Hereby I will prove how the realty boomers arguments are false.

What are the boomers arguments?

1.) Buy today, houses always increase in value in the long run.
WRONG. House prices cannot increase more than incomes in the long run. This is obvious if you think about it. If house prices go up more than people can afford to pay, buying stops, like it has stopped now.
Even Warren Buffett have pointed out that houses don't increase in intrinsic value. Unless there's a bubble or a crash, house prices simply reflect current salaries and interest rates. If a house is 100 years old, it's value in sheltering you is exactly the same as it was 100 years ago. Then came the maintenance as the house didn't renovate itself. It also has taxes, and insurance - costs that always increase and never go away. The price of the house went up about as much as salaries went up.
To put this is simple perspective, vegetable were costing Rs.5-6/kg when 5 digit salary was a rarity.
Today, the prices have gone up by about 4 times but so have the salaries. So, sounds very much like the reasoning people use now when they talk about how much their father's house appreciated "in the long run" without considering that salaries rose a proportional amount.

2.) Renting is just wastage of money.
WRONG. As said before renting is now much cheaper per month than owning. If you don't rent, you either:

* Have a mortgage, in which case you are throwing away money on interest, tax, insurance, maintenance, costs that increase forever.
* Own outright, in which case you are throwing away the extra income you could get by converting your house to cash, investing in bonds, and renting a similar place to live for much less money. This extra income is sufficient for emergency expenses,retirement etc.

Either way, owners lose much more money every month than renters and that's assuming prices don't correct to very high level & everything is smooth in the economy.

3.) As a renter, you won't have any money left as you will spend them on vacations,cars & hence won't have equity/savings etc.
WRONG. Equity is just money. Renters are actually in a better position to build equity/savings through investing in anything but housing. Renters can get rich much faster than owners, just by investing in conservative stocks & bonds.

* Owners are losing every month by paying much more for interest than they would pay for rent. The tax deduction does not come close to making owing competitive with renting.
* Owners must pay taxes simply to own a house. That is not true of stocks, bonds, or any other asset that can build equity/savings. Only houses are such a guaranteed drain on cash.
* Owners must insure a house, but not most other investments.
* Owners must pay to repair a house, but not a stock or a bond.
* Owners lose their money as house prices reduce. The EMI's remain constant in spite of reduction in rates. At the end of loan tenure, they would have paid almost twice than that of current renters who will buy at logical rates. Keep interest rates in mind. Most of the EMI is not principal amount but interest.

4.) There are great tax advantages to owning a house.
WRONG. Many people believe you can just reduce your income tax by the amount you pay in interest, but they are wrong. Buyers may not deduct interest from income tax; they deduct interest from taxable income. And even then, the tax advantage is not significant compared to the large monthly loss from owning.

If you don't own a house but want to live in one, your choice is to rent a house or rent money to buy a house. To rent money is to take out a loan. A mortgage is a money-rental agreement. House renters take no risk at all, but money-renting owners take on the huge risk of falling house prices, as well as all the costs of repairs, insurance, property taxes, etc.

5.) RE is based on local factors, it's not a national phenomenon. RE of Delhi-NCR,Bangalore & rest of the cities has nothing to do with Pune RE.
WRONG. Lending rates remain the same throughout the country. ALL loans are harder to get. This will drive prices down everywhere.

6.) A rental house provides good income. So, you can rent if you have purchased as investment.
WRONG. Rental houses provide very poor income in hyped areas and certainly cannot cover mortgage payments. Remember there is almost 300% difference between EMIs & rent for the same house.

It's pointless to do the work of being a landlord if you can make more money with no risk, no work, and no state income tax by investing in assured good returns bond.

7.) If owning is a loss in monthly cash flow, but appreciation will make up for it.
WRONG. Appreciation is negative. Prices are going down. It only adds to the injury of already high EMI's.

8.) As soon as prices drop a little, the number of buyers on the sidelines willing to jump back in increases.
WRONG. There are very few buyers left, and those who do want to buy will be limited by increasing difficulty of borrowing now that many house owners are near bankrupt as they don't save anything at the end of the month due to high EMI's.
No one has to buy, but there will be more and more people who have no choice but to sell as their payments rise. That will keep driving prices downward for a long time.

9.) House prices never fall atleast in Pune.
WRONG. If you see the RE scenario of 1996, prices crashed by 50% & took a whole 7+ years to recover.
Exact 1996 scenario may not be there today but strong correction is inevitable across the city.

10.) House prices don't fall to zero like stock prices, so it's safer to invest in real estate.
WRONG. House prices won't be zero, but the equity or the principal amount you paid can be zero or even negative. What you will pay as EMIs later in actual terms is not for the principal amount but only the interest as house prices dip. So, you will be only serving the bank.

11.) Prices will soften gradually, won't crash immediately.
WRONG. Prices are falling off a cliff. No one knows exactly what will happen, but it looks like prices will continue to fall for long time. These are just more manipulation of buyer emotions, to get them to buy even while prices are falling.

12.) The bubble prices were driven by supply and demand alone.
WRONG. Prices were driven by low interest rates and risky loans & good returns for investors in initial phases of boom in 2004-05.
Prices went up, interest rates went up & buyers savings went down. So prices are violating the most basic assumptions about supply and demand.

13.) There is lack of land.
WRONG. Ample of land is available & continue to be even in future in Pune. Sales volume are down. Even in Japan (small country with less land), prices went down. Current prices here are the same as that of 23 years ago. If we really had a housing shortage, there would not be so many vacant rentals.

14.) If you don't own, you'll live in a cheap neighborhood later.
WRONG. For the any given monthly payment, you can rent a much better house than you can buy. Renters live better, not worse. There are downsides to renting, such as being told to move at the end of your lease, or having your rent raised, but since there are thousands of vacant rentals, you can take your pick and be quite happy renting during the crash. There are similar but worse problems for owners anyway, such as being fired and losing your house, or having your interest rate and property taxes adjust upward. Remember, property taxes are forever.

15.) There's always someone predicting a real estate crash.
TRUE, yet irrelevant. There are very real crashes every decade or so. Even a broken clock is right twice a day.

16.) Local incomes justify the high prices.
WRONG. The mortgage should be more than your 3 years earning. It is much higher today. Most are already in danger/red zone.

17.) You have to live somewhere.
CORRECT. But that doesn't mean you should waste your life savings on a bad investment. You can live in a better house for much less money by renting during the down slide in RE.

18.) It's not a house, it's a home.
WRONG. Wherever one lives in it is home, be it apartment, condo, bungalow , mansion or house. Calling a house a "home" is a manipulation of your emotions for profit.

19.) If you don't buy now, you'll never get another chance.
WRONG. History proves otherwise.
Here's a beautiful quote from a analyst:-
"The real issue isn't whether you will be stuck being a renter all your life, she says. Its whether you'll get so scared about being shut out that you'll buy at the market's peak and be stuck in a property you can't afford or sell."

20.) It would take major economic recession or a major earthquake that wipes out this area in order for the price to fall by over 50%.
WRONG. Even today, if the prices fall by 50%, there will still be very few people who can buy at this levels due to uncertainty in jobs & most importantly high EMIs. Also, look at the rental rates for equivalent houses. Which loss per month is larger? EMI or rent?

contd....
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  • Kingfisher struggles to keep flying, government steps in

    Another loot in the process.....

    Kingfisher Airlines could be looking at hope after TV news channels reported on Friday that civil aviation minister Vayalar Ravi has said he will talk to finance minister Pranab Mukherjee to give the airlines some assistance from banks.

    Kingfisher struggles to keep flying, government steps in - Hindustan Times
    CommentQuote
  • KF recently paid VM 50 Crores in cash!

    Originally Posted by Saurabh01
    Another loot in the process.....

    Kingfisher Airlines could be looking at hope after TV news channels reported on Friday that civil aviation minister Vayalar Ravi has said he will talk to finance minister Pranab Mukherjee to give the airlines some assistance from banks.

    Kingfisher struggles to keep flying, government steps in - Hindustan Times



    Some weeks ago I read a small ET report that VM was paid 50 Crores for standing guarantee for KFs Debt (6500 crores or so). One more way for VM to loot cash from cash-strapped KF before it sank completely.

    So, if KF now defaults on its debt OR go bankrupt, will VM be asked to make good? And how many crores would that amount to?

    Clever VM already "re-structured" loans to banks by asking some of them to convert some Debt (1100 Crores? just saw it on TV today) to equity at a rate of Rs 64 per share - and current price is Rs 19!!!

    No wonder Moody's is downgrading Indian Banks. Complete Mess the banking sector is getting into!

    I believe KF is on its last legs. Losing Pilots, Planes and still having huge debt and payables load on its BS, it should rightfully head into bankruptcy.

    And the man wants to raise 2000 Crores through a rights issue! Who in his right mind will shell out even a single rupee to this disaster-in-the-making!

    MAybe VM should pay a visit to Euozone and ask for some crumbs as bailout (since they are anyway talking 1 Trillion Euro and a few thousand crores is peanuts in that league :))

    cheers
    CommentQuote
  • Originally Posted by wiseman
    Some weeks ago I read a small ET report that VM was paid 50 Crores for standing guarantee for KFs Debt (6500 crores or so). One more way for VM to loot cash from cash-strapped KF before it sank completely.

    So, if KF now defaults on its debt OR go bankrupt, will VM be asked to make good? And how many crores would that amount to?

    Clever VM already "re-structured" loans to banks by asking some of them to convert some Debt (110 Crores? just saw it on TV today) to equity at a rate of Rs 64 per share - and current price is Rs 19!!!

    No wonder Moody's is downgrading Indian Banks. Complete Mess the banking sector is getting into!

    I believe KF is on its last legs. Losing Pilots, Planes and still having huge debt and payables load on its BS, it should rightfully head into bankruptcy.

    And the man wants to raise 2000 Crores through a rights issue! Who in his right mind will shell out even a single rupee to this disaster-in-the-making!

    MAybe VM should pay a visit to Euozone and ask for some crumbs as bailout (since they are anyway talking 1 Trillion Euro and a few thousand crores is peanuts in that league :))

    cheers


    VM should stick to what he does best and that is produce beer and associated liquors. ::bab (4):
    CommentQuote
  • Originally Posted by wiseman

    Clever VM already "re-structured" loans to banks by asking some of them to convert some Debt (1100 Crores? just saw it on TV today) to equity at a rate of Rs 64 per share - and current price is Rs 19!!!


    does it mean its as good as he paid his loan by giving equity to banks at rate of 64 per share and now banks have got stake in KF and may have hard time until KF reaches 64 rs per share :bab (59):? BTW which bank is this? hope not SBI coz bought some SBI shares at 1795:o
    CommentQuote
  • capitalism

    Originally Posted by Saurabh01
    Another loot in the process.....

    Kingfisher Airlines could be looking at hope after TV news channels reported on Friday that civil aviation minister Vayalar Ravi has said he will talk to finance minister Pranab Mukherjee to give the airlines some assistance from banks.

    Kingfisher struggles to keep flying, government steps in - Hindustan Times


    profits are mine but losses are for all taxpayers has been their motto for ages... to think these a'holes actually parade themselves modern day doyens of business, they are no different from common hoodlums, although these common hoodlums are lot better for one's health.

    Dhandha karo tho aisa karo !
    CommentQuote
  • Mallya is a fool. He paid tons of money to buy Deccan.. rebranded it to KF red.. could not manage it.. and now going back to full service..

    Had the worst employee record.. never paid salaries in time..

    ICICI has a huge exposure to KF .. no wonder its price is struggling..

    Originally Posted by spmohan
    profits are mine but losses are for all taxpayers has been their motto for ages... to think these a'holes actually parade themselves modern day doyens of business, they are no different from common hoodlums, although these common hoodlums are lot better for one's health.

    Dhandha karo tho aisa karo !
    CommentQuote
  • New law draft to benefit home buyers

    'New law draft to benefit home buyers'



    New Delhi: Registration of builders, adherence to approved plans and refund of money in cases of default will become mandatory under a new law that the Government plans to bring in to usher in "accountability and transparency" in land selling and housing transactions. A Real Estate Regulatory Authority will also be established under the Real Estate (Regulation and Development) Bill, 2011, whose draft was made public today by Union Minister for Housing and Urban Poverty Alleviation Kumari Selja here.

    The long-pending legislation that seeks to protect home-buyers from fly-by-night developers is likely to be sent to the Union Cabinet for its approval during the Winter Session of Parliament.
    Once the law comes into force, no promoter or builder will be able to develop any immovable property without registering the real estate project and obtaining a registration certificate from the proposed authority.
    "The Government of India has been planning such a legislation for a very long time and real estate sector and others have approached me on a number of occasions on such kind of a law. The aim is to intervene and ensure transparency and accountability on part of the promoter to the consumer," Selja told a press conference here.
    The major aim of such a legislation, the Minister said, was to regulate the activities of the real estate sector and usher in an era of "accountability and transparency" in land selling and housing transactions.

    The Minister has also written a letter to Chief Ministers enclosing a copy of the draft bill seeking their views on the legislation.
    Asked about the possibility of criticism from the sector of the proposed Bill, Selja said: "I do not wish to convey that I have a rigid stand on the issue. We will talk to everyone whoever wishes to and strike a balance."
    The proposed law also has a provision asking the promoter to compulsorily deposit a portion of funds received from the allottees in a separate bank account, to be used for that project only.
    Once the promoter registers his project, the firm will be asked to open an online account through which all the necessary documents will have to be sent to the authority, which will further verify them.
    The authority will have a chairperson and not less than two members having adequate knowledge and experience of the sector.

    It will also have the powers to impose penalty on erring promoters and to direct them to refund the money that they have charged from the consumer.
    Selja said "much of the apprehensions" of the real estate and other sectors would be met in the legislation and expressed her desire to listen to suggestions.
    "We are open to suggestions. In fact, I will be holding a meeting with real estate sector, private sector and other stakeholders on this issue," the Minister said.
    The legislation also proposes establishment of a 'Real Estate Appellate Tribunal' to hear appeals from the Authority's orders and to adjudicate on disputes.
    "The tribunal will be headed by a sitting to retired judge of Supreme Court of Chief Justice of High Court with 4 judicial and at-least 4 administrative/technical members," she said.
    A Central Advisory Council will also be established to advise the Centre on matters concerning implementation of the Act.

    Selja also said both Centre and States will have powers to make rules over subjects specified in the Bill, and the Regulatory Authority to have powers to make regulations.
    Noting that poor have very little access to credit as financial institutions are "very reluctant" to encourage them, Selja said the Credit risk Guarantee Fund announced by Finance Minister Pranab Mukherjee during his budget speech this year would go a long way in addressing their concerns.
    Under the scheme, she said, the Government will provide credit guarantee support to collateral-free/third-party- guarantee-free housing loans up to Rs 5 lakh extended by lending institutions for low income housing.
    "The CGFS will cover the housing loans to EWS/LIG borrowers for the purposes of repairs, home improvement, construction, acquisition, and purchase of new or second-hand dwelling units, involving an amount not exceeding Rs 5 lakh per loan," she said.

    Selja said Rs 1000 crores has been earmarked as an initial corpus for CGFS.
    CommentQuote
  • I hope this materialises. Last time similar idea was defeated by our so called selfish-minded politicians (aka builders).

    Originally Posted by frugality
    'New law draft to benefit home buyers'



    New Delhi: Registration of builders, adherence to approved plans and refund of money in cases of default will become mandatory under a new law that the Government plans to bring in to usher in "accountability and transparency" in land selling and housing transactions. A Real Estate Regulatory Authority will also be established under the Real Estate (Regulation and Development) Bill, 2011, whose draft was made public today by Union Minister for Housing and Urban Poverty Alleviation Kumari Selja here.

    The long-pending legislation that seeks to protect home-buyers from fly-by-night developers is likely to be sent to the Union Cabinet for its approval during the Winter Session of Parliament.
    Once the law comes into force, no promoter or builder will be able to develop any immovable property without registering the real estate project and obtaining a registration certificate from the proposed authority.
    "The Government of India has been planning such a legislation for a very long time and real estate sector and others have approached me on a number of occasions on such kind of a law. The aim is to intervene and ensure transparency and accountability on part of the promoter to the consumer," Selja told a press conference here.
    The major aim of such a legislation, the Minister said, was to regulate the activities of the real estate sector and usher in an era of "accountability and transparency" in land selling and housing transactions.

    The Minister has also written a letter to Chief Ministers enclosing a copy of the draft bill seeking their views on the legislation.
    Asked about the possibility of criticism from the sector of the proposed Bill, Selja said: "I do not wish to convey that I have a rigid stand on the issue. We will talk to everyone whoever wishes to and strike a balance."
    The proposed law also has a provision asking the promoter to compulsorily deposit a portion of funds received from the allottees in a separate bank account, to be used for that project only.
    Once the promoter registers his project, the firm will be asked to open an online account through which all the necessary documents will have to be sent to the authority, which will further verify them.
    The authority will have a chairperson and not less than two members having adequate knowledge and experience of the sector.

    It will also have the powers to impose penalty on erring promoters and to direct them to refund the money that they have charged from the consumer.
    Selja said "much of the apprehensions" of the real estate and other sectors would be met in the legislation and expressed her desire to listen to suggestions.
    "We are open to suggestions. In fact, I will be holding a meeting with real estate sector, private sector and other stakeholders on this issue," the Minister said.
    The legislation also proposes establishment of a 'Real Estate Appellate Tribunal' to hear appeals from the Authority's orders and to adjudicate on disputes.
    "The tribunal will be headed by a sitting to retired judge of Supreme Court of Chief Justice of High Court with 4 judicial and at-least 4 administrative/technical members," she said.
    A Central Advisory Council will also be established to advise the Centre on matters concerning implementation of the Act.

    Selja also said both Centre and States will have powers to make rules over subjects specified in the Bill, and the Regulatory Authority to have powers to make regulations.
    Noting that poor have very little access to credit as financial institutions are "very reluctant" to encourage them, Selja said the Credit risk Guarantee Fund announced by Finance Minister Pranab Mukherjee during his budget speech this year would go a long way in addressing their concerns.
    Under the scheme, she said, the Government will provide credit guarantee support to collateral-free/third-party- guarantee-free housing loans up to Rs 5 lakh extended by lending institutions for low income housing.
    "The CGFS will cover the housing loans to EWS/LIG borrowers for the purposes of repairs, home improvement, construction, acquisition, and purchase of new or second-hand dwelling units, involving an amount not exceeding Rs 5 lakh per loan," she said.

    Selja said Rs 1000 crores has been earmarked as an initial corpus for CGFS.
    CommentQuote
  • Real, All,

    Been very busy lately, but just posting this on behalf of a friend. A friend gave a token amount of rs 51000 by cheque, for a resale flat. He has a original receipt and copy of the cheque and the seller has no copies or anything in writing.Now, he wants to cancel the deal for some personal reasons and wants the full booking amount in return. No Mou or agreement was made. He will shortly talk to the seller, but can the seller legally refuse to give back the token amount ?
    CommentQuote
  • Originally Posted by pcpune
    Real, All,

    Been very busy lately, but just posting this on behalf of a friend. A friend gave a token amount of rs 51000 by cheque, for a resale flat. He has a original receipt and copy of the cheque and the seller has no copies or anything in writing.Now, he wants to cancel the deal for some personal reasons and wants the full booking amount in return. No Mou or agreement was made. He will shortly talk to the seller, but can the seller legally refuse to give back the token amount ?


    Unless agreed upon earlier he will forfeit his token.

    Or unless he can convince the seller to be magnanimous..

    Note : legally this would be case he said / i said in which only winners would be the black coats
    CommentQuote
  • Normally depends on the seller.. The seller has a claim if he/she had turned down any offers on the flat post the buyers offer..

    But if you beg and plead.. sellers return the money once someone else buys the house.. Till then he has to wait..

    Or if someone else wants to buy and he can arrange for a replacement buyer.. he can get it back..

    It is better settled between two parties.. instead of involving lawyers


    Originally Posted by pcpune
    Real, All,

    Been very busy lately, but just posting this on behalf of a friend. A friend gave a token amount of rs 51000 by cheque, for a resale flat. He has a original receipt and copy of the cheque and the seller has no copies or anything in writing.Now, he wants to cancel the deal for some personal reasons and wants the full booking amount in return. No Mou or agreement was made. He will shortly talk to the seller, but can the seller legally refuse to give back the token amount ?
    CommentQuote
  • Originally Posted by kedarp
    I am not a fan of UPA govt, but there is no point in blaming UPA government. Our government has no control over petroleum prices as we are dependent on other countries for import. There is no point is subsidising the petrol as the subsidy will have to come from taxes we pay. So whatever they do, we will have to pay what OPEC wants us to pay.

    Our only option is to pray that Mr Ambani and ONGC to become successful in finding some good oil well.

    Ghanta Govt :bab (45):. Man, majority of the money on petrol is spent on tax. Even Nepal, Pakistan have petrol cheaper than us !! Add to it octroi, VAt etc. on it & it becomes even more expensive. India has one of the highest rate for petrol in world, much expensive than even western countries.
    So, here we are:- Central Govt collects taxes on petrol like customs, state with VAT & junk PMC/PCMC with octroi. Go out of PMC limits & petrol is cheaper by INR 2/-.

    Ambani & ONGC are biggest lobbyist for deregulation of petrol so that RIL can restart its petrol pumps, so can Essar & Shell as rate will be same as that of HPCL, BPCL, IOL etc.

    To add to the injury, the moron MMS recently said that inflation is good as it indicates growth :bab (45):.
    CommentQuote
  • Originally Posted by Sharpj
    2014..

    Let's take 2014..
    TN it will be Amma
    AP (was congress) but the Telengana problem and jagan has thrown it open.. in all probabilities it will be undecided though congress is set to be the leading party.. (Hopefully TDP comes back to NDA fold)
    Kerala.. Congress is hanging by whiskers
    Karnataka Unless there is a tie up with Dewa Gowda for congress, it will be BJP . tie up is unlikely as Dewa Gowda is more corrupt than DMK
    Maharashtra.. BJP/ Sena is terrible and also MNS is eating into their votes so it will be congress NCP..
    Orrisa is JD (U)
    Gujrath and MP will be BJP
    Rajasthan will also be BJP
    Goa will be congress
    Uttaranchal and Himachal will be BJP
    UP will be congress in Lok Sabha polls (Mayawati might win assembly).. unless BJP gets its act together
    Delhi will be congress
    Bihar will be JD (U) NDA
    WB is Mamta
    Jharkhand will be BJP
    NE states and Assam will be Congress
    J&K will be NC
    Punjab will be NDA
    Haryana will be congress

    It looks pretty even..

    Congress has some setbacks in AP, TN, and Rajasthan.. but it will be not be wiped out..
    It would be interesting to see what they do.. How they manage UP and Bihar..
    But you cannot underestimate them..
    I think it will be those lame duck government (like Chandrashekar's) propped up by congress.. which is more dangerous..

    BJP has nobody credible and Advani/Modi means no NDA..

    So maybe we will be stuck with these morons.. but if they are weakened they will not be so arrogant

    Couple of things need to be seen here:-

    > In AP, the Jagmohan Reddy factor can't be ruled out. The YSR Congress can eat into votes of Congress. Also, several MLAs have left Congress post death of YSR. If BJP-TDP-YSR Cong come together, Congress will be out. However, the CM will be not from BJP, unless BJP secures more seats than TDP-YSR-C put together,

    > In Maha, there is a strong faction of BJP which is inclined to ally with MNS rather than SS. BJP-SS is favored mostly by Munde gang, thanks to good relationship Bal Thakre had with late Pramod Mahajan. The RPI going with BJP-SS is setback for Cong-NCP coz the votes of Cong will be split & NCP will solely be dependent on Maratha votes,

    > In Delhi, MCD is ruled by BJP. The CWG scam is not in picture right now due to 2G, but once it does come out, the first to go out will be Shiela ki...err Dixit, with small fish Pune MP Kallu dancing around in Tihar :D.
    The Ajay Makan group is trying hard not to let Sheila supporters get tickets,

    > Harayana will be 50:50 as Bhupinder Singh Hooda has lost support which he enjoyed before. The farmer vote bank has been damaged due to Singh's anti-farmer policies,

    > In Orissa, the BJD (Biju Janta Dal) of Navin Patnaik actually came in power with BJP support. Later, they allied with Cong, which were actually it's main rival during elections. This thing hasn't gone down well with the people & has given the image that BJD is most power hungry,

    > Goa will be with BJP as current Kamat Govt relies on independents & NCP. There is a mining scam of INR 18,000 Cr here & if this too pops up during election, which it will, Manohar Parrikar will the best choice for CM then for BJP. Btw, Parrikar & Nandan Nilekani are classmates....one went in politics, other became top ITG :D,

    And yes, 2 years is a biiiiig time in politics. See some fun in coming PMC elections in Feb 2012 itself.

    *** PS:- Anna Factor......big one.:bab (34):
    CommentQuote
  • Tough govt regulator for real estate likely soon

    Nauzer K Bharucha TNN
    Sat 12 Nov 2011

    Mumbai: Stringent punishment including imprisonment and penalties on erring builders forms the crux of the final draft of the new Real Estate (Regulation & Development) bill released by the ministry of housing and urban poverty alleviation on Wednesday. The government has proposed setting up a Real Estate Regulatory Authority, which will play the role of Big Brother to keep builders in check. :)
    The bill is expected to be passed in the winter session of Parliament, but the ministry has sought the real estate industry’s feedback within the next 30 days. If approved, the new law will have widespread repercussions on builders who flout its provisions, but come to the aid of buyers in case they get shortchanged.

    Builders said the provisions are unusually harsh and would oppose them.
    Promoters/developers who “willfully’’ contravene provisions of the Act could be jailed up to three years or a “penalty which may extend to 10% of the estimated cost of the real estate project’’, or with both. Those flouting the orders of the Regulatory Authority “shall be liable to a minimum penalty of Rs one lakh for every day during which such default continue, which may extend to 5% of the estimated cost of the real estate project’’.

    Authority To Crack The Whip

    • Real Estate Regulatory Authority to monitor all building projects

    • Jail up to 3 years or penalty up to 10% of project cost for builders who fail to register their projects

    • Builder to compensate if flat buyer suffers loss because of misleading advertisement

    • Builder to rectify structural defects in first year at own cost

    • Builder to deposit 70% of sum collected from buyers into a bank a/c The draft bill said no builder will be able to develop a property, alter or convert it without registering the project and obtaining a certificate from the Real Estate Regulatory Authority. If a property is to be redeveloped in phases, then “every phase shall be considered a standalone project, and the promoter would have to seek registration for each phase separately’’. However, projects which do not exceed 4,000 sq m (one acre) are exempt from this.

    One of the harsh provisions stipulates that builders deposit 70% of the amount collected from the allottees (flat buyers) in a separate bank account within 15 days of its realization for meeting the costs of the project.
    If the developer’s registration lapses or is cancelled for some reason, the authority may consult the government to take action including “carrying out the remaining development works by competent authority or by association of allottees or in any other manner’’.

    The developer will have to access the authority’s website and enter details of the proposed project, including documents like sanction plans, title of the land and disclosure of his name, address and company. Every fortnight, the builder will have to update the list of bookings on the basis of the agreements.

    “No promoter (builder) shall issue or publish an advertisement or prospectus, or invite any member of the public to buy or book in such projects to be developed or take advances or deposits without obtaining a copy of registration certificate with the authority,’’ it said.

    In case a flat buyer sustains a loss due to a misleading advertisement, the promoter will have to compensate him in a manner determined by the authority. If the person intends to withdraw from the project, he will be “returned his entire investment along with interest at such rate as may be prescribed’’.
    The builder will not accept any money as an advance payment or deposit from a person without first entering into a written agreement for sale. The buyer will also be entitled to check the site plans along with structural designs and specifications approved by the local authority as well as the stage wise completion schedule.

    The draft bill proposed that the developer rectify structural defects or any deficiency in service free of cost once the buyer brings it to his notice within a period of one year. “If he fails to rectify such defects within a reasonable time, the aggrieved allottees shall be entitled to receive appropriate damages or compensation as may be determined by the authority,’’ it said.

    A proposed Real Estate Appellate Tribunal will adjudicate disputes between the developer and the allottee or the authority. “Any promoter who wilfully fails to comply with the orders of the Appellate Tribunal, shall be punishable with imprisonment for a term which may extend to one year or with a penalty which may extend to 10% of the estimated cost of the project, or with both,’’ it said.
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  • Originally Posted by mymarji
    Thanks for the link. I also visited the other link mentioned in the article "Is your child going to inherit your home loan?" Link: Is your child going to inherit your home loan? - Indian Express

    That is scary part. Looks like we will be like the typical filmy mazdoor/farmer who keeps repaying his grandfathers loan to Zamindars.

    Very good links. Add to this the following:-

    > The NPAs of SBI has gone up by whopping 20.5% YoY,

    > The auto sales have dipped by 25% this festive season, which is the biggest drop in past 10 years,

    > The IIP numbers have fallen to 2 year low,

    > The loan tenure for home loan, if to maintain the same EMI has increased by 14.2 yrs !! A chap who takes loan for 20 yrs 3 yrs back, now will have to increase the duration to 34.2 yrs !!

    And man, despite doing all this, do you get a good quality home on time ??
    I have myself seen cases where people who bought loans with 80-85% loan 2.5 yrs ago are now using bikes (parked their car in basement) to save fuel cost. Those who have kids will also know the hikes which have taken place in the fees of school, colleges in past 3 yrs.

    And now SBI wants INR 8,000 Cr from Govt. Now, from where the hell the Govt will give this money when it is itself under severe fiscal deficit ??

    Btw, this UB saga was already discussed before & now we see the consequences of over-leverage through Kingfisher. Hey, what happened to air-hostess ??? Kingfisher first was known for ..........:bab (59):
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