Category Archives: Buyers Guide

Benami Transaction Act and Its effect on Real Estate Market

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The amendment in Benami Transaction Act  is a step in right direction to improve the overall confidence of the real estate buyers.  All real estate transactions shall be in the name of the actual owner who is paying the amount.

It would make real estate operations easier and establish professionalism increase transparency and clarity in ownership of the property. It would also  put the restrictions on black money into the reality market. It will bring the much needed confidence in investors . We may face an increase in real estate transactions prices. The realtors  entering into Benami Transactions may have to face punishment and pay  the hefty amount as penalty.  The act should impact the real estate transaction volume especially land transactions and real estate prices adversely.

Benamidar, or the beneficial owner or any other person who abets any person to enter into such a transaction, will face rigorous punishment ranging from a year to seven years in jail. These persons will be liable for a fine of up to 25 per cent of the fair market value of the property.  And, Those giving false information may face Imprisonment from six months to five years. Up to 10 per cent of the fair market value of the property. This act would be applicable on any kind of assets movable, immovable, tangible, intangible, corporeal or incorporeal.
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Real estate properties a preferred investment option for Indians

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Real estate has always been a preferred investment option for several Indians like other investment options such as gold. Choices of investments may differ but investors in all financial categories follow more or less the same pattern or have similar preferences. Not just wealthy Indians, even middle-class and lower-income groups dream of owning a home or investing in real estate property and are keen to save all through their lives to buy properties.

According to the recent report, the real estate sector will be a preferred option even in the next 5-10 years. In the last ten years, the billionaire count in India has increased by 333 percent while the global growth was just 68 percent, which points to the growth of wealth in India. And these people preferred to invest in real estate sector. The average number of residential properties owned by wealthy individuals stands at 4, while the global average is 3.7, thus highlighting Indian’s inclination towards investment in the realty sector. One-third of wealthy Indians increased their asset allocations to residential real estate over the past decade.

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Real Estate Bill a Big Boost for Property Buyers

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With Real Estate Bill becoming a realty, business in real estate will not be as usual.  Home Buyers has many reasons to cheers as The Real Estate bill, whose main focus is to protect the home buyers rights makes registration of projects essential, including those that have not got completion or occupancy certificates. Registration will require builders to set aside funds collected from buyers and pay interest in case of delays. Hence, The real estate bill would force the Builders and Developers to finish construction and development work quickly as registering existing projects might delay them further.

The Real Estate Bill which has been passed recently by both the houses of parliament is ready to receive the assent of the President says that Builders have to deposit 70% of the amount collected from buyers in a separate account to cover the cost of construction, including land. Developers will also have to pay the same interest rate for any delays on their part as buyers do when their payments to the builders are late.

Real Estate investment has always provided a sense of security and emotional attachment to property buyers and investors. Real Estate is far less volatile than other growth oriented asset classes and financial institutions lend money easily to a real estate buyers. Real Estate is one of the very few asset classes which has beaten inflation consistently in the long run. Government’s commitment on Housing for All and Real Estate Bill to make it a realty will certainly help to strengthen the morale of realtors in coming days.

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Hubballi-Dharwad Growth Plan for the next 15 years

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The long pending Comprehensive Development Plan (CDP) for the possible growth of the twin cities in the next 15 years likely to be approved shortly. The development plan which has already been sent to DTCP is under technical scrutiny and will be sent for approval very soon.

Hubballi Dharwad Urban Development Authority commonly known a HDUDA whose plan for comprehensive development of the twin cities may become a reality very soon. The CDP is under technical scrutiny of the DCTP experts and will be sent to the government directly for approval if no issues are found. After the government approval the development plan will be sent back to the Hubli Dharwad Urban Development Authority (HDUDA) for inviting objections from the public where genuine objections will be reviewed and the final revised plan will be sent to the government for implementation.

The CDP was prepared keeping in view of the possible growth of the twin cities in the next 15 years. The Growth plan for the twin cities which dates back to 2003 had been delayed for several reasons is likely to get nod shortly.

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Land Prices Increase in Hubli-Dharwad

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The twin cities are turning out to be an investment hub for outsiders. With land prices going beyond imagination in metro cities people are turning towards Hubli-Dharwad to invest their money in the residential plots here. The recent selection of Hubli-Dharwad twin cities as smart city project and IIT in Dharwad by central govt has attracted more buyers. The trends are in such a way that more than 50% of the investors in residential plots of twin city are outsiders.

What’s luring them is cheap land prices and good returns.  Compared to metros, prices here are one-tenth of the land rates and gives more than 100% return in 2 years alone. The twin cities are also well-connected by air, rail and road to big cities like Mumbai, Pune, Bangalore and Goa and its proximity to these cities is making the difference.

People are now aggressively scouting for land in areas on the outskirts of the city. Land prices has increased almost twice as compared to last year. Layouts on Kusugal Road and Gokul Road, which had many takers a few months ago, is also now out of reach for middle and upper middle class families.

Developers are now scouting for land and concentrating on places near Navanagar and Tarihal where as these areas are nearer to both Hubli-Dharwad cities. More than 90% of outsiders who are buying properties here are doing it for investment purpose.

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Can I beat inflation in the long run?

Buyers Guide

Yes, you can!

Inflation is a monster that silently eats away the real returns. Very few asset classes have the potential to grow investments well above the rate of inflation. Inflation is nothing but purchasing power of the money. In order to protect the real purchasing power, an investment has to grow substantially higher than the inflation.

Stocks & Real Estate are two such examples of growth oriented asset class that has handsomely beaten inflation over a long period of time. The key here is to hold on to these asset classes for a very long time rather than flipping it for short term gains.

Good location, reasonable pricing & an ongoing economic activity can work wonders for a real estate investment. Real Estate also provides a sense of security and emotional attachment. Several of the Government’s policy initiative is focused on real estate sector. Housing for all by 2022 is the single biggest catalyst for the entire real estate space.

Maintaining a good credit history will also help in lowering the overall cost of acquiring a property. Current benign interest rate scenario works well in favour of a property buyer.

According to a study by Cians Analytics on the returns from various asset classes in India during 1991-2013, real estate emerged as the top performer. Looking at the overall returns, the study noted that “real estate appears to have outperformed all other asset classes during the 23-year period with an annualized rate of 20%.”

“Real estate was repeatedly the best performer during the 5-year sub-periods since 1991, with the highest return being 670% during 2008-12 and the lowest 46% during 1993-97,” the study noted.

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Interest rates looks set for a fall in the near future, should I do part prepayment of my home loan?

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Not necessarily. Home loan is a loan which is taken to create a long term asset. Concentrate on retiring high cost consumer oriented loans such as vehicle loan, personal loan, if any. Also, ensure Credit Card is paid within the due date. NEVER EVER carry forward the Credit Card dues.

Home Loan with a tax saving kicker effectively reduces the actual interest rate that a home owner actually incurs. This results in a substantial savings in the long run.

Home Loan is an excellent vehicle to fund a real estate purchase.

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Possible rate cuts by banks

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Imminent rate cuts by banks looks a real possibility now that Governor Rajan has made it clear that the cost of funds for banks have fallen substantially.

As usual banks have been rather reluctant to pass on the rate cuts to the end consumer in spite of couple of rate cuts by the RBI this calendar year. However, it is just a matter of time before banks are forced to pass on the rate cuts. Thousands of borrowers are patiently waiting for reduction in their monthly EMIs. Even corporate India has been very vocal on the impending rate cuts by the banks. On the ground economic activity will get a leg up when the borrowing costs comes down. Improved economic activity will result in higher income and will eventually boost the disposable income of the people.

Real Estate space should be one of the biggest beneficiary as and when the rate cut trickles down the system.
Now that the Governor himself has made his stand loud and clear, banks will have no option but fall in line by cutting lending rates, sooner rather than later.

Reference – Newspaper Link

 

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