A guide to renting out your property

September 2018

If you are looking to earn rental income from a second or third home, here is a round-up of what you need to keep in mind before locking in the lease

Real estate has always been a lucrative investment option for Indians. Many people will invest in a second and third home to earn rental income. Here is what you need to about the risks involved in renting out your property.

Low rental yield:

The returns from rental housing are not very high. “In most cities, the yield is barely 2-3%,” points out Sanjay Sharma, MD, Qubrex, a Gurgaon-based real estate consultancy. On the positive side, however, rental returns are inflation-adjusted. It is usually possible to revise the rent each year, unless there is a supply glut. Hence, the return on your historical cost, improves as time goes by.

Potential expenses:

All repairs have to be undertaken by the landlord. If the house needs major repair, the cost can eat away a substantial portion of the income earned that year. The house also has to be painted every time a tenant vacates.

Vacancy risk:

If the house remains vacant for a few months after the previous tenant has moved out, your cash flow gets disrupted.

Tenant issues:

Difficult tenants may not pay rent on time. The problem assumes a serious proportion if payments are defaulted continuously. The tenant could also misuse the property, undertaking commercial activities in a residential unit, or even use it for illegal activities. The landlord should be watchful that the tenant pays the society’s maintenance charges and the utility bills, on time.

Finding the right tenant

Research

Before speaking to potential tenants, find out the current rental rate in the area to avoid quoting a rate that is out of sync. You can charge a higher rate only if you have expanded the area of the apartment or furnished the house.

Advertise

Post a flyer on the notice board of your housing society with the resident welfare association’s (RWA) permission. You may also inform local brokers. Many potential tenants approach them when looking for an apartment in an area. Another option is to list your property online.

Police verification

Once you have found a client, you will have to get police verification done. This has become mandatory. Download the verification form from the police department’s website. Fill it and submit it at the local police station along with the tenant’s proof of identity. The police will then conduct a background check and provide approval accordingly.

Tenant issues

Difficult tenants may not pay rent on time. The problem assumes a serious proportion if payments are defaulted continuously. The tenant could also misuse the property, undertaking commercial activities in a residential unit, or even use it for illegal activities. The landlord should be watchful that the tenant pays the society’s maintenance charges and the utility bills, on time.

Rent agreement

This document, usually prepared by the real estate agent, must mention a few things explicitly. It must specify the start and end dates of the lease and the total period. The norm in the residential market is to have a lease period of 11 months. The agreement should also mention the rights and obligations of both, the landlord and the tenant in case one of them wants to terminate the lease before 11 months. The agreement should also state the date on which the rent will be paid. If the tenant is handing over post-dated cheques, it should mention the number of cheques and the repercussions if a cheque bounces. The rent agreement should also mention clearly who will be responsible for repairs. Usually, minor repairs are taken care of by the tenant.

Register the agreement

Get the rental agreement registered. The cost of stamp duty may have to be borne by the landlord, or it could be shared with the tenant. “The rent agreement will have greater validity in a court of law if it is registered and not just notarised,” points out Sujit Kumar, a Delhi-based high court lawyer.

Also read: How to improve your credit score before applying for a home loan

Back to All Thane Real Estate Resources, Thane Property News and Articles

  

TO KNOW MORE ABOUT 1 / 2 BHK PROPERTY IN GHODBUNDER ROAD THANE, VISITCREDAI MCHI THANE UNIT

Source: housing.com

Home Loan Versus Loan Against Property: Crucial Differences

August 2018

When it comes to raising money, should a borrower opt for a loan against property or a home loan? We examine...

Purpose

A home loan is taken for the purpose of either buying a ready-to-move-in house or for the purpose of booking an under-construction property. Home loans are available for residential, as well as commercial properties. On the other hand, a loan against property is generally taken, for the purpose of raising additional funds for business. The loan against property may be obtained in two forms. It can be a pure loan, under which, a lump sum is paid to the borrower, against the security of an immovable property. Alternatively, a line of credit may be set up in the form of an overdraft facility with a set limit, based on the value of the property and repayment capacity of the borrower.

Loans against property may also be obtained for personal purposes like education or marriage in the family. A loan against property can also be availed, to finance the purchase of another property, in case it is not possible to get a home loan against the property, due to any technical reasons like defect in the title of the property being purchased. The security pledged, for taking a loan against property, may be a residential or commercial property. In case of a home loan, the property to be purchased is pledged with the lender, whereas in case of a loan against property, another property is pledged and not the house that is being purchased.

Tax benefits of home loans and loan against property

For home loans taken to buy a residential house property, the borrower can claim twin tax benefits under the income tax laws. The first benefits is for the repayment of the principal component of the home loan, which is available under Section 80 C, upto Rs 1.50 lakhs for all the residential properties taken together. This deduction of Rs 1.50 lakhs is available along with other eligible items like public provident fund, contribution towards employee provident fund, life insurance premium, school fee for children, national savings certificates, ULIP, ELSS, etc. The other benefit is available under Section 24(b), for the interest paid on such loans. This benefit can be availed even for commercial properties and also on amounts borrowed from friends and relatives.

For a loan against property, the availability of tax benefits will depend on the ultimate use of the money borrowed. If the money is used for the purpose of your business, the interest paid and the incidental costs, like processing fee and documentation charges, can be claimed as business expenditure under Section 37(1) of the Income Tax Act. If the loan is used for personal purposes like marriage or education of your child, the interest on the same cannot be claimed under the present tax laws. If the money is used for the purpose of financing another house property, then, the same can be claimed under Section 24(b) of the Income Tax Act. The interest claim would be allowed, only if you are conclusively able to establish the link between the money borrowed and its ultimate use.

However, you cannot claim any benefit for the principal repayment on a loan against property that is taken to finance another house, as the money borrowed cannot be treated as a home loan.

Margin requirements and rate of interest for home loans and loan against property

To safeguard themselves against a decline in the market value of the asset, lenders do not lend the full value of the security/underlying asset. This difference that the lender retains while lending, is called the margin. The margin money in the case of a home loan, is the money that the borrower is supposed to finance on his own. The margin requirement for home loans is generally regulated by the Reserve Bank of India, in the case of banks and by the National Housing Bank, in the case of housing finance companies. The margin money also depends on the amount of home loan availed. The maximum loan that a lender gives, is only upto 90 per cent of the value of the property. So, the buyer has to put in 10 per cent. For high-ticket home loans, the margin requirement can increase to 25 per cent. For loan against property, which is not covered under priority sector lending, the lenders have to keep a higher margin, which can range from 24-40 per cent of the property.

The rate of interest on home loans is generally in the range of 9-12 per cent, depending on the type of lender and the profile of the borrower. The rate of interest on loan against property, is generally higher than home loans but lower than personal loans. The rates may vary from 11-14 per cent, again depending on the type of lender and profile of the borrower.

Hence, a home loan is the best option, for persons who want to buy a readymade house or book an under-construction property. However, in case you have any title defect in the property to be purchased, you can finance the same by way of a loan against your existing property.

Also read: How to improve your credit score before applying for a home loan

Back to All Thane Real Estate Resources, Thane Property News and Articles

TO KNOW MORE ABOUT HOME LOAN ON PROPERTY IN THANE WEST, VISIT CREDAI MCHI THANE UNIT

Source: housing.com

Navi Mumbai : Work on airport likely to begin in October

On August 24, the GVK-led NMIAL had sought expressions of interest for construction and engineering work at the airport. The last date for responses is September 10. 

CONSTRUCTION WORK on the terminal building and the southern runway of the Navi Mumbai International Airport (NMIA) is expected to start from October.

Officials of the Navi Mumbai International Airport Private Limited (NMIAL), which will execute the work, said they plan to award the first tender for the airport’s construction in the middle of October.

On August 24, the GVK-led NMIAL had sought expressions of interest for construction and engineering work at the airport. The last date for responses is September 10. After the two-stage tender process, applicants whose bids are selected, would participate in the financial bids.

“The tender is worth Rs 6,400 crore. The scope of work includes cut-and-fill works, construction of terminal building, airfield works such as runway, apron and other airside infrastructure and facilities, landslide infrastructure like roadway network, ancillary buildings, multi-level car park and utilities among others. They will be in charge of designing and planning the airport,” a senior NMIAL official said.

According to the conditions laid down by GVK, the applicant should have recorded an average annual revenue of more than Rs 40 billion in the last three financial years and constructed, in the last 10 years, a terminal building with a capacity of 15 million passengers per annum and other airfield infrastructure works of an airport.

“We are confident of awarding the tender within a month after bids are finalised. It also depends upon how many participate in the bidding,” said Lokesh Chandra, Vice-Chairman and Managing Director of City and Industrial Development Corporation (CIDCO). London-based Zaha Hadid Architects (ZHA) is designing the airport’s Terminal 1 and Air Traffic Control (ATC) tower. On July 7, CIDCO and NMIAL had signed off on achievement of the “appointed date”, marking the concessionaire’s official commitment to the project and the start of the construction period. GVK had said YES Bank would be the lead bank for the initial two phases of the airport, estimated to cost Rs 9,500 crore. The CIDCO is hopeful to start flight operations on a single runway by December 2019.

Senior officials said that more than 50 per cent of ground-levelling work of the airport is yet to be completed. Only 1,300 families from among the 3,000 families affected by the construction of the airport have shifted from the site. “More than 75 per cent of the required land for constructing the southern runway has been acquired. Remaining project-affected locals will shift after the monsoon,” said Chandra.

The airport with two parallel runways will have three terminal buildings, each having a maximum capacity of up to 30 million passengers per annum.

Read all Thane Real Estate Latest News

TO KNOW ABOUT THANE REAL ESTATE DEVELOPMENT CONTACT US AT 022 2580 6868

Source:indianexpress.com

Conversion of closed industries to residential plots may shrink Thane-Belapur industrial belt

NAVI MUMBAI : The latest state government policy of converting closed industrial units to residential plots in Navi Mumbai is likely to affect the shape of the 2,500 hectares of the Trans Thane Creek (TTC)-MIDC industrial zone, popularly known as the Thane-Belapur industrial belt.

The state policy, which was declared two days ago following the meticulously charted draft notification of 2016 by the urban development department (UDD), is already drawing varied reactions from factory owners, developers and citizens.

“This state government notification of easy conversion of industrial units for residential purposes will throw open a lot of land area in the industrial zone to make buildings and towers. So, this is a good opportunity for developers in general, as nearly 40 per cent of the industrial units are either shutdown or running into losses. It makes business sense to give it for real estate development,” said Manohar Shroff, former secretary of the Maharashtra Chamber of Housing Industry (MCHI-Navi Mumbai).

However, vice president of TTC-MIDC Industries Association (TMIA), Prakash Padikkal, said, “We have to study this state notification and seek legal opinion, since we feel that the industry as a whole will suffer if there are residential complexes and towers coming up here.”

As per the government resolution on August 20, 2018, any open land or closed industrial unit on such a land, or any existing built-up area in the industrial zone, can be converted for residential and commercial use with permissible floor space index (FSI) with prior approval of the civic commissioner.

The notification also states that for industrial units that have shut down, No Objection Certificates (NOC) of the labour commissioner is required to ensure that the dues of the previously employed workers are paid off.

Padikkal added that TMIA, which comprises 4,000 small and medium scale industrial units employing over 5.5 lakh people, is already in legal dispute with the Navi Mumbai Municipal Corporation (NMMC) over land ownership.

“There has not been any significant infrastructure development in the Thane-Belapur industrial zone, and now the state wants to give away land to builders. Who will run the industry then and what about ‘Make In Maharashtra?’ We will consult all our 4,000 members before taking a tough stand on this issue,” he said.

As per the policy, a premium 20 per cent of the amount will have to be paid to the state government for a speedy facilitation of change of land use, as per the ready reckoner land rates. Also, of the total FSI in the redevelopment process, 25 per cent has to be kept for commercial use.

Right to Information (RTI) activist Anarjit Chauhan remarked, “The government is only looking at lucrative short term gains by pleasing builders and throwing open industrial space. Such a policy can be legally challenged if one goes into the history of the original land ownership and change of use. As per the information that I have gathered, permission of Ministry of Environment (MoEF) will also be required for change of use as this was forest land given to the revenue department six decades ago.”

NMMC commissioner , Ramaswami N, said, “I will have to study this new government notification and then act on it. However, for now I can say that it looks like a win-win situation as residential units are required in industrial areas, and so it can be planned out well.”

Dinkar Samant, former chief architect and Cidco planner, is also of the opinion that such a move (from industrial to residential) is not good for the city.

“It is also not good for the economy. A city exists on three factors — residential, job ppportunities (industrial), and civic amenities. So, if the industrial manufacturing base is further shrunk, it is not good for the city.”

Samant added that earlier, several chemical factories at TTC MIDC were gradually replaced by infotech parks, which are also employing more people.

Read all Thane Real Estate Latest News

TO KNOW ABOUT THANE REAL ESTATE DEVELOPMENT CONTACT US AT 022 2580 6868

Source:realty.economictimes.indiatimes.com

Real estate shows signs of revival after demonetisation

The confidence of homebuyers has started coming back and those sitting on the fence can be seen returning to the market, which is good news for the real estate sector.

The nation’s real estate sector has witnessed many ups and downs ever since the onset of global financial crisis in 2007. However, just as it started doing well during the middle of this decade, the demonetization of high-value currency notes in November 2016 again hit it badly. The crisis was further aggravated due to the implementation of various policy reforms like RERA and GST. Although these reforms were aimed at protecting consumer interest, improving transparency in the sector and making builders more accountable, among others, however it took some time to gain the confidence of homebuyers.

Although more than a year after it was formally implemented, RERA is yet to be implemented in some states, however, its impact is now being felt on the landscape of real estate. No wonder, the confidence of homebuyers has also started coming back and those sitting on the fence can be seen returning to the market, which is good news for the sector.

Another factor which has worked in favour of real estate is the Modi government’s continued focus on affordable housing, backed by its ambitious scheme ‘Housing for all by 2022’. No wonder, as a result of macro-level regulatory developments, the residential sector has witnessed significant structural changes over the past two years, and demand for affordable housing has continued to drive residential sales, which is expected to stabilise going forward.

According to a recent research report by ANAROCK Property Consultants, a whopping 50 per cent jump has been witnessed in new housing launches in the Q2 of the current calender year, ie, 2018, over the preceding quarter, with the maximum supply in the affordable housing segment of below Rs 40 lakh. On the other hand, housing sales across the top 7 cities of the country went up by 24 per cent during the same period compared to Q1 of this year, giving enough indications that hombuyers are coming back to the market and the sector has started showing signs of revival.

The top seven cities – which include MMR, NCR, Bengaluru, Chennai, Pune, Kolkata and Hyderabad — witnessed new launches of close to 50,100 units in the Q2 of 2018 compared to 33,400 units in the Q1 of this year. The major cities contributing to Q2 2018 new unit additions include Mumbai Metropolitan Region, NCR), Bengaluru and Pune, altogether accounting for 75% of the new supply.

Out of the seven cities, the National Capital Region alone contributed close to 17 per cent of the new supply with 8,500 units, showing a 89 per cent rise over that of the last quarter. Of this, 54 per cent consisted of units in the affordable housing segment.

Thus, while the affordable housing segment has been the driving force in the residential sector, even commercial real estate absorption has remained strong, showing signs of a robust business environment. A positive leasing market with strong global occupier demand has sustained investors’ interest in the commercial segment. Also, warehousing and industrial segments are expected to pick up following the granting of infrastructure status to the logistics sector, which is good news for real estate.

Read all Thane Real Estate Latest News

TO KNOW ABOUT THANE REAL ESTATE DEVELOPMENT CONTACT US AT 022 2580 6868

Source:www.financialexpress.com

Industrial plots in Mumbai region opened for commercial and residential development

The decision will permit unused industrial areas or closed industries in satellite townships to be used for malls, residential areas and commercial houses with the approval of the civic commissioner

The state urban development department has opened large tracts of industrial land in the Mumbai Metropolitan Region (except Mumbai) for residential and commercial development.

The decision will permit unused industrial areas or closed industries in satellite townships to be used for malls, residential areas and commercial houses with the approval of the civic commissioner.

The developer will be charged a premium equivalent to the ready reckoner rate of the plot.

A notification was issued by state’s urban development department (UDD) for corporations of Thane, Kalyan-Dombivali, Ulhasnagar, Bhiwandi and Mira-Bhayandar as they have common Development Control Regulation rules – norms for construction and urban planning in an area. A separate notification was issued for Navi Mumbai.

According to the UDD directive, out of the total Floor Space Index (FSI) utilised for the development, a minimum of 25 per cent will have to be reserved for commercial development.

The notification also made it clear that in cases where the land had been originally acquired under the Land Acquisition Act, permission of the state government will be required.

This is being seen as a windfall for real estate developers ahead of the 2019 polls, as it will open up several plots for development.

Read all Thane Real Estate Latest News

TO KNOW ABOUT THANE REAL ESTATE DEVELOPMENT CONTACT US AT 022 2580 6868

Source:realty.economictimes.indiatimes.com

Industrial plots in Mumbai Metropolitan Region opened for development

The state’s urban development department issued a final notification to its ‘Industrial to Residential’ policy for the civic bodies of Thane, Kalyan-Dombivli, Mira-Bhayander, Ulhasnagar and Bhiwandi-Nizampur. These civic bodies share common development control rules for construction and urban planning in an area. 

A year ahead of Assembly polls, the Maharashtra government opened up large tracts of industrial-use land in the Mumbai Metropolitan Region (MMR) for residential and commercial development. The move allows unused industrial plots in MMR to be used for building houses, malls and offices with approval of the civic commissioner and a payment of a premium — 20% of the ready reckoner rate of the plot — to the government.

The state’s urban development department (UDD) issued a final notification to its ‘Industrial to Residential’ policy for civic bodies of Thane, Kalyan-Dombivli, Mira-Bhayander, Ulhasnagar and Bhiwandi-Nizampur. These civic bodies share common development control rules (DCR) — norms for construction and urban planning in an area. A separate notification was issued for the Navi Mumbai civic body.

The notification said that out of the total Floor Space Index (FSI) utilised for the development, a minimum of 25% is to be reserved for commercial development. Floor Space Index (FSI) typically indicates how high a developer can build on a plot. It is the ratio of total built-up area to the size of the plot.

The notification, however, made it clear that in cases where the land had been originally acquired under the Land Acquisition Act, permission of the state government will be required.

The decision is being seen as a windfall for developers since it will open up several unused industrial plots across the seven cities for development, and also increase housing stock in MMR.

However, this may not translate into affordable homes for citizens. The notification states that “provision of inclusive housing shall not be applicable while allowing such conversion”. So while the state has made it mandatory that 20 per cent of the basic FSI utilised should be for building residential tenements with built-up area of 30 sq metres and 50 sq metres (322 sq feet to 538 sq feet), the developer can sell these in the open market. That effectively means developers can join small flats and sell them.

A senior UDD official admitted that while a condition has been put in to ensure smaller tenements, it may not lead to affordable homes.

Urban planning experts said the government’s premise for creating public housing itself was flawed. “There is a complete lack of transparency while formulating such policies. Does the government know how much of industrial land will be opened up for residential development through this move. Is the housing being planned in tandem with transportation systems?” said Pankaj Joshi, director, Urban Design and Research Institute (UDRI), adding that affordable homes can be built only by public agencies. “The state could have made it mandatory to reserve a portion of this development for low-cost homes. These houses could have been handed over to Mhada, which could have auctioned them,” said Joshi.

Builders, too, are sceptical about the move bringing them gains. “It is a welcome move, but I don’t see this necessarily as a windfall for developers. It will also not lead to price correction as developers will have to pay a premium for conversion and there will be other levies,” said Nayan Shah, president of CREDAI-MCHI, apex body of developers

Read all Thane Real Estate Latest News

TO KNOW ABOUT THANE REAL ESTATE DEVELOPMENT CONTACT US AT 022 2580 6868

Source:www.hindustantimes.com