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- Though its a good initiative, CREDAI has taken but I have my own doubts regarding the various issues that they have raised.
For example- Its mentioned in the article, "There are many ways like making land available at an affordable rate for the developer so that he can build affordable homes for buyers. And, reforms on taxation, administration and banking are also very important, he stressed."
How can we be sure that even if builders are alloted land at affordable rate, how are they going to pass this benefit to end users? How will they prevent investors to do bulk booking and raising rates unnessasary?
Realty sector badly needs reform but it should be good for both parties, builders as well as end users.CommentQuote0Flag
- they have dug their own grave. Where there was need for affordable housing, they created vaccum for that by only making big luxurious housing.
now because their greedyness they are suffering and now they are requesting to save themselves...CommentQuote0Flag
- So just in case anyone of us had any doubts as to how bad things really are, CREDAI has been thinking of sending out an SOS and stopping work is now seeming fairly certain - so the raining bookings due to Navratras, NRIs and Non-stoppable Black Money was a lie as if we ever were fooled. Be rest assured who will pay for this.
Now the entire nation seems to be going the Noida Extension way -Developers will stop construction sooner or later under some pretext and then people will be out on the streets to complain and help government give a bailout. See how wonderful the idea is. Except perhaps, there will be hordes of litigation and financial models gone awry across India.CommentQuote0Flag
- CREDAI seems to be shifting the focus by invoking the name of home buyers .
Totally agree with kinjalnc . CREDAI was digging its own grave for many, many years & is fully responsible for the current position it is in .CommentQuote0Flag
- these institutions should be banned. If you see the statements of representatives of these association, rather than solving the issue they keep on preaching the property prices cannot be decreased for falana dhimka reasons..blah... blah.
Why these institutions are not suggesting to coming out with smaller flats, non luxurious, decent flats, then these situation wouldn't have arisen at all...
Have any builders have passed on any benefits to end users, which they have received. They have always cheated on calculation of property, which now BMC has plugged...
They have no place to go but to disclose actual area but by disclosing enhanced area, they will have to shell out more money for paying premium.
I believe if governments takes only two more such steps, then property prices will definitely be fair...CommentQuote0Flag
- Real estate development should be given special status on par with industry
The real estate is booming and is a sector, next only to agriculture, which has the maximum growth potential in terms of employment generation and contribution to the GDP (gross domestic product).
This sector, however, is wallowing in neglect and does not even have a status, 'special' or 'industry'. Real estate development should be given special status on a par with industry. Budget 2012-13 has poured cold water on this sector, yet again, and dashed the hopes of developers and builders.
A legion of prominent developers and builders, under the banner of NAREDCO ( National Real Estate Development Council) and CREDAI (Confederation of Real Estate Developers' Association of India), made several representations to the Union government to accord the sector longstanding demands like special status, infrastructure status to the housing sector, special economic zone (SEZ) incentives for promoting real estate development like housing finance, rental housing, deduction for irrecoverable rent and assessment for bank incremental deposits, etc, but nothing came of it.
In a post-Budget memorandum for 2012-13 , developers have again raised these issues. They believe that an industry status will bring about major transformation in the outlook and nature of the sector. It would encourage investment , attract large companies and, most important, inculcate corporate culture and industry discipline in the sector , which would immensely benefit the overall economy, the consumers in particular .
Industry status would also help the sector get bank loans on average interest rates and at low collaterals, against the existing high-risk rates. Further, it would help the sector get central and state subsidies in case developers move into backward regions or the northeastern regions and raise external commercial borrowings (ECBs).
In the post-Budget memorandum for 2012-13 , of NAREDCO, developers have demanded that the sealing of Rs 1 lakh under Section 80C of the I-T Act be increased to Rs 2 lakh with Rs 1 lakh out of it exclusively reserved for payment of principal borrowed for the purchase of a residential house. This would help boost housing stock. A separate limit for payment towards purchase of a house or repayment of principal on housing loan was earlier available under Section 88.
Navin Raheja, the president of NAREDCO, says: "As an incentive to housing development, infrastructure facilities like roads, toll roads, highways including housing, watersupply projects or other activities, etc, must be added to Section 80-IA of the I-T Act, where the gross total income of an assessee includes any profits and gains derived by an undertaking or an enterprise from any of the business referred to in sub-Section (4) then a deduction equal to 100% of the profits and gains derived from such business shall be allowed for ten consecutive assessment years. This will meet the outstanding demand of housing to be treated as infrastructure ."
Kamal Taneja, the vicechairman of TDI Group, says: "Housing development companies are engaged in undertaking large-scale urban development projects including purchase of raw land and developing it for the purpose of construction of houses, multistoreyed buildings, creation of infrastructure and social facilities like roads, water supply, water treatment, sanitation and sewerage, solidwaste treatment and also to create educational, medical and recreational facilities as an integral part of development of satellite townships, in accordance with the elaborate rules and regulations and with the specific approval from the governments concerned.
Such projects tend to reduce the pressure on existing cities by providing lowpriced alternatives and value for money to the customers."
Navin Raheja says: "After purchasing agricultural land, realty firms create and provide most of the infrastructural facilities. It is only by creating these facilities that the raw land gets converted into developed land, fit for construction of houses and highrise buildings for residential and commercial purposes, thus augmenting the housing stock of the nation.
It is presumed that the activities of these companies are already covered by the definition of 'infrastructure facility' but the position has become debatable as such activities are not covered by a specific clause."
The previous Budget has specified that exemption under I-T Act 1961 would be available to only those SEZs, which are approved on or before March 31, 2012, and begin manufacturing or producing or providing services on or before March 31, 2014. The direct tax code ( DTC) does not cater to concessions available under Section 10AA and 80IAB.
It proposes minimum alternate tax (MAT) at the rate of 18.5% on the book profits effective from April 1, 2012 on developers of SEZ and units operating in the SEZ. The SEZ developers are also required to pay dividend distribution tax (DDT) at 15% after June 1, 2011.
Sanjiv Srivastava, national executive committee member of Credai, says: "As development of many SEZs has been delayed due to economic slowdown in view of rising interest rates, lack of investors and global uncertainties, we have suggested , under the banner of Credai, that the cut-off date for completing development of SEZs be reset to March 31, 2013 and for starting manufacturing to March 31, 2015."
"We have also been demanded the income tax deduction under Section 80-IB (10) available to firms developing housing projects is for projects approved on or before March 31, 2008. As this date has not been extended, provisions of this section will cease to exist after March 31, 2013," Srivastava says.
Vijay Jindal, the chairman and managing director of SVP Group, says: "Undoubtedly , since the housing industry has not yet overcome the impact of the recession of 2008 and is in the grip of a severe downturn, coupled with a huge demand of housing, especially for poor, yet to be fulfilled, it is suggested that provisions of Section 80-IB (10) be made applicable for projects sanctioned after March 31, 2008, at least till 2015.
If need be, the size of units could be reduced from 1,000-1 ,500 sq ft to up to 1,200 sq ft, in line with the definition of affordable housing prescribed by the government."
Anil Sharma, the vice-chairman of Credai, NCR, says: "The deduction of capital expenditure incurred wholly and exclusively for developing and building a housing project under a scheme for slum development or rehabilitation or affordable housing framed by the central or state government and notified in accordance with the guidelines prescribed is allowed under Section 35AD sub-Section (5)( ac) & (5)( ad).
The definition of capital expenditure does not include land cost and building construction cost or any other significant investment in the project. As a result, a developer of slum redevelopment , rehabilitation and affordable housing does not get any major advantage , as far as the income tax concession is concerned.
Therefore, we believe that the cost of land and building construction should be made part of capital expenditure to incentivize developers to undertake construction of social housing."
Budget 2012-13 has poured cold water on this sector, yet again, and dashed the hopes of developers and builders.
Industry status would also help the sector get bank loans on average interest rates and at low collaterals, against the existing high-risk rates.
Real estate development should be given special status on par with industry - The Economic TimesCommentQuote0Flag
- CDERAI should ensure that:
1. Super area, buildup area, and carpet area should be declared FIRMLY
2. If there is scope of super area increase, it should be firmly mentioned that super area increase will have a corresponding increase in carpet area also.
3. Parking charges are ILLEGAL and builders should not charge for it
4. Service tax on parking charges is even more ILLEGAL
5. All licence details SHOULD BE CLEARLY MENTIONED IN ADVERTISEMENTS
6 VERY HIGH PENALTY to be imposed on builders for concealing any legal information about title of land, licence etc.
7. BUILDERS SHOULD DECLARE FROM WHOM THEY BOUGHT LAND, WHEN , AND FOR HOW MUCH , AND WHAT % HAS BEEN PAID
8. PENALTY FOR DELAY SHOULD BE REASONABLE AND SHOULD BE ACCORDING TO THE RENTAL OF FLAT. IF DELAY EXCEEDS 6 MONTHS THAN PENALTY SHOULD BE DOUBLED, AND WHEN DELAY EXCEEDS ONE YEAR PENALTY SHOULD BE THREE TIMES
9. EDC,IDC CALCULATIONS SHOULD BE SHARED WITH BUYERS AND AMOUNT PAID TO REGULATORY AUTHORITIES SHOULD BE KNOWN TO BUYERS.
10. AFTER TAKING 90% PAYMENT POSSESSION HAS TO BE OFFERED WITHIN 4 MONTHS - currently the norms are 4 years after taking 90% payment.
THAT IS THE JOB OF CREDAI - LET THEM DO THIS FIRSTCommentQuote0Flag
- Reforms needed to check corruption in real estate: CREDAI
Mumbai: The Confederation of Real Estate Developers' Association of India (CREDAI) today said there was a need for comprehensive reforms to check black money and corruption in the realty sector.
"There is a need for all round reforms to end corruption and check black money in realty," CREDAI National President Lalit Kumar Jain told reporters here.
He said that CREDAI has been advocating for single window system for project clearances to cut down time and chance for corruption.
CREDAI has sought reforms in four key areas including administration, land, taxation and banking, which impact the real estate.
"There has been a lot of talk on this, but no action. We too hate the system that labels us as crooks and breeders of black money. There is a need to realise that the various bottlenecks at government level at Centre and in several states are equally responsible for this menace," he said.
He pointed out that the economic reforms initiated by Prime Minister Manmohan Singh 20 years ago saw the end of the Licence Raj, but there are still many controls on the real estate sector, he said.
There are over 40 clearances that a developer is supposed to get, which lead to human interaction with over 150 officials at various stages, he said, adding any delay at any stage obviously gives rise to 'greasing of palms' as the developer is always anxious to finish his project in time.
"Real estate is a highly capital intensive industry and any delay would only add to the interest burden for developer who scrupulously tries to avoid it since the increased costs would lead to cut in is margins and rise in the cost for the customer," he said.
He further said that the restricted land use and continued pressure on land availability is also one of the causes of high costs of inputs and the resultant sale price.
"Like any prudent businessman, we are also here to make profits, otherwise it simply does not make sense for us to be in business," Jain said.
He also pointed out that there is no clarity on land policy and no control over cost of funding and other inputs.
"With rapid urbanisation, the nation is witnessing an ever increasing demand-supply mismatch and developers are being blamed for artificial shortage of homes. Shortage of any product leads to price hike and real estate is no exception," he said.
CREDAI has suggested special housing zones on lines of SEZ saying that extention of economic zone facilities to real estate could easily help in making affordable housing a reality.
Jain further added that it is necessary for the government to concentrate on infrastructure development as well.
"Every rupee invested in real estate sector, contributes to addition of 78 paise to GDP," he said, adding, "developers are ready to play their role but at the same time, we want the governments to play the role of facilitator," he said.
Reforms needed to check corruption in real estate: CREDAICommentQuote0Flag
- Credai urges MPs to consider real estate reforms
Mumbai: Real estate developers' association, Credai today urged lawmakers to consider reforms in the real estate sector to boost growth.
In a letter to MPs, Confederation of Real Estate Developers' Association of India (CREDAI) national president Lalit Kumar Jain said: "Though the government is moving in right direction with bold reforms agenda, much more can be achieved without any controversy or incurring additional cost just by focusing on the housing sector."
He has also mentioned a 10-point action plan drawn up by Credai to rejuvenate the sector.
"This action plan will help the economy to grow at much faster rate since realty contributes to the growth of over 200 other industries. Real estate is highly capital and labour intensive which makes it the largest employer after agriculture," Jain said.
The association added that there are some shortcomings in the proposed Land Acquisition and Real Estate Regulatory Bills which are likely to be moved in the ongoing session of Parliament.
"The bills appears to be one-sided as they seek to punish errant developers while ignoring defaulting buyers and corrupt officials.
(While provisions) in the Land Acquisition Bill may make housing costlier," the letter said.
Credai urges MPs to consider real estate reformsCommentQuote0Flag