Residential Real Estate – Page 25

Renting Instead of Buying a Home? Here’s How To Get It Right

Santhosh Kumar, Vice Chairman – ANAROCK Property Consultants

Don’t expect all available options to be available online
The ‘hidden’ costs of renting a home
The elements of a sound rental agreement

The Government’s much-touted aim to deliver Housing for All by 2022 may not have met with spectacular success in terms of on-ground deployment, but it was certainly a very effective electoral promise. Housing is a sensitive subject in India, precisely because so many people don’t have it. Such an electoral promise was bound to draw attention – and hope.

Providing a self-owned home to every Indian household in the promised timeline seems unlikely. Building enough dedicated rental housing and backing it with a sound rental housing policy could have brought this electoral promise closer to its goal. However, there has been little progress on this front beyond the discussion stage, either.

While a large number of Indians do hope to live in self-owned homes someday, renting homes is still the default option for many. For some, rental housing is seen as a temporary measure until the dream of homeownership is fulfilled.

by Anuj Puri

Anuj Puri, Chairman – ANAROCK Property Consultants

A possible GST rate cut at the very beginning of 2019 could bring in the much-needed respite for the Indian residential sector, which is still reeling from reformatory changes.

Though ANAROCK data indicates that sales numbers picked up by nearly 16% in 2018, sales are still far from their peak levels.

The ongoing 12% GST rate levied on under-construction properties has proved to be a major deterrent for homebuyers, who understandably shied away from this added burden on their finances.

ANAROCK’s consumer sentiment survey also confirms that the prevailing GST rate has prevented as many as 49% of property seekers from buying under-construction homes liable for GST. They preferred ready-to-move-in homes that were exempt from this tax.

To attract home buyers and kick-start a more convincing revival of the residential sector, the GST Council is now considering reducing the GST rate for under-construction homes during its next meet in January 2019.

In fact, this move was expected in December 2018; nevertheless implemented, it will be a perfect New Year bonanza for millions of aspiring homebuyers looking to buy under-construction homes in the coming year.

by Anuj Puri

Anuj Puri, Chairman – ANAROCK Property Consultants

If you are looking to buy a property or have already invested in one, you will know that there are tax implications involved. Let’s first examine the tax on property purchase and then elaborate on how one can save on it via tax exemptions and deductions.

To begin with, the taxation on property purchase has become much simpler than it was before. With the roll-out of GST, all taxes previously applicable on real estate purchase (VAT, Service Tax etc.) have been subsumed under this single unified tax system.

The overall costs involved in buying a property are broadly divided into two components – the first being the one paid to the builder/seller and other – the statutory and legal costs – to the government.

While the former roughly comprises 80-85% of the overall property cost, the remaining 15-20% goes as taxes to the government coffers.

So, are the taxes same for both under construction and ready-to-move-in properties? The answer is ‘No.’

Taxes for Under-Construction Properties

Statutory and legal costs for under-construction properties vary between 15-20%,

by Anuj Puri

Anuj Puri, Chairman – ANAROCK Property Consultants

The applicability of GST in the Indian taxation system was a move aimed towards ‘one nation, one tax’.

Post land abetment, the applicable GST for under-construction properties was 12% while ready-to-move-in flats were kept out of the GST ambit.

Even for under-construction properties, there was a ruling of Input Tax Credit (ITC) pass-over to the buyer to ensure that it becomes a tax neutral proposition.

While calculations and ITC pass-over still remain a challenge after 1.5 years of GST regime, a recent announcement stated that there is no GST applicable only on ready-to-move-in flats wherein sales took place after the issue of completion certificate.

This is likely to add woes to buyers as well as developers.

Impact on Buyers

Until now, all properties that were treated as ready-to-move-in were out of GST ambit, so buyers had significant choices.

As per ANAROCK data, more than 90,000 units out of total unsold inventory of 6.87 lakh units (as of Q3 2018) across the top 7 cities were ready-to-move-in – a massive 14% of the overall unsold stock.

by Anuj Puri

New housing supply estimated at 1,93,600 units by 2018 end; an annual increase of 32%
Housing sales in 2018 estimated at 2,45,500 units; an annual increase of 16%
NBFC crisis holds sector at gunpoint as 2019 begins

Anuj Puri, Chairman – ANAROCK Property Consultants

The year 2018 was a veritable roller-coaster ride for Indian real estate. Despite signs of recovery across segments, the liquidity crunch – further exacerbated by the NBFC crisis – put all industry stakeholders on tenterhooks.

Consolidation via mergers and acquisitions was rife in all sectors, completely redefining the concept of ‘financial health’ among players and drawing clear lines on who will survive the heat. This process will continue throughout 2019, as well.

Despite all odds, economic indicators remained positive with India’s GDP growth rate pegged at 7.3% in 2018. CPI inflation, a major concern in the past, remained reined in at a manageable 4.8%.

GDP growth and contained inflation are generally considered panacea for most real estate woes. However, it took a lot more than that for real estate to retain even a semblance of an even keel in 2018.

by Prashant Thakur

Luxury supply increased by 29% since 2017
Of 12,090 units new luxury supply in 2018, MMR launched nearly 6,310
NCR – 2,650, Hyderabad – 1,585, Kolkata – 160; Pune saw least supply with less than 100 units

Prashant Thakur, Head – Research, ANAROCK Property Consultants

Catering to a very niche clientele and not the masses, luxury housing has evolved at a rapid pace in India. The nouveau riche (newly rich) prefer discreet opulence over the commonplace, and look for experiential luxury, both at a unit and project level.

From start-up founders to high-salaried professionals, high net-worth individuals are prompting developers who understand the luxury segment to think increasingly out of the box and deliver something unique and aspirational.

On the ‘other side of the fence’, affordable housing has taken centre-stage in India over the past 3-4 years, not only because of the massive demand for it but also due to the concerted efforts by the Government to cater to it. Against such a backdrop, there are rising speculations that luxury housing is losing its sheen to the affordable segment.

by Anuj Puri

Anuj Puri, Chairman – ANAROCK Property Consultants

The recent stand-off between the government and the RBI owing to the NBFC crisis and the apex bank’s endeavour to maintain its autonomy and reserves had caused the industry to watch closely whether the repo rate will increase or remain unchanged.

That said, today’s move by the RBI to keep the repo rate unchanged at 6.5% was more or less expected. This was not solely because inflation targets are still under control.

Politically, an upward revision would not have served the current Government well as the 2019 elections are around the corner. From the economic standpoint, a hike in repo rates would have had a direct impact on home loan rates.

High housing loan interest rates are known deterrents to many buyers, especially in the affordable segment where higher interest rates can and do weaken sentiment.

Any move to further discourage customers from availing of bank credit would ultimately exacerbate the liquidity crunch and adversely impact the economy.

From that perspective, the unchanged repo rate will at least keep the demand for housing loans at status quo.

The RBI obviously needs to maintain an adequate buffer for the economy – especially in light of the massive changes that are likely to come about in the next few months in form of REITs and SPVs.

by Anuj Puri

Anuj Puri, Chairman – ANAROCK Property Consultants

More than a year and a half after the deployment of the Real Estate Regulatory Authority (RERA), it is evident that the Centre’s aim to have it enforced in each state to regulate the Indian real estate sector still falls way short of the intended mark.

It may be recalled that RERA intended to cover developers as well as real estate agents seamlessly across the country.

As it stands now, there are quite a few states still in the process of notifying their RERA rules, while there are others where buyers have been continuously fretting about the dilution of the rules notified.

However, one provision that makes RERA across a few states a ‘hit’ among consumers is the rising number of complaints being registered with the respective state authorities, and its redressal timeline.

Even if the redressal of complaints is not satisfactory for many, consumers are increasingly bestowing their faith on RERA regulators and coming forward in large numbers to register their complaints.

For example, the latest numbers (as on November) show that more than 4,900 complaints have been registered in Maharashtra ever since MahaRERA came into effect.

by Anuj Puri

Anuj Puri, Chairman – ANAROCK Property Consultants

Co-working and car-pooling have become viable options for the millennial workforce, and an exciting new trend – co-living – is also beginning to make its mark with the burgeoning student population across Indian cities.

While it is largely the major cities like Bengaluru, Mumbai, Gurgaon and Pune that began promoting this concept, the demand for co-living spaces is also gradually percolating into tier 2 cities like Jaipur and Lucknow where both working millennials and students are increasingly opting for co-living spaces.

Co-living is much more than a mere bed-and-breakfast deal. These are fully-furnished homes where the privacy of tenants is respected. Private bedrooms with access to common shared areas like the kitchen and living room are the norm.

Such spaces offer convenience and an entirely new lifestyle for young professionals – most often bachelors and singles – who are not keen to change cities because of their work.

Their main concern is finding the right accommodation. For them, co-living is an ideal solution, and conventional paying guest facilities and hostels are gradually giving way to this more sophisticated way of living in a less inhibited and restrictive environment with ample opportunities to mingle.

by Anuj Puri

Anuj Puri, Chairman – ANAROCK Property Consultants

So far, there have been no answers – only more questions

Mumbai’s Dharavi, one of the largest slums in Asia, has been an area of contention for almost two decades now.

For all its revelations, the recent blockbuster film ‘Kaala‘ only underscored what Mumbaikars, human rights activists, urban planners and real estate developers have known for decades – there is no simple formula for unravelling the complex Dharavi equation.

Occupying 535 acres of prime land in the very heart of India’s financial capital, Dharavi could be a motherlode of pure gold for developers who could get a piece of it.

Formal housing developments there would also give innumerable Mumbaikars exactly what they need – homes in the heart of the city and within a short commute to some of Mumbai’s most important workplace hubs.

Not surprisingly, the Maharashtra State Government has been eager to redevelop Dharavi. Building affordable to mid-range housing projects here would completely reinvent the residential real estate equation of Central Mumbai and also make a major contribution to the Central Government’s Housing for All by 2022 target.

Renting Instead of Buying a Home? Here’s How To Get It Right

GST Rate Cut in 2019 – A New Year Gift for Homebuyers?

Taxes on Property Purchase – And How to Save On Them

New Blow: GST On RTM Projects Without Completion Certificate

The Highs And Lows Of Indian Real Estate In 2018

Is Luxury Housing Losing the Plot To Affordable Housing?

Unchanged Repo Rates Astute From All Angles

RERA Deployment: Still Thin, But Complaints Galore

Co-Living Spaces In India: Rental Housing With A Progressive Twist

Is There Any Hope For Dharavi?