds the landlord and tenant to comply to each others terms and conditions. Important information such as the rent and its categorization, date of rent payment, security deposit, rent period, facilities and amenities, etc., should be clearly mentioned in the agreement.

A rent/lease agreement can be used as evidence in the court only if it has been registered. Section 17 of the Registration Act says that every lease agreement for more than a period of 11 months needs to be legally registered. You may have to pay minimal amounts for registration along with the stamp duty.

Know Your Tenant

Will you ever give your house to a criminal or a drug dealer? A felonious person will not tell you about his illegal practices himself. So, knowing your tenant is not all about introduction. You also need to check his background. And you would be surprised to know that not checking the background of a tenant is a punishable offence under section 188 of the Indian Penal Code. Verification forms are available online. You just need to download it, fill the form and submit it at the police station of your area, along with your tenant's ID proof.

These are some of the points you need to keep in mind before you finally rent out your flat/house. But your duty does not end here. You should visit the flat periodically to check if the tenant is violating any conditions, and if they are then proceed accordingly.

The Craze Around Wi-Fi Cities: Is India Really Internet Ready?

Many people compare the advent of Wi-Fi cities with the recent ‘Digital India’ campaign. This is not completely true as the proposal for free Wi-Fi hotspots was under discussion even before the NaMo government. The present government only accelerated the development of a digitally equipped India.

Currently, we have numerous free Wi-Fi spots across the country and many others in the pipeline. Additionally, the government is carrying out pilot projects in trains, metros and airplanes. But is India really ready for it?

Although elaborate plans have been made in the past, there’s been little in terms of delivery and quality of services. Thus, the country doesn’t have a great track record in this respect.

Firstly, the concept of ‘free’ Internet is itself a bit controversial. Free internet is only available for a particular time span or data usage. For example, in Bangalore one can surf the web for free for the first three hours only and post that one need’s to buy a recharge card. In case of Delhi’s Connaught Place, only half an hour worth of web surfing is free of cost.

Another problem that irritates the free Wi-Fi users in India is the limited coverage. In Patna, there are many spots in the specified 20 kilometer Wi-Fi stretch where Internet cannot be accessed at all. The situation is no different in Bangalore and Delhi’s Connaught Place. Quality of services is also a big question with the free Wi-Fi. Slow speed and weak connections are common experiences of the users.

It’s also not unfair to say that India is still uncertain when it comes to the issue of Internet Security. Wi-Fi spots are a haven for Internet hackers and users are still waiting for strong firewall mechanisms to prevent foreign intrusions.

With the Digital India campaign due in 2019, the country has a long way to go. We can only hope that things fall into place soon.

 

What Does The Land Acquisition Ordinance Mean For Industry?

The government on 29th December, 2014 introduced an ordinance to bring major reforms in the Land Acquisition Act, 2013. This ordinance is seen as a course correction strategy by the NDA government as the Act championed by the UPA was termed restrictive by the industry bodies and was hurting growth. Though through the ordinance, the government has tried to balance the interests of both farmers and industries, yet it has also created a difficult situation for the landless laborers.

Here come the major changes the ordinance has brought in the Land Acquisition Act and what it means for the industry.

Removal of consent and Social Impact Assessment (SIA) Clause

The key amendment has been made in the Section 10 A of the Act. Government has expanded list of sectors where Social Impact Assessment (SIA) and landowner consent is not required while procuring land. The list now includes rural infrastructure including electrification, industrial corridors and affordable housing apart from national security and defense. PPP projects where ownership of land continues to be vested with the government are also exempted from the clause. Earlier, a written consent from 70 percent of the affected families was mandatory before progressing with other transaction formalities.

Exemption from SIA clause will kick start long stuck infrastructural projects which are essential to improve GDP growth rate. The assessment clause in the original act implied compensation for everybody (not only landowners) who will be impacted by land acquisition. But, according to the new ordinance, only land owners need to be remunerated. This also indicates that whether the land is fertile or not it could be acquired if it is needed for the above mentioned categories.

No change in Compensation Packages

To contain the interest of affected farmers, the compensation entitlement has not been changed, despite several recommendations being made by numerous state bodies. It is four times the market price for rural land and two times for urban land.

Ordinance addresses the issues of Farmers Country-wide

The waiving off of the consent clause has been balanced out by including 13 other excluded Acts under the purview of the main Land Acquisition Act. Till date, land acquired under these Acts followed no uniform policy.

The Acts include the Coal Bearing Areas Acquisition and Development Act 1957, the National Highways Act 1956, the Ancient Monuments and Archaeological Sites and Remains Act 1958, the Petroleum and Minerals Pipelines Act 1962 and the Damodar Valley Corporation Act 1948. The Electricity Act 2003, Land Acquisition (Mines) Act 1885, Atomic Energy Act 1962, the Indian Tramways Act 1886, the Railways Act 1989, Requisitioning and Acquisition of Immovable Property Act 1952, the Resettlement of Displaced Persons Act 1948 and the Metro Railways Act 1978.

So, now farmers whose lands are acquired under the above legislations would be compensated according to the provisions of the Land Acquisition Act, 2013

The Future Course

As it is just an ordinance and not a full-fledged Act, the proposal will now face the test in upcoming budget session in the parliament in February. Presently, the main opposition UPA is against the ordinance. However, if we go by the current media reports this won’t be hurdle for the ordinance to become a law. Despite having a lower numbers in Rajya Sabha, the current government has a majority in Lok Sabha. The government is expected to go for a joint parliament session to get the ordinance passed.

For the meantime, one can say that the ordinance is a positive move by the government which reflects its pro growth and pro industry orientation.



 

What Is Stalling The Mumbai Metro Phase II Project?

After the success of Mumbai Metro Phase I, Mumbaikars were eagerly looking forward to the next phase. However, the Mumbai Metro Rail Corporation terminated its agreement with Reliance Infrastructure recently, thus bringing the Rs 12,000 crore project to a halt.

Though the termination was mutual, things had never been smooth for the Charkop-Bandra-Mankhurd Metro Corridor (Phase II) anyway.


So, what is exactly stalling this Mumbai Metro project?

Apparently, the foremost reason for the termination of contract by Reliance Infrastructure is the lack of environmental clearances. The proposed sites for car depots at Charkup and Mankhurd fall under the Coastal Regulation Zone (CRZ). Previously, the government gave a conditional clearance for the same that allowed construction of car sheds over stilts so that the mangroves were not affected, however, washing of trains was not allowed. In words of Reliance Infrastructure spokesman “this makes car shed depot impractical”. The search for alternate sites for the car sheds has not been successful till date.

Another problem with the Metro route is seen as the incapability of Mumbai Metro Rail Development to provide 100 percent right of way for the project. Right of way is a critical part of any transport corridor and if government finds it tough to take up then there is no use of taking a project forward. According to recent media reports, only around 55 percent of right of way has been granted and that too is non-contiguous.

Whenever a high profile project like the Metro is drafted, the major problem for the authorities is the shifting of existing utilities. Mumbai, being a congested city, makes the shifting of utilities like water, electricity and telephone connection not only difficult but sometimes impossible. For the Mumbai Metro phase II, the government is unable to draft any concrete plan regarding this aspect as of now.

Previously the constraint by Airport Authority regarding the construction height of the metro station near Juhu was also posing a problem for the phase 2 portion of the project. Nevertheless, thankfully the issue has now been resolved.

Therefore, there are numerous issues acting as road blocks for the metro project

Understanding Service Tax And VAT On Under-Construction Property

Rakesh (name changed) has always dreamt of owning his own home. Now with a salary increment, he was closer to realizing his dream. He shortlisted a few under construction properties that met his budget of 60 lakhs. However, as he readied himself to pay, he enquired about the actual cost of the apartment from the builder. The cost sheet supplied to him included two additional charges – VAT and Service Tax which he had no clue of.

Are you also unaware of these additional charges as Rakesh?

If your answer is yes, then you should know that Service Tax and VAT applies on all under construction property transactions. However, their actual value varies with states in which the property is being constructed.

Let us learn more about these taxes and the calculation behind them.

Service Tax
 Service tax is levied by the Central Government on the construction services offered by the builder to buyers. Presently the rate of service tax is 12%. Taxes like Education cess and higher education cess is calculated on top of the service tax which makes the effective rate of service tax to 12.36%.

Though it sounds simple, calculation of service tax is a bit complicated due to its applicability to various cost heads. The basic cost of the property you pay includes the cost of land and construction. Service tax is applied only on the construction component. As it is difficult to calculate land cost and construction cost separately for majority of the properties in the country, the government offers an abatement (relief) scheme. According to this scheme, relief is given on 75% of the value of the property. Service tax is charged only on the balance 25%. This effectively brings the service tax rate to 3.09% (12.36% * 25%). It is to be noted that abatement is reduced from 75% to 70% in case of flats having a carpet area of more than 2000 sq. ft or property value is Rs 1 crore or above. In all such cases, service tax of 3.71% would be levied. However, this abatement is not available on other cost items such as Preferred Location Charges ( PLC), Floor Rise Charges, initial maintenance charges and club house etc. In all these cases service tax is charged at a flat rate of 12.36%. EDC/IDC and lease rent to the extent paid to state government are excluded from service tax liability. Parking charges are exempted from the service tax ambit.

Service tax is payable only on property purchase directly from builders and is not required in case of resale property purchase as there is no service provided.

VAT 
VAT or Value Added Taxes are levied on the sale of goods (movable properties). For any sale to attract VAT, it should involve transfer of goods from a person to another. In case of under-construction properties, the transfer of goods applies to the transfer of ownership rights from the builder to you in the form of a sale agreement. This tax is governed under the ‘works contract’ in the VAT law. However, currently VAT is only applicable on properties bought in select states. For example, VAT is charged at the rate of 1% of “agreement value”in Mumbai and Pune and 5% in Bangalore. There is no VAT on properties bought in Noida-NCR, Chennai and Kolkata.

We hope that you would be clear on the aspects of Service Tax and VAT by now. In case you have any queries, please post it down in the comment box. We would definitely try to resolve them.

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