FAQs

A: Real estate as such is scattered market and not localised. It will be fetching very good price at say Mumbai suburbs than Nashik, Chennai or NCR Noida or the other way round at different time of the year.

However in localities where there is more supply the market will show less correction as compare to demand rich locality as it has matured (demand-supply rule). So real estate market stability, correction and increase would be locality specific and various stages in development. If you are potential buyer, decide according to your need and requirement and not the market scenario. 

A: To predict real estate market is very difficult or speculative. It is the market with its own dynamics, highly unorganised and liquidity factor very low unlike stocks.

However, it is also the reason for it being a long term investment with large amount of sum involved. Every individual or family should have real estate in their portfolio to at least 20-30 percent. Hence the question should be; is buying/selling the property fitting into my scheme/plan of investment for achieving my goal.

A. Real estate is unique cyclical market where it is not same all over a region like India, Maharashtra or Mumbai. Some times in a micro-market the market dynamics are different society-wise. Each micro-market has demand-supply dynamics which decides the rental and capital rates. It keeps going up and down along a period of time. This happens typically in all the micro-market as real estate is not regulated sector but market related. For e.g; one seller may ask for higher price than the average price rate prevailing in this locality because the property has additional features and amenities or it is located at prime location & the buyer is ready to pay this asking price then the market becomes seller’s market. But when the buyers are not ready to pay the asking price because they feel the rates are too steep (they would get similar property at better locality) then after some period the seller has to drop the price or keep the same price for long period…. Also when the supply of property is more the property rates tend to dip thus causing this cyclical trend of high & low price. 

A: Stamp duty is the tax paid to the revenue department of state government on documents or instruments under the Bombay Stamp Act, 1958 (real estate) & Indian Stamp Act, 1899.

It is about 5% (Maharashtra state) of agreement value or ready reckoner rate (as per market value assessed by the Registrar/Sub-registrar Office published every year) whichever is more.

Registration: The agreement on which stamp duty is paid should be registered with Registrar/Sub-registrar of the state department as it forms record with the government. The charges for the same are 1% of agreement value or Rs.30000/- whichever is less.

It is ok legally not to pay stamp duty, however any body buying property insist on stamp duty payment as it is one of the necessities of home loans. In case of dispute the registration agreements are valid in the court of law. So it is always good and safe to have stamp duty paid and registration done.

A: Number of banks are authorized to collect the stamp duty and frank the documents like ICICI Bank, Bank of India, Cosmos Bank and others.

The registration has following steps

  • Filling all the relevant data online with sub registrar’s website.
  • P.O / D.D of specified amount favouring that sub-registrar office as registration fees.
  • Complete documents along with the agreement deed as specified to be submitted in advance (30-45 minutes) to time allotted.
  • Token from Sub-Registrar’s office on telephone/personally/online.
  • All the parties along with identity proofs and one witness each should be present before the Sub-Registrar to execute the registration.  
  • Documents registered will be returned within 30-45 minutes or next day.

(This procedure is subjected to vary with different sub-registrar offices) 

A: By knowing about his previous projects (landmark project), his tenure in the field, timely possession ability, registration with the MCHI, others.

Following factors should be checked before buying or investing in the project:

  • Whether the title of the land is clear on which the construction is done.
  • N.A. permission
  • Permission under U.L.C.Act
  • Developmental agreement with power of attorney
  • Approved plan, IOD, CC, OC is obtained from Regulatory authorities according to the stages of construction.
  • Agreement draft for sale.
  • Area in carpet and built-up.
  • Amenities promised are provided.
  • Payment schedule.
  • Possession duration/time is adhere by him.
  • Approval of project by financial institution.
  • Other relevant check list with the lawyer’s consultation.

A: Obligation of a seller according to the Section 55 of the Transfer of Property Act, 1882

  • Disclose any material defect in property or in the title about which he is aware, but buyer is not
  • Provide to the buyer all the documents related to the property that are in his possession or power
  • Answer all the relevant questions put to him by the buyer about the property or its title
  • Execute a proper conveyance of property when the buyer tenders it to him (after payment of due amount) for execution at a proper time and place
  • To take care of the property and all relevant documents in his possession between the date of sale and delivery just as an owner would
  • Pay all public charges accrued in respect of the property up to the date of sale

A: A freehold property is one where there is a whole and sole owner, ownership is full & unconditional and there is no lessor/lessee involved. It last for indefinite duration of time.

Leasehold property is one where the property is leased/rented to lessee/tenant for definite period of time like 12 months or 99 years.  

A: Assessment tax also referred as property municipal tax, is revenue earned by civic authorities for services being rendered to public viz; water, sewerage, education, streets, etc., which is based on rateable/capital value decided by assessment department.

All the private properties (lands, lands with building, others) either freehold or leasehold, attract assessment tax. The lands or land with buildings owned, occupied, used by state, central & civic authorities will not be assessable for tax.

Also lands reserved for non-build-able public use in developmental plan i.e; playgrounds, gardens, roads, etc., are exempted from the tax. Lands/premises owned and used by public charitable trusts viz; temples, hospitals, schools, etc., are partially exempted from the tax.

A: According to the BMC proposal, property tax on residences will be calculated at 0.41% of its capital value. For offices, the tax will be at 1.95% of the capital value, and for banks, it's at 3.91%. The new tax will be calculated on the basis of the current market value or capital value of the property based on factors, like age, price, location, and type of property.

This is being changed from the current system of calculating property tax based on rental value of the property that was set in the first year of assessment. BMC, however, claims that the change was long overdue.

The rateable value (R.V.) of the tax is calculated on capital value which should be based on fair & reasonable marketable rates. The main barrier is fixing the capital value of a property.

According to BMC, the tax is currently being levied on the built-up area as the model is based on ready-reckoner rates that are linked to built-up space.

A: Value of property, grossly can be differentiated into 3 categories according to their purpose viz;

  • Sales Comparison approach which involves the information gathered from recent sales of the properties highly comparable to one being estimated. These properties involve normal market transactions with no unusual circumstances.
  • Income approach is based on principle of producing cash flow from the property like rent, capital appreciation after invested period, others.
  • Cost approach is estimating the cost of land & constructing the property.

In flat, apartment type the cost of renovation, alteration & creating amenities plus the basic value of the property.   

A: Besides the price of the property under consideration, the following information is important in determining the overall value.

  • List of other properties available in the area, for comparative purpose
  • List of properties sold in the recent past and details of the transactions
  • Historical data of the Land under consideration with due diligence, including title search  
  • Access to Land under consideration, including any potential future blockage
  • Status and category of land e.g. agricultural, industrial etc
  • Potential use of surrounding and neighboring property
  • Profile of the population in the catchment’s area through demographic study
  • Infrastructure available in the region
  • Future prospects for the region under consideration, viz Government’s Master Plan, if any
  • Others

A: An insurance policy indemnifying against the loss due to title imperfections, purchased usually by the buyer.  

Title insurance was intoduced in developed countries to cure the inadequacies of title validation accomplished through an abstract and legal opinion. It does all that a competent lawyer’s opinion & carefully drawn abstract does to protect the title. In addition, it spreads the risk of unseen hazards among many owners. Because of this many investors & lenders would prefer title insurance. In the absence of title insurance buyer can at future date find facing claims from an old mortgage, deed of trust or hidden heir, which might lead to costly litigation & considerable financial losses.

In India it is at budding stage & will improve discrepancies in real estate sector.

A: Title insurance companies search public records to develop and document the property’s chain of title. This means they will detect known claims or defects in the title of property.

If they find liens or encumbrances, they will insist that steps be taken to clear them. After that the insurance is tabulated & premium fixed.

A: Courtesy: Specification for coastal regulation zone chart and its development
(National Hydrographic Office, Dehradun, India)

In general the land between low tide line and high tide line is the Coastal Regulation Zone. The rapidly increasing human population and industrial development along coast have resulted degradation of coastal ecosystems and diminishing the living resources. In order to conserve coastal resources by controlling their depletion and manage the development activities, the government regulations prohibit certain activities and also list the permissible activities within the CRZ.
Coastal area classification and development zone:
For regulating developmental activities, the coastal stretches within 500 meters of HTL (High Tide Line) on the land ward side are classified into the following different 4 categories of coastal regulation zones (CRZ).

Category I (CRZ-I)
The areas that are ecologically sensitive and important such as national parks, sanctuaries, reserve forest, wild life habitats, mangroves, coral reef area close to breeding spawning ground of fish and marine life, heritage area, and areas likely to be inundated due to rise in sea level due to global warning. It covers the area between high tide line and low tide line.
Category II (CRZ-II)
The areas that have already been developed up to and close to the shoreline. For this purpose, developed area is referred to as that area within the municipal limits or in other legally designated urban area which is already substantially built up and which has been provided with drainage and approach roads and other infrastructure facilities, such as water supply and sewerage mains.
Some development on land ward side of existing road and structures and proposed road shown on the coastal zone management plan are permissible in this zone.
Category III (CRZ-III)
The area that are relatively undisturbed and those which do not belong to either category I or II. These will include coastal zone in the rural areas (developed and undeveloped) and also area within municipal limits or in legally designated urban areas, which are not substantially built up.
Category IV (CRZ-IV)
Coastal stretches in the Andaman and Nicobar, Lakshadweep and small islands except those designated as CRZ-I, CRZ-II and CRZ-III. 

A: It is specially demarcated area within domestic territory which is treated as foreign territory for trade, commerce, incentive, and taxation. In short the trade & commerce conducted from this area is given special treatment for tax and other government procedures. The main objectives of the SEZ are

  • Generation of additional economic activities
  • Promotion of exports of goods and services
  • Promotion of investment from domestic and foreign sources
  • Creation of employment opportunities
  • Development of infrastructure facilities
  • Others for development of otherwise economically weak zone

A: Metros are most developed cities or towns of that country. Here you find maximum growth in economic, physical/social infrastructure, political and employment terms. Standard of living is much higher compare to other cities.

 Few metros & cities

Tier-I

 

Tier-II

 

Tier-III

 

  • Mumbai
  • Delhi & NCR
  • Bangalore

 

 

  • Hyderabad
  • Chennai
  • Pune
  • Kolkata
  • New Mumbai

 

  • Nagpur
  • Nashik
  • Ahmedabad
  • Indore
  • Surat
  • Combaitore
  • Jaipur
  • Chandigarh
  • Goa
  • Lucknow
  • Thane
  • Kochi
  • Vishakapatnam
  • Mangalore
  • Ludhiana
  • Bhubaneshwar
  • Others

 

Note: This is to give an overall comparative analysis of cities from real estate sector point of view. Their status would change with time, developments (like infra structure), populations, state & central government regulations & facilities and lot of other uncontrollable factors.

For details click RERA

RERA is an Act to establish the Real Estate Regulatory Authority for regulation and promotion of the real estate sector and to ensure sale of plot, apartment or building, as the case may be, or sale of real estate project, in an efficient and transparent manner and to protect the interest of consumers in the real estate sector and to establish an adjudicating mechanism for speedy dispute redressal and also to establish the Appellate Tribunal to hear appeals from the decisions, directions or orders of the Real Estate Regulatory Authority and the adjudicating officer and for matters connected therewith or incidental thereto.

A. For understanding purpose let us categorized property into two basic types commercial & residential

 

Parameters

 

Residential

Commercial

 

Demand / Supply (you score accordingly)

 

End-use

Renting

Investing

End-use

 

Renting

Investing

Price / Rate

 

 Locality ongoing rate with amenities and facilities

 Locality ongoing rate with amenities and facilities

 Rate at different stages like under construction / ready possession

 

 Locality ongoing rate with amenities and facilities

 Locality ongoing rate with amenities and facilities

 Rate at different stages like under construction / ready possession

 

New Projects

 

 Developer track record,

all approvals in place & other developmental charges (VAT, service taxes & others)

 Amenities / facilities

 Stage of project & possession duration

  Developer track record,

all approvals in place & other developmental charges (VAT, service taxes & others)

  Developer track record,

all approvals in place & other developmental charges (VAT, service taxes & others)

 Stage of project & possession duration

 

Neighbourhood / locality type

 

 Residential or Commercial

 Residential or Commercial

 Residential or Commercial  

 Residential or Commercial

 Residential or Commercial

 Residential or Commercial

 

Brokers / Agents

 

Lot of brokers means supply is more than demand

 Lot of brokers means supply is more than demand

 Lot of brokers means supply is more & not favourable for investing

 Lot of brokers means supply is more than demand

 Lot of brokers means supply is more than demand

 Lot of brokers means supply is more & not favourable for investing

 

Transportation

 

 All types of conveyance

present

 All types of conveyance present

 All types of conveyance present & upcoming

 All types of conveyance

present

 All types of conveyance

present

 All types of conveyance

Present & upcoming

 

Markets / Utility centres

 

 Availability of basic things for living

 Availability of basic things for living

 Availability of basic things & upcoming markets / utility centres

  Availability of basic things for commercial

  Availability of basic things for commercial

  Availability of basic things & upcoming commercial needs

 

Education Centres

 

 Number of quality educational centres present

  Number of quality educational centres present

  Number of quality educational centres present & upcoming

 Not applicable

  Not applicable

  Not applicable

 

Healthcare Centres

 

 Number of hospitals, doctors, chemists & other healthcare centres present

 Number of hospitals, doctors, chemists & other healthcare centres present

 Number of hospitals, doctors, chemists & other healthcare centres present & upcoming

  Not applicable

  Not applicable

  Not applicable

 

Banks / ATMs

 

 Number of Banks present

 Number of Banks present

 Number of Banks present & upcoming

 Number of Banks present

 Number of Banks present

 Number of Banks present & upcoming

 

Hotels & Eateries

 

 Hi-end & local eateries present

 Hi-end & local eateries present

Hi-end & local eateries present & upcoming

  Hi-end & local eateries present

  Hi-end & local eateries present

 Hi-end & local eateries present & upcoming

 

Religious / Social Centres

 

 Would decide communities present

 Would decide communities present

 Present & upcoming

 Not applicable

 Not applicable

 Not applicable

 

Infrastructures

 

 Should be well developed

 Should be well developed

 Should be well developed & upcoming

 Should be well developed

 Should be well developed

 Should be well developed & upcoming

 

Others