Category Archives: Hubli

Landmark Change to The Karnataka Land Reforms Act

In a significant change to the Karnataka Land Reforms Act, 1961, Governor Vajubhai R. Vala on 13/07/2020 signed the Karnataka Land Reforms (Amendment) Act, 2020, a month after the Karnataka Cabinet passed an ordinance making amendments to the Karnataka Land Reforms Act, 1961. Following the Governor’s consent, the State Government has notified the Amended Act in the Gazette notification.

Accordingly, the amendments –

  • Allow Non-agriculturist to purchase agricultural Land (Farm land) in Karnataka. However, restrictions on purchase of irrigated land by non-agriculturist remain
  • Removed the ceiling on income from non agricultural sources to buy agricultural land
  • Also increased the ceiling on number of units of land a person/family can hold

Accordingly, Sections 63(A), 79(A), 79(B), 79(C) in the existing Karnataka Land Reforms Act, 1961, were repealed to enable these changes.

With these changes –

  • Farmers are expected to get better prices for their land
  • Organised farming will get a fillip
  • Technology adoption & modernisation of agricultural practises is expected to increase

Reduce corruption & promote industries alike

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What is REAL ESTATE?

Real estate is –

  • Is India’s 5000 year old first choice of  investment
  • Parents & Forefathers blessings
  • It is Senior citizen’s only source of income & wealth 
  • A Widows support
  • A Father’s pride
  • A Husband’s promise to his wife for life long shelter & happiness
  • A Brothers protection to his Sister
  • It’s a Child’s nest & dream
  • A Soldiers support system back home
  • its a roof for covid patients
  • its education
  • It’s the only ASSET from which banks can recover money from bankrupt companies
  • it’s prestige upon which a father gives his daughter’s hand to a stranger

 

Real Estate is REAL ASSET, and invested wisely, yields highest ROI compared to any other asset class.

Cheers!

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Initiatives to be taken by Karnataka State Government to revive Real Estate Industry

7th May 2020, Bangalore

As we move from Lockdown 2.0 to INDIA 2.0, we all look forward to the State government to dole out incentives & freebies to kick-start the Economy. But post COVID-19 we all know that the government’s coffers are all empty and any recommendation that will help increase the revenue of the government and at the same time, revive the industry will be more than welcome!

Real estate is driven by sentiment and there is much that needs to be done to push the demand side of it. We have been hearing news about countries like Japan, USA & South Korea wanting to move their manufacturing units from China to countries like India, Philippinnes etc. Land twice as much as Luxembourg is made available by some of the Indian states but Karnataka does not figure much in this list. In contrast neighbouring states like Andhra Pradesh, Telangana & Tamil Nadu have constituted expert committees with representatives from Korea & Japan to attract these industries

For any industry, the primary requirement is LAND.

A case in point is that of POSCO. POSCO, a South Korean conglomerate, after signing an MOU with the state government, was to set up an integrated steel plant in North Karnataka and scouted for land in Tier 2 cities of Bellary, koppal & Bijapur. For over many years the required land could not be acquired and eventually the project was stalled. Similar was the fate of AccelorMittal who were looking for land in Bellary for setting up a steel plant. Its been over 10 years & even today the projects have not taken off as the land was not made available by the state government.

If Land can be allotted by the state government, say in 30 days or 60 days and a single window clearance mechanism is established, including environmental clearances, a lot of industries will come to Karnataka. Karnataka has the required manpower, skilled labour, raw materials etc. Once these industries are setup, it will help develop the Tier 2 & Tier 3 cities & inturn increase employment, incomes & the entire vicinity of these factories will improve.

This is a major opportunity that the state of Karnataka should capitalise on.

We get a sense that our government is listening –

  • On returning from World Economic Forums our CM has proposed changes to the age old Karnataka Land reforms Act in sections 79A, 79B, 80 & 109 thereby making land easily accessible for industries.
  • Land conversions & Building plan approvals have gone online
  • Online registrations is also in the making for the first time in Karnataka

Some of the other changes that we recommend which will increase revenues for the government & also kick-start the Real Estate Industry are –

  • Not just tweaking it, but abolition of Section 79A & 79B and amending Section 80 & Section 109 of Karnataka Land reforms Act, thereby paving the way for investments in agricultural lands by individual & industries alike.
  • Extension of validity of all approvals already obtained by a period of 9 – 12 months to accommodate the delay caused by CORONA
  • Reduce stamp duty to 3% for a limited period of 6 months to induce the fence sitters to invest in Real Estate. A case in point if the state of Maharashtra which has already announced reduction in stamp duty by 1%
  • Revise guidance value of properties as they are at present exorbitant
  • Definition of affordable housing to be raised from 20 Lakhs to 45 Lakhs for reduced Stamp duty benefits as announced in the state budget
  • Property tax waiver for 1 year
  • On the approval side –
    • Issue of Commencement Certificate (CC) & Completion Report (CR) to be made online
    • Ease of doing business initiatives
    • Single window approval system without much of manual interface
    • Payment of statutory fee / Dues / license fee to be linked to stage of construction of Real estate project
    • Release orders – while the intent of the provision is well received, it puts enormous pressure on the developer to complete all civil works and obtain all NOC’s from a plethora of departments & only then be able to register plots. This eventually increases the selling price of the end product. Instead, relaxation from 100% release on complete development to the hitherto system of 40:30:30 rule or equivalent is recommended.

These measures, along with the steps taken by the Reserve Bank of India (RBI) to put of money in the hands of the consumers & also paving the way for reduction in interest rates on housing loans will have a multiplier effect, boost demand and revive the Real Estate industry.

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Role of Channel partners post RERA

Channel partners & Real estate agents have always been an integral part of the realty sector. With the unparallel growth of Indian Real Estate, developers have been rapidly engaging with Channel Partners. Earlier, Kirana shop owners, small-time brokers and the likes had an unobstructed participation in the real estate marketplace, and many of them grew on unprofessional practises & under-informing their customers.

With introduction of Real Estate Regulation & Management Act (RERA), prospective buyers now have more faith in buying the property through channel partners as they have to get themselves registered with the respective state RERA authorities under the RERA Agent category. Organised Channel partners as advisors, act as a bridge between Real Estate companies and property buyers rather than mere brokers. In Tier-2 cities like Mysore & Hubli, Channel partners, are witnessing immense growth opportunities as they have better understanding of the local requirements & trends.

Interestingly, under the RERA Act, upto 5% of the total project cost can be levied to a registered Agent (channel partners) if wrong information is shared with prospective home buyers. This has brought about transparency in the sector and has improved buyer confidence. This will inturn boost the sector and strengthen the economy further.

Channel partners are looked up as professionals who are adept with current trends & have indepth knowledge of the local markets, customer demands and the builder profiles, there by offering quality service and consultations. There role is way beyond just referring clients, to arranging for property purchase loans, property registration & finally post sales documentation.

In the current scenario, the Role of Channel partners is more that it was ever before!

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How will home buyers benefit from RERA?

  • Home buyers who use the services of realty agents and agencies will now be protected as the Act renders brokers and agents punishable if they do not abide with the regulator’s strictures ruling.
  • It will bring transparency, better governance and accountability to the real estate transactions and processes.
  • False promises and wrong delivery of real estate property will end.
  • Home buyers can approach the authority to settle disputes with errant builders.
  • Developers will have to sell flats based on carpet area and not super built-up area.
  • 70% of the money received from buyers be deposited in an escrow account and used only for the purpose of the development of a project.
  • The unfairly falsely allotted property buyers is entitled to receive compensation under RERA.
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Will RERA change the way real estate functions?

Definitely. With a promise of protecting the right of consumers and ushering the transparency The Real Estate (Regulation and Development) Bill, provides a legislation to protect home buyers and encourage genuine private players. Passed in March last year the long awaited RERA Act has finally coming into effect from May 1 where consumer is the king.

It will change one’s home-buying experience as the primary aim of the Act is to bring transparency and accountability from all stakeholders. Violation of orders of regulatory authorities may cause imprisonment of up to three years for developers and up to one year in case of agents and buyers . it will make mandatory for the builder to disclose details like approvals received, layout plans, court cases against them,registration etc.

Demand will improve as buyers will have increased confidence about investing in the property market. The real estate prices will remain stable now but rates could rise in the next six months. RERA will boost the confidence of investors. It will protect buyers who have purchased flats in the past. the RERA will provide relief to home buyers. It will help buyers get well-defined product typology and interior specifications. Therefore, Buyers will be able to make informed decision on a well laid-down information.

 

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Why you should invest in Tier-II cities like Mysore

  •  Low costs real estate properties are easily available in Tier II cities.
  •  Higher and Faster appreciation of your properties.
  •  Booming real estate market.
  •  Affordable properties has wider demand and unexpected returns on your investment.
  •  Convenience to sell your property in tier ii cities in future gives more stability to your investment plans.
  •  Due to increasing cost of real estate and rapidly growing IT and other industries in tier-II cities high appreciation is more than certain.
  •  With Increasing commercial activity and services in Tier II cities also increases the demand for more residential properties.
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Demand of Real Estate Sector in Tier-II Cities

Tier II cities has the possibility of yielding maximum return on your real estate investments.  It poses all the basic amenities, better infrastructure and transportation system. Health and educational institutions, corporate and industrial institutions and many more but it still has lots of scope for growth hence increases the demand for residential and commercial properties.
  Most of the Tier II cities has been selected for Smart city project and will shoot up the real estate price once the project gets started.  Expanding number of industries, commercial hubs and new infrastructures have accelerated the demand for more real estate projects.
Selection of several Tier-II cities for smart city has made them a promising real estate investment destination for NRI investors.
  Tier-II cities are not only good for end-users with small pockets but are also great investments considering the potential price appreciation.  The passage of the Real Estate Bill will also play an important role in the protecting the interest of buyers and ushering in more transparency in a sector for opacity.
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Tier-II cities as a viable investment option for NRIs

Tier-II cities are better investment destinations due to higher potential for growth. Residential real estate prices in some of these tier II cities have seen a very good appreciation in the past few  years and is more likely to grow at a faster pace compared to the metros. Modi Government’s smart city project is also have major role to play as if successfully implemented, it has the potential to transform many Tier-II towns into metros. With improving infrastructure and more industries coming up in these cities, real estate market will more likely to see an expansion. While property prices in metros are sluggish, Tier-II cities have seen a significant positive correction. For NRIs who  usually want to invest either for their families or to create an asset have very good possibility to invest in these non-metros Tier-II cities as they can use them if they decide to relocate to India in future.. With Indian economy growing smoothly the Tier II cities are likely to expand day by day as Tier-II cities grow much faster than metros and more economic activity and infrastructure developments happen there. Major government policy changes like Real Estate Bill which is bringing much need transparency and credibility to the real estate sector will encourage more and more NRI investors to invest without hesitation and worry.
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