Mafatlal gets 100% TDR for roads on its Chembur plot



Clearing the decks for Mafatlal to redevelop its sprawling plot in Mahul in Chembur, the Bombay HC has directed the BMC to grant the company 100% Transfer Development Rights for the public roads it has constructed on the land. A division bench of Justice Anoop Mohta and Justice Ajay Gadkari struck down as illegal the corporation's decision to revoke the letter of intent (LOI)—the initial clearance for the redevelopment project—granted to Mafatlal.

"(Mafatlal's) entitlement just can't be denied once it is es tablished, and there are documents on record to show, that they completed work as required and accordingly handed over the site to the BMC's officers," said the judges. The BMC had claimed there was a delay in completing the road construction and now whatever was done by the company was unauthorized.

The HC, however, pointed out that the BMC itself had issued approvals for the road and after the company surrendered the civic amenity , the corporation had taken it over.

As per the policy , Mafatlal constructed the road and even paid over Rs 54 lakh for sewer lines and other facilities. Following a 2009 Supreme Court judgment, Mafatlal sought 100% TDR for the public road it had constructed at its own cost.

`Take back land given to Videocon' idco has been allowed to C take back 100 hectares of land allotted to Videocon at Navi Mumbai in 2008 to set up a TFT-LED plant. The state cabinet has taken the decision due to delay in setting up the plant. A release issued by the CM's office said Cidco required the land for several important projects and hence the decision. TNN

Read more...

State ordinance clears hurdles for conversion of land use





To ensure that there are no hurdles for conversion of land use from agricultural to non-agricultural, the state government has issued an ordinance amending the Maharashtra Land Revenue Code, 1966.

Section 42 of the MLRC requires permission from the collector for non-agricultural use.With the ordinance the state has done away with the requirement. This is because the process is cumbersome and had led to a rise in use of land for other purposes without the collector's nod.

Under the new amendment, in urban areas, if a plot is part of the development plan or the draft development plan sanctioned under the Maharashtra Regional Town Planning Act, then the collector's permission is not required. But the planning authority will need to ascertain its occupancy and any encumbrances and thereafter sanction development permission.

In August 1999, the state had issued a government resolution for conversion of land use. But as the Act was not amended, the notification could not be implemented. This time, after the cabinet approved the proposal, the earlier GR was cancelled and in its place the ordinance has been issued. It is one of the last ordinances signed by governor K Sankaranarayanan on August 22. He resigned from office on August 24, after he was transferred as Mizoram governor.





Read more...

Over 2L flats remain unsold due to demand-supply gap





The unabated demand-supply gap in the residential property market has created a pile-up of 2,13,742 unsold units, according to a Knight Frank India report released on Tuesday . The unsold inventory could take almost three years to sell.

The half-yearly report, India Real Estate Outlook,analyses the residential and office market performance in the Mumbai metropolitan region (MMR) between January and June 2014.

Demand in the region dropped by a whopping 25% during this period in comparison with the same period last year. "Buyers continued to sit on the fence for the most part of H1 2014 in anticipa tion that the new and stable leadership at the Centre would revive the ailing economy ," it said The most expensive location (south Mumbai) accounts for less than 1% of the 4,47,294 under-construction units in the MMR. " A comparison with all other micromarkets in MMR shows that the inventory level in south Mumbai market will take maximum time of 18 quarters (4.5 years) to sell," it said.

Central Mumbai, on the other hand, emerged as a prominent residential market on the back of premium residential and social segment and corporate headquarters from manufacturing, media and consulting sectors. It will take almost four years to clear the inventory that has been in the market for the past nine quarters.

The western suburbs saw a 19% jump in new launches compared to 12% during the same period last year. This belt has an unsold inventory of over three years.

With developers deferring fresh launches, new project completions dropped by 25% in H1 2014 compared to the same period last year.





Read more...

New TDR policy to bring down property prices

Mumbai: Property prices are set to come down, with the state deciding to increase its share in the Transfer of Development Rights (TDRs) market from 0.33 to 0.67 in the suburbs. In other words, the government has restricted the land available with private builders for TDRs. The amended TDR policy will be released soon. Though widely seen as a pre-poll sop, many developers have welcomed the move. The rise in the state government's share in the TDR market will bring more revenue into its kitty and also the Brihanmumbai Municipal Corporation (BMC). The civic body can utilise this earned revenue for various infrastructure projects. What exactly is TDR? TDR means Transfer of Development Right. Supposing you own some property in Borivli. If the government declares it as reserved land (either to be used as a garden or as a heritage property), you may lose control over that property. But the government will compensate you by issuing TDR. Though the government generally issues TDRs on reserved land, it can issue TDRs on other land also, if it wants. How will it help? TDR will enable you to sell to builders an equal area of the land you've lost. Only, this is a virtual space market. Here, you are actually not selling land that you own, but selling an equal area of virtual space for real space lost. You're selling a certificate and getting compensated for the land lost. When builders start selling and buying them, an open market is formed. How will increase in TDR reduce prices? Earlier, the government's share in the TDR market used to be 0.33 and the open market share was 0.67. Since the bigger percentage was with private players, the government had lesser control over prices. Private TDR holders used to increase prices artificially and manipulate market. By reversing the ratio, the government will have a better control of the market and real-estate prices. What are TDR prices like? At present, TDR is sold between Rs3,500 to 5,000 per sq ft. Once developers start getting TDR at reasonable rates from the government, their input costs will come down. There will no supply constraints. Automatically, property prices will also come down. But they are far lower than land prices... Yes. The TDR prices are far lower than the actual land price. The logic is to compensate for lost land with something, rather than nothing. What are builders saying? Though property prices going down is not good news for builders, they welcome this move as it would bring stability to the real-estate market. Price rise beyond a certain level will only lead to piling inventory and it will not really help developers. Says Sunil Mantri, chairman of National Real Estate Development Council (NAREDCO), developers umbrella body: "This will bring stability." How's the scene abroad? According to Mantri, every major world city has an FSI (Floor Space Index) of more than 4. FSI is the creation of addition space by building more floors.

Read more...

Entire Backbay may be opened up for development





The Mahim shoreline is not the only stretch in Mumbai to be declared a bay by the state coastal authority , opening it further to construction.
The entire Backbay area, extending from Nariman Point and Cuffe Parade to Girgaum Chowpatty , has also been classified as a bay based on a report by the National Hydrographic Institute in Dehradun.

The shift in nomenclature, effected earlier this year, could create a bonanza for builders in south Mumbai in the months ahead. The state urban development department and the BMC are already grappling with the prospect of seeing large parts of Mumbai's coastline open up to rampant construction due to the process of redefinition. Till 2011, Coastal Regulation Zone (CRZ) norms had restricted construction activity up to 500m from the sea's high tide line. But an amendment in that year reduced the minimum distance for construction activity near a bay from 500m to just 100m, while retaining the old protection for seafronts.

3.5-acre plot freed, P 5 Taking advantage of the change, many Mumbai builders with prime plots near the coast rushed to the National Hydrographic Institute and the Institute of Remote Sensing (IRS) in Chennai. The institutes reportedly certified several areas as bays and marked out the plots as being outside the 100m zone.

The director of hydrography clarified that Backbay has been depicted as a bay on the institute's official navigational charts. Based on this classification, the Maharashtra Coastal Zone Management Authority (MCZMA), earlier this year, green-lighted construction on a 3.5-acre plot in Gamdevi, which earlier fell within the 500m CRZ protection line. The builder is rumoured to be developer Sudhakar Shetty. He could not be reached for comment despite several attempts by TOI.

"The builder got a favourable mention in the minutes of the MCZMA, which put his plot close to Girgaum Chowpatty out of the purview of CRZ," said a source.

Debi Goenka of the Conservation Action Trust said the shorelines in Mumbai could technically be defined as bays. "The problem is with the Union environment ministry, then headed by Jairam Ramesh, which allowed CRZ restrictions for bays to be reduced from 500m to 100m," he said. Architect and housing activist P K Das warned any attempt to dilute CRZ will lead to "development anarchy".

Government sources al

leged the MCZMA was selectively granting environmental clearances to some plots.

As reported by TOI on July 24, the urban development department and the BMC objected to the MCZMA clearing building projects by removing them from CRZ on the basis of the new bay definition. The state government stayed the coastal authority's approvals.

But R A Rajeev, the IAS officer who was removed as state environment secretary (he was chairman of MCZMA) last week, said the authority did not take any controversial decisions. "The MCZMA approved projects based on reports by the hydrographer and authorized agencies of the environment ministry. The authority sim

ply followed their observations on the demarcation of these plots," he told TOI.

"We did not pick and choose cases. Every project was scrutinized. Some were cleared by the Bombay high court," said Rajeev, adding that there were 15 such cases in the pipeline.

A new coastal zone management plan (CZMP) for Mumbai is currently being prepared by IRS Chennai.

Builders whose plots abut Backbay are waiting anxiously to free their plots from CRZ.

"They are hoping the draft CZMP plan would be approved by the National Coastal Zone Management Authority and published accordingly, showing these areas as a bay," said a source.

TIMES VIEW: It's ultimately experts who will determine whether these areas qualify as bays or not. But there is something drastically wrong in the law and the process if a mere change in nomenclature of an area can mean so much of difference in terms of development. Mumbai is already bursting at its seams and can barely provide the infrastructure its residents need; it's imperative the city gets a dose of planned development.

Read more...

THE WORLD AT YOUR FEET - High income, low tax... House that!





Buy that new penthouse, reap lakhs in tax savings. Here's how the math works

The upside of being a `high-net-worth individual' (HNWI) is that you get a fatter pay cheque than most people.
The downside is that a big chunk of it will be taken away by the taxman. But there are ways of getting around that; in fact you can save a lot of tax by buying a house -as long as you let it out and not live in it.

Kuldeep Kumar, executive director of PricewaterhouseCoopers, says that's because, under Sec tion 24 of the Income Tax Act, you are al lowed deduction of the entire interest payment on your home loan from your taxable income -provided you club the rental income from the house with it.

After the new Budget, home buyers are allowed a deduction of Rs 2,00,000 on interest payment of their home loan. But no such limit exists if you can show your purchase as an investment, and not for personal use. The tax benefit is huge, says Vivek Jain, a senior chartered ac countant. If you are wonder ing how, the math is simple: with interest rates at around 10% per annum and rentals from a residential property hovering around 3% of capital value even in the metros, your actual outgo amounts to about 7% every year. This "net loss" is what you can rightfully claim as deduction from your taxable income.

LOSS IS GAIN

Here's how the calculation works out. Let's say you have an income of Rs 1.20 crore per annum, putting you in the 33.99% tax bracket. You buy a house worth Rs 3.30 crore for which you pay Rs 30 lakh up front and get financing of Rs 3 crore from a bank. At 10% interest rate, your EMI will be Rs 2,89,506. In the first year, your total payout will be Rs 34,74,072 -Rs 29,77,656 as interest payment and the rest towards repayment of principal. Going by market trends, your annual rental income would at most be Rs 11,50,000, or 3.5% of capital value. After deducting 30% as maintenance expense, your net taxable rental income will be Rs 8,05,000 (70% of 11,50,000). Deduct this from the interest amount (Rs 29,77,656) and your "net loss" stands at Rs 21,72,656. This amount will be deducted from your taxable income, reducing your tax liability by as much as Rs 7,38,486.

RETURNS OF RENT

With part of EMI being used to pay the principal, the interest burden will decline with each year; the second year, it will be reduced to Rs 29,25,675.
With rental income rising by , say, 5% during the period, the net loss will come down to Rs 20,80,425 and you get to save Rs 7,07,136 as tax in Year Two.
Interest amounts will fall further but a simple calculation shows that even if rentals keep increasing at 5% CAGR, your income from rent will exceed your interest outgo only in the 15th year.

FLOOR POWER

Buyers who are yet to get possession of their flat stand to gain as well, says Kumar.
The entire accumulated interest payout during the construction period can be claimed as deduction over the next five years once possession is taken.

After 15 years, you can sell the house and reinvest the money in a new one. Of course, you can always invest in more than one property and save even more tax. All it takes is an even fatter pay cheque.

Read more...

Nariman Point-Kandivli coastal road goes to BMC

After nearly two years of dithering, CM hands the file back to the civic body n Project cost estimated at Rs8,000 cr n BMC has raised Rs3,500 cr from fungible FSI

Mumbai: Ending ambiguity over who will execute the multi-crore coastal road project, the state government has confirmed that the Brihanmumbai Municipal Corporation (BMC) will undertake the ambitious venture. MMRDA was the other contender. Speaking to dna, chief minister Prithviraj Chavan said BMC will execute the project now. "The BMC will work on the project... we have permitted BMC to collect revenue in lieu of fungible floor space index... If need be, we will chip in with funds," he said. First, what exactly is this fungible FSI? Fungible means interchangeable. Imagine, you are buying a flat. Developers will charge you for ornamental features like lobby, lift space, flower bedsetc. The developers were not sharing this money with the government. They were called free-of-FSI (floor space index) component. Now, the government charges a premium from developers for such space. The money so collected will be exclusively used for coastal road construction. To compensate the developers, the government gives them additional FSI or additional area for the premium collected. Now, what's the coastal road project? It's a 35.6-km road from Nariman Point to Kandivli, which runs parallel to the coast. The road will start from Manora Guest House, opposite Mantralaya, and progress through a tunnel between the NCPA and the Air India building. Nearly 8 km will be on reclaimed land. It will also have elevated roads. There will be 18 exit and entry points. What's the project cost? Given the route along the coastline, the BMC has two options: to reclaim land from sea or to build road through mangrove patches. The first option will cost Rs8,000 crore, and the second Rs7,000 crore. How will it help me? The minimum average speed on city roads has come down from 18 km per hour to 8 km per hour due to rise in vehicles and congestion on roads. As far as the coastal road is concerned, motorists can drive at 90 km per hour. Where will the money come from? The BMC has so far collected Rs3,500 crore as premium recovered in lieu of fungible FSI. "We have set a target of Rs2,000 crore in a fiscal. To meet that target, developers will have to undertake a specified number of projects in a year," an official said. Why a Cong-led govt chose Sena-led BMC Though this is a pet project of chief minister Prithviraj Chavan, he's willing to cede ground here. The logic is that since the Sena-BMC combine is ruling the Centre as well, clearances will be smooth. Recently, Chavan had met Union environment minister Prakash Javadekar to discuss environmental clearances. The latter appeared positive on putting the project on fast-track. Does the BMC enjoy any edge over MMRDA? It's a multi-crore project, requiring huge monetary investment. So, the government thinks the BMC has the resources that no other agency has. When was the project conceived? The wheels started rolling when the Chavan cabinet issued a government resolution on June 30, 2011, forming an 11-member joint committee, under the chairmanship of then civic chief Subodh Kumar. The panel consisting of architects, urban planners and experts in oceanography submitted the report to the government on December 29, 2011. What's the status now? Feasibility study is on now. In February this year, the BMC appointed a consultant (a consortium of Stup and Ernst and Young consultants) to carry out a feasibility study with the roads department. The consultant will suggest the best way to carry out the project and also a cost-effective model.

Read more...