Search This Blog

Wednesday, May 3, 2017

India property developers on notice: Clean up act or go to jail

Under laws that came into force Monday, developers have to use at least 70 percent of sale proceeds to complete residential projects, rather than funnel money to other jobs, and will no longer be allowed to start pre-selling apartments before all building approvals are obtained. Developers who don't comply with the new laws face up to three years in jail. 

The moves are aimed at cleaning up an industry where more than 30 percent of housing projects run at least a year over schedule, and developers are known for corner-cutting tactics such as starting work before all approvals are granted and using sub-standard materials. Developers accused of wrongdoing have seen their shares tumble, even as the main property index has surged this year. 

With thanks : Economic Times : LINK : for detailed news.

RERA: 5 Things You Should Know About India's New Property Rules To Protect Home Buyers

In a relief for home buyers, India has enacted new laws that govern the country's sprawling and overcrowded real estate market with harsh penalties against erring home builders.
Here are 5 things you should know about the new rules.

State-level legislation

While the main real estate act is centralised, individual states will have to ratify their own rules, and will have their own regulatory authorities. However, so far, only 13 states have notified their respective laws to the centre.
Both new building projects and ongoing projects will be subject to the laws, with the exception of certain projects that have already been completed.

Tighter screening of home builders

Home builders including those who have ongoing construction are required to register with their local state regulatory authorities in the next three months, and provide regular updates on the status of the building projects on the regulators' websites.
Builders will be required to deposit 70 per cent of the money they collect from prospective home buyers into an escrow account that will only be used for construction purposes. They will also need to disclose details of exactly when the property will be completed, and how much money they have already collected.
In addition, any new advertising of unsold property for ongoing projects or any major structural changes will need approval from two-thirds of existing occupants or home owners.

No more early bird deals

Home builders can now only advertise property and homes once they have received all the regulatory approvals.
In addition, builders will also have to enter a registered sale agreement if they collect more than 10 per cent of the home value at the time of booking the project.

Penalties for delayed projects

If a builder has delayed a housing project they will now have to either refund the entire amount they have charged, or pay interest on it until the home is delivered to the buyer.
Defaulters will be subject to an interest rate of two percentage points higher than that being offered by the State Bank of India, on the amount already paid.
Home builders that violate the new laws could be imprisoned for up to three years.

Real estate disputes

In case of disputes, instead of going to civil courts, home buyers can now take their complaints in connection to their property projects to special real estate courts that will be set up in each state. This is aimed at speeding up the current redressal process.
with thanks : huffington post : LINK : for detailed news report

Go after owners of benami property, PM tells officials

Prime Minister Narendra Modi on Tuesday reviewed the government’s initiatives against black money and directed revenue officials to speed up action against benami property holders.

At a three-hour meeting two days after the deadline for deposits under the Pradhan Mantri Garib Kalyan Yojna (PMGKY) ended, he discussed further steps against tax evaders. The authorities plan stringent action against tax evaders, given the dismal collection under the second round of PMGKY.

The government has collected just Rs 2,300 crore by way of tax, penalty and surcharge under the second tax compliance window launched after the November 2016 demonetisation. Official sources said Modi wanted quick implementation of e-assessment to minimise human interference. He told officials to find ways to widen the tax base by bringing more people under the tax net.

Post-demonetisation, the revenue department had warned those involved in benami transactions of rigorous imprisonment of up to seven years. Through advertisements in newspapers, it had cautioned that benami properties would be attached and confiscated. It had also attached assets around the country and registered about 250 cases. The properties included agricultural land, bank deposits, apartments and jewellery.

with thanks : Deccan Herald : LINK : for detailed news