Saturday, 27 April 2013

Proposed Land Bill Will Stymie Growth

Experts say that the Land Acquisition Bill, if passed in its current form, would slowdown urbanization in the country and hamper the growth of the economy. 

The proposed Land Acquisition Bill is likely to affect the implementation of most of the real estate projects including housing projects. Experts and developers say that if the bill is passed in its present form, it will not only increase the cost of a project but would also prolong the time required to implement the project. 
In fact, experts say that the bill, if passed, would slowdown the planned urbanization and hamper the growth of the economy. 
 In modern times, cities have emerged as engines of growth and the availability of land is very crucial in this development. According to FICCI, an industry association, the average time required for acquiring land for industry will be six-seven years, since there are a number of steps that have been added to the whole process of land acquisition. The provisions of the bill will be applicable in cases where land acquisition is 50 acres or more in urban areas or 100 acres or more in rural areas. Cushman and Wakefield, a global consultancy firm, says that the compensation for land acquisition after the bill is passed will at least double in urban areas and will go up by four times in rural areas. Further, the clause of mandatory consent of 80% of the landowners for private projects, and mandatory consent of 70% of the landowners for public-private-partnership projects will delay the process of land acquisition, and the projects in turn. 
But the worst is the provision for leasing out the land to industry by landowners. FICCI said that the provision should have been discussed with the industry before being included in the bill. But neither the standing committee nor the government had earlier suggested the ‘lease’ as an option under the bill. 
FICCI says that on the one hand a lease may significantly reduce the front-end outlays, as the total compensation will not have to be paid up front, while on the other hand it has got uncertainty factor attached to it. It said leases have inherent uncertainty regarding renewals, particularly when the period is short. A lease may restrict flexibility over development and operations, adding further to the uncertainties. Also, leased lands will impact mergers and acquisitions, as there are obvious limitations to the automatic transmission of leases in rearrangements. The bill continues to prescribe for consent of 80% of “affected families” for acquisition for private-sector projects and 70% for PPP for the defined public purpose. FICCI said that “affected families”, and not the landowners, have been made the basis of consent requirement in any acquisition. The definition of “affected family” includes agricultural labourers, tenants including any form of tenancy or holding of usufruct right, share-croppers or artisans who may be working in the affected area for three years prior to the acquisition, whose primary source of livelihood stands affected by the acquisition of land. 
This definition of project-affected families is too wide and it would be practically impossible to identify the genuine families affected and obtain their consent. 
The bill not only wants the industry to pay for compensation for land to landowners but also for the relief and rehabilitation (R&R) of the affected families. Compensation and R&R, as per the bill, will raise the cost of acquisition by six to seven times for the industry, FICCI said in a paper. 
Further, in case land remains unutilized after acquisition, the new bill empowers the government to return the land either to the owner or to the state land bank. The period for the return of unutilized land has been reduced to five years in the bill, from the earlier stipulation of 10 years. 
Now, in case of infrastructure projects like industrial corridors, the project does not take off before five years because of problems in clearances. So, the definition of “unutilized” needs greater clarity; also, five years could be too small a time period for many infrastructural projects, depending upon the definition adopted for “unutilised” land. 
Further, where acquired land is sold to a third party for a higher price within 10 years of the acquisition, 40% of the appreciated land value (or profit) will have be shared with the original owners. This comes at the top of the already increased R&R and compensation amount to be paid and will create problems in tracing the original landowners after some years. 
In these circumstances, Cushman and Wakefield says, besides housing projects, urban infrastructural projects are the ones that will receive the sharpest blow. In many instances, this rise in input costs is likely to make many projects unviable. 
The growth of Indian economy is largely dependent on infrastructural development, which the government cannot take up singlehandedly; cooperation of the private sector becomes inevitable. But, the consent clause in the bill will delay the start of projects and impinge on their viability, C&W says. 
Om Chaudhry, the founder a n d CEO of FIRE Capital, says that land acquisition is the most critical factor in real estate development and any dislocation here would create a lot of downstream issues in urban development and hence the country’s economic growth. 
“The state has gradually reduced its involvement in real estate development over the years and the private sector has acquired lands on market terms and carried out the necessary development to expand our urban city infrastructure in order to cater to the needs of the fast expanding urban population. The government should suggest a practical and feasible rehabilitation and resettlement policy,” Chaudhry says. 
Harsh Trehan, the CMD of Trehan Home Developers, says: “Homebuyers will be the most affected party (if this bill is passed) as the developers will have no option but to transfer the entire cost increase upon them. It will be a big setback for the housing sector, especially low-income housing where the shortage is maximum. It may also jeopardize the slum rehabilitation and resettlement schemes.” 



Monday, 22 April 2013

Buy cheaper flats in a resale

After the failed predictions over the past couple of years about a fall in property prices, you are more likely to witness the prophesied Second Coming before the promised correction. So what should cash-conscious buyers do? Wait endlessly in the hope that realty prices falter or take the bait of glossy schemes offered by developers? While most such offers for new houses seem tempting, you won't derive any real benefit. 

Fortunately, there is a third option: cheaper flats in the resale market. No, these aren't old, mouldy apartments in decades-old projects. Quite a few of these houses have not even been lived in, but you can still get them at a discount to similar houses within the same project or vicinity. If you're wondering why resale flats are cheaper than the new ones being offered by the developer, it can be due to various reasons. One of them is that these houses have been snapped up by buyers and investors during the pre-launch phase with the intention of selling them after about three years to earn a profit. At this stage, they were only required to make the down payment.

"Many investors book a property at the initial stage just to make a small profit. If they want to make a quick exit, they will price it cheaper than the one offered by the developer, for a faster sale," says Yashwant Dalal, president of the Estate Agents Association of India, an apex body of 
real estate developers.

Another reason is that a lot of investors who book flats during soft launches are offered heavy discounts by builders. "To get funding before construction commences, builders offer investors at least a 20% discount to the prevailing market rate," adds Dalal.

So, even if such investors sell the flats at a price lower than the one offered by the construction company, they make a hefty profit. While individual buyers readily make the down payment, a few find out that their finances are strained when they have to start paying the home loan EMIs after the construction is complete, especially if they are also paying a rent. In some cases, they find another project that is more to their liking. Obviously, in either situation, the only option is for them to sell the current house as quickly as possible to repay the home loan, even if it means earning a smaller profit than the one they had hoped for.

Also, a seller may prefer to dispose of the house before he starts paying the EMI. This is because the home loan principal repayment benefit of up to Rs 1 lakh under Section 80C is reversed if a house is sold within five years of buying it. The amount that he had claimed for tax deduction would be included in his salary and become taxable. Another factor that could influence the seller's decision is that he would want to exit the property before taking possession. This would help him avoid paying the additional charges, such as the fee for parking space or club membership. The seller could also avoid paying the registration charges and stamp duty, which can be as high as 12% of the value of the property.
Not paying these will help him offer the house at a discount while selling it. How you gain The biggest benefit of buying in the resale market is that the construction is almost complete and some of the houses are ready to move in. So, unlike in the case of a project that is still under construction, you don't have to worry about when you will get the possession.
"There is always a risk associated with projects that are being built in terms of delays or handover. An added benefit in the resale market is that if you are leasing an apartment, shifting to a fully built house will help you save on rental costs, unlike purchasing a property under construction, where you pay the rent as well as EMIs," says Anshuman Magazine, chairman and managing director (South Asia), 
CB Richard Ellis.

Of course, in this case, you will also know that you are getting exactly what you are paying for. You can be sure that you won't be duped by the developer, who promises to instal marble or wooden flooring and, instead, puts in regular tiles. Another advantage is that you can avail of the tax benefit beginning with the first mortgage payment. The tax deduction of Rs 1 lakh on the principal component of an EMI is available under Section 80C, while the interest paid on a home loan is tax-exempt up to Rs 1.5 lakh under Section 24 B. However, this is possible only after you take possession of a house. In case of a property under construction, you have to pay the pre-EMI, which is the interest on the home loan.

Though the total interest that you pay as pre-EMI can be tranched into five payments that are eligible for tax exemption for five years after you take possession, they are included in the capped amount under Section 24B. So there's hardly any benefit in this case. Problems you may face In the resale market, the down payment is higher than that demanded by a builder, which is usually 20% of the value of the property. Also, the seller may ask for a portion of the selling price to be paid in cash, which means that you will have to apply for a smaller home loan (see 9 questions to ask). So, you should be sure that you can afford to pay 25-30% of the price. Also, when you buy a property in the resale market, you are dealing with an individual rather than the developer, who has a reputation to protect.

"You can't take anything at face value here, so you must thoroughly scrutinise all the property documents, especially those that verify the seller as the real owner of the property, who has the right to dispose it of," says Om Ahuja, CEO, Residential Services, Jones Lang LaSalleIndia.

Go through the original sale deed and the society's share certificate carefully. If you plan to take a home loan, you will have the advantage of the bank doing the necessary due diligence. Beyond the sale price, there will be additional costs that you should factor in, such as registration costs and transfer fee to the housing society. Before taking over the house, make sure that the seller has paid all outstanding dues and taxes. However, to get the utility connections transferred to your name, you will have to pay a fee to the relevant state departments or municipal authorities. Though these houses are practically new, you may want to carry out renovations or changes to suit your taste. So, include such costs while finalising your budget. There could be other minor issues like not getting the membership to the society's club because it is full or the lack of parking space.

"If the first buyer did not buy the parking space, the new buyer may not be able to get a new parking lot even if he is ready to pay for it," says Ahuja. The situation may be worse if your family owns more than one car. What if the property is mortgaged? If the house is already mortgaged with a bank, you should ask the seller to obtain a letter from the relevant bank stating that it agrees to relinquish the property documents when the loan is fully paid. After you are satisfied with all the property documents, you can make a token payment to the seller and enter into a registered agreement with him. You can then deposit the balance payment to the seller's loan account, after which the bank will initiate the process of releasing the documents.

The bank and the seller will fix a date by which you will have to make the full payment. If you are unable to do so by the due date, the bank will levy either a penalty or a premium over and above the outstanding principal, which you will have to pay. If you plan to take a 
home loan to pay for the house, your bank will directly transfer a portion of the outstanding amount to the seller's loan account. Once the seller's bank receives the payment, it will issue a 'no objection' or 'no dues pending' certificate to the seller and hand over the original documents to your bank, which will then transfer the balance payment.

Why are resale flats cheaper?

1) Builders are reluctant to bring down the price as:

Existing buyers may want a refund since they bought at a higher price.

The builder has to give an exit option to the people who invested in the prelaunch phase.

Property developers are hoping for the market to pick up.

Some builders can manage to hold on to prices as they have access to funding.

2) The recovery in the market is taking too long and some investors want to exit even if the profit is less.

3) Individual owners may not be able to hold on to an investment property if they face a fund crunch or can't afford the EMIs.

4) There is oversupply in some markets and the owners are more willing than builders to lower the prices.

9 questions to ask

1) What's the cash component?

The seller may want a part of the selling price in cash. In the sale deed, he may quote only the amount that you pay through cheque, not the entire price. In this case, you won't get a home loan for the full price.

2) Is the property registered? 

Several properties are sold through power of attorney. Check if the property is included in the government registry. If it isn't, it should be cheaper.

3) Is the house free of debt? 

Is the property mortgaged to the bank or has the home loan been paid? If possession has been taken, are all the utility bills paid?

4) Are all documents in order? 

Check documents like the share certificate in the owner's name, agreement made by seller with the last party, and the NOC from the housing society.

5) Do you need to deal with the builder? 

Many flats are being sold by investors even before they take possession. In such a case, check if you need an NOC from the builder.

6) Is the property disputed? 

Are there any lawsuits regarding the property? You don't want to pay for a house and realise that it won't be yours for years.

7) Why is the property being sold? 

This is important as there could be issues like noisy neighbourhood, seepage problem, water scarcity, etc.

8) Who will pay the tax? 

The Budget proposes to impose a 1% TDS on properties worth more than `50 lakh and the onus to pay will be on the buyer. So, you should clarify this with the seller before finalising the deal.

9) What are the transaction costs? 

Enquire about the transfer costs that you will incur. Though some fees are fixed, the housing society may, at its discretion, demand additional charges.

Thursday, 18 April 2013

Things to remember before you sign a rent agreement

When Kshitij Nadekarfinalised the house he wanted to rent in Pune a year ago, he thought he would stay there for 2-3 years till he bought his own house. "The place was in a reasonably good condition and was very close to my office. So, I immediately signed the agreement with the landlord," says the 37-year-old management executive.Nadekar had agreed to pay a monthly rent ofRs 5,000 and furnished Rs 50,000 as deposit money. However, six months later, the landlord wanted to increase the rent byRs 500 as the rentals in the area had gone up. 
"I had two choices—pay the extra money or hunt for another house. My landlord told me that such an increase was the norm, and since nothing was mentioned in the lease agreement, I had little option but to pay the additional money," he adds. Nadekar could have avoided this hassle if he had scrutinised the 
rent agreement carefully and made changes that could have served his interests better. However, most tenants are not even aware of the points that should be included in the rent agreement. Here are the things you should check while sifting through the contract.
Is the lessor the actual owner? Before you sign the agreement, be sure that the person you are transacting with is the actual owner of the property. Often, NRIs or investors hand over their property to caretakers, who may lease it to a third party without the knowledge of the owner. So, you should verify the title documents, such as the sale deed and share certificate, besides obtaining a no-objection certificate (NOC) from the housing society where you want to lease the property.
These papers will help ascertain that you are dealing with the right person. Utility bills also come in handy as they specify the name of the owner. "If the apartment is mortgaged, the original sale deed will be in the custody of the bank. In such a case, an NOC should be obtained from the bank. This will mention the rightful owner's name," advises Om Ahuja, chief executive officer, residential services, 
Jones Lang LaSalle India.

Shveta Jain, executive director, residential services, Cushman & Wakefield, says that tenants should be wary of arbitrary eviction if they deal with an unsolicited party. "A case of trespassing can be filed against such a tenant if he refuses to vacate within a given time frame. The tenant cannot challenge eviction in this case," she adds.

Consider that the person who offers the property for rent, say, Mr. A, has slyly inserted a clause stating, 'The tenant has verified the title papers of the property and confirmed and satisfied that Mr. A is the rightful owner of the property'.
If you fail to check the agreement and sign it, you could be held liable for trespassing. "Of course, if such a clause is not mentioned, the tenant can hold the other party responsible for cheating and committing fraud," adds Ahuja.
What does the rent agreement contain? A rent agreement includes the terms and conditions under which the property is given on rent. It specifies the rent value and the tenure for which the agreement is made, as well as the security amount that needs to be deposited with the landlord by the tenant.
The agreement should also clearly mention the day before which the rent is expected to be paid. For instance, it could be the 5th or 10th of every month. If the tenant fails to pay the rent before the predetermined period, the penal charges that he would be liable to pay should also be defined in the agreement. The rent agreement could also mention the facilities, such as parking space or the usage of society's gym, included with the property.
There could also be additional monthly charges, such as the society maintenance charge and club fee. It's best if the additional charges for using such facilities are clearly spelt out, along with the person who is supposed to bear them. If either party fails to honour the terms and conditions of the agreement, it will become void and the aggrieved party could claim penal charges. The tenure of a rent agreement is usually 11 months, unless otherwise specified in the contract. If it's for more than a year, it's mandatory for the owner to get the document registered. The agreement should also specify the notice period and penalty for cancelling the agreement without completing the specified period. Typically, a two-month notice is served in case of high rental properties, while one month's notice is sufficient for low rental ones. What should you check? A tenant should verify whether the owner has included a rent escalation clause in the lease agreement, which could be used to increase the rent after a couple of months.
"The best way to safeguard yourself is to ensure that the agreement specifies the dates on which the rent escalation will be applicable and the percentage of increase," says Ahuja. You should also make sure that there is a clause on the sale of the house. If the owner decides to sell the house during the term of the rent agreement, you should know how many months you will get to search for another suitable accommodation. It's also important to check that all the appliances and the connections in the house are working properly before you sign the agreement.
Usually, minor repair work for installed electrical appliances is the responsibility of the tenant and he has to pay for them. However, if the property is damaged because of negligence on your part, the landlord can rightfully use the security money deposited with him for carrying out the necessary renovation. You also have the right to see the documents that prove all previous bills related to the house have been paid, especially the electricity, water and gas bills. While you are at it, make sure to peruse the papers that state the property tax has been paid by the landlord.

Tuesday, 16 April 2013

10 Environmentally Friendly Architectural Styles

Start the Countdown

Before green was mainstream, environmentally friendly home styles had a kind of chunky utility. They were obviously different than regular houses and were probably thought by some to be the kind of homes you might find on a commune or ones only hippies lived in. But not anymore. Green homeshave come a long way from the prototypes (and stereotypes). Today's contemporary eco-responsible homes have an elegant usability that combines the best of the old with the technologies of the new.
While most any home can be made green with updates -- and with some due diligence on the part of the owners -- some residential styles lend themselves to being eco-friendly by design. And though it's taken decades to get there, if you're building or choosing a home, green options are within your reach. You can have an environmentally friendly, eco-responsible or even zero-footprint house, depending on how much you want to dedicate in money and lifestyle changes in order to steward the planet and its resources.
Not ready for an all-solar shed with a living roof and nothing but a bike parked outside? Take a look at some other eco-friendly options that are as attractive as they are comfortable.
  • 10 -  Earth Sheltered
Living in earth-sheltered housing doesn't have to mean sharing your space with the worms. With designs that are partially below ground or completely above ground, earth-sheltered housing is adaptable and takes advantage of the energy efficiency of the surrounding soil and plant life. Architect Malcolm Wells advocated and promoted the earth-sheltered architecture until his death in December 2009 [source: Weber]. He designed multiple underground homes, stadiums, airports and even bridges, and though many never came to fruition, they did forever influence the green movement [source: Weber].
One earth-sheltered design that has taken hold today is the bermed home. It is built at ground level or dug into the hillside and has earth compacted around two sides, the top/roof and along the rear. Homes like these have sub-ground living areas with central atriums or large courtyards that provide natural light, cool air andinsulation.
According to the U.S. Department of Energy, elevational bermed homes, usually those situated partly in the ground with a south-facing wall open to sunshine and heat, may be the most affordable options in earth-sheltered housing. They're easier to construct and often are built into hillsides, taking advantage of natural surroundings. Underground earth-rammed homes may be more costly, but they're not covered with as much earth as you might think -- typically less than 3 feet (0.9 meters). Using more than 3 feet doesn't increase energy efficiency [source: U.S. Department of Energy].
  • 9 - Recycled Modern
For decades, "weird," "amazing" and "unusual" homes found their way into the spotlight because of their non-traditional make up. Bottles and cans, old tires, and other trashed and found items became building materials for recycled architecture. Many of these structures are green because they reuse available items, but often they go further by incorporating other eco-friendly ideas. And though some are quirky and funky by design, others have an air of elegance because of their finished details and traditional craftsmanship.
A recycled modern home doesn't have to be made of 6 million empty beer bottles, as is the case with La Casa de Botella in Argentina, but planning a house that embraces irregular sizes and design in order to use recycled materials is realistic without having to be extreme or newsworthy [source: Alvarado]. Directories published in the United States and Canada by the Building Materials Reuse Association (BMRA) help builders find local sources for deconstructing and reconstructing -- taking good care to preserve materials you're taking down and selecting reuse materials for building up.
Building with roof rafters from an old factory or insulating walls with old denim are less visible possibilities, and if you still want to use an old ship's bow for a front porch, anchors aweigh.
  • 8 - Domed and Organic
A forerunner in promoting environmentally friendly architecture was engineer Buckminster "Bucky" Fuller. He sought to realize the idea of "doing more with less," and in building design, he tried to popularize the half-circle geodesic dome. Made up of interconnected triangles, which use a minimum of materials to create an open space for living, the domes were thought to be ideal because of their low cost and sturdiness [source: Black Mountain College].
An earlier form of semi-sphere living was the yurt, which goes back thousands of years to traditional Mongolian tent living. With circular walls built up in one layer or many layers of circles, a yurt is kind of a strong tent that survives harsh conditions and has a simple set up.
Both of these forms are organic, borrowing from the design of natural forms on the Earth and in the body -- such as cells -- and they use fewer materials. Yurts, domes and other organic forms are not the most traditional choice in contemporary eco-friendly housing, but manufacturers in North America sell homes in the style of domes and tents in an affordable range. And in some parts of Asia and Africa this traditional style is still the most popular, sturdy and economical choice.
  • 7 - Prefab and Tract

As the need for affordable, well-made and energy-efficient housing increases through challenging economic times, and as families learn more about the toxins in the very materials that surround them at home, some eco-conscious developers are buying in bulk and buying green to keep costs down and fill a market need.

Tract housing units in states ranging from Arizona to Washington to New York have been finding investors and buyers who are building eco-friendly from the ground up. Builders who still get behind the ease and low cost ofprefabricated housing also have shown green growth by adding options for energy efficiency and non-toxic features in their pre-built cottage, solar and modular home packages.

Though doing some research into the green claims of companies marketing tract and prefab is advisable, there is one quality that many of these companies seem to have in common: You get more energy efficiency and make a smaller footprint on the environment, and you will likely get a smaller house, too.

  • 6 - Pueblo and Adobe Revival
Most people associate adobe- and pueblo-style with hot, dry areas such as the Southwestern United States, Mexico, and parts of Africa and the Mediterranean. The homes built with adobe blocks or bricks made of a clay, water and sand mixture can last hundreds of years, and they provide excellent insulation from hot and cold weather, even though they're more widely found in warm, arid climates [source:Encyclopaedia Britannica]. Having adequate and regular sunshine to keep the adobe dry and to allow it to store heatenergy is a must. Adobe has a low R-value, meaning it doesn't insulate as well outside of its ideal, dry and sunny environment, but its thick make up is very eco-friendly in terms of keeping the heat out [source: U.S. Dept of Energy]. In cold climates, it's possible to add insulation and counter any moisture, though it makes more sense to work with other materials more suited for the environment [source: Roberts, et al.]
Adobe- and pueblo-revival continue to be most popular in warm regions, and what makes them "revival" is they combine traditional clay materials and newer insulating and strengthening ingredients like concrete and paper composites, and sometimes applied exterior plasters, as well. Although the revival in this style started back in the 1920s and '30s, it has continued into the 21st century with its characteristic simple lines, central courtyards and wooden architectural details often with modern tweaks and varied rooflines.

  • 5 - Rammed Earth
Stacks of dried out muddy-looking rectangles with a dirt smell and crumbly corners might be one way people imagine rammed-earth construction. However, centuries-old European homesteads, ancient Asian landmarks, and modern, sleek and efficient Western designs stand up against this stereotype. Crude forms of rammed-earth building in impoverished areas of the world do usually lack the polish of contemporary styles, but most share an amazing longevity and energy-efficiency.
Rammed-earth construction is simply the use of soil -- with a weighted mix of clay and sand -- packed super tight into brick form or packed up in layers within wooden molds to form walls. These blocks and walls are at minimum about 12 inches (30 centimeters) thick, but can be twice that, and they often have added external treatments to increase insulating properties and durability against weather extremes [source: Encyclopaedia Britannica]. Untreated walls are hardy too, but depending on the climate, modern techniques, such as moisture barriers or strengthened concrete mixes, can improve resilience.
Building a rammed-earth structure will lower energy consumption and costs, but due to the time, labor and transport involved, costs are much higher than in traditional homebuilding [source: California Energy Commission]. Working with local building codes for this unusual building type adds some work too, but long-term and possible lifelong energy savings in an Earth-friendly, earth-filled home may balance the initial time and costs.

  • 4 - Multi-family Eco Units
Living with shared walls or common spaces and interacting with neighbors isn't for everyone, but like-minded renters and homeowners might be heading toward more planned and communal properties, bringing social lives and work closer to where they actually live. A January 2011 study sponsored by the U.S. Environmental Protection Agency's Smart Growth Program finds that one of the factors that would significantly decrease energy consumption is to focus building and community planning on multifamily or attached housing with shared walls that hold in more heat and increase efficiency [source: EPA]. Building homes closer together and closer to public transit options -- and with more energy-efficient construction -- could reduce consumption up to 64 percent compared to single-family, remote suburban homes that rely heavily on car travel [source: EPA].
Having a single-family home without shared walls is a dream and long-term goal for many, but condos, row houses and cohousing offer options for private ownership and shared responsibility for resources. Some have the added initiative of being responsible to each other in communities as part of the stewardship. Sharing a wall with a neighbor isn't what it used to be. For many, it's a preference and obvious choice toward a smallerfootprint and a return to knowing their neighbors.

  • 3 - 21st-century/Mid-century Modern

Many people in the West have grown up living in and visiting homes with lots of small rooms connected by narrow hallways, with little connection to the outdoors. But mid-century modern homes were different -- they had open plans, more natural flooring, and interior courtyards or sheer walls and glass sliders to the outside. Houses from the 1960s by architecture firms like Eichler Homes continue to be hot commodities, and many 21st-century, eco-friendly designs have been inspired by the clean lines and efficiency of this style. With well-joined building envelopes, often achieving a hermetically sealed feel, and the circulation of free-flowing spaces and ventilation -- some with movable walls and tracks for true indoor-outdoor living -- this mid-century modern redux is bringing modern eco-technology to a treasured design style.
Another twist is the adaptation of mid-century modern to multi-unit residential design. Housing developments from the Netherlands to South America show the influence of mid-century modern open planning but in a stacked, urban housing form that departs from the apartment style of connected, closed off small boxes. Greening this multi-unit building is breathing new life into this common housing design.
  • 2 - Small or Tiny
Downsizing isn't something desirable in the workforce and often it's something brought on by circumstances and not by choice, but for the eco-conscious, it's often a conscious and deliberate move. Criticism of "McMansions," those super-huge, mostly soul-less and resource-wasteful houses of the suburbs have given way to more and more coverage of small, tiny and even micro-homes. Living in small spaces is a necessity for most city-dwellers in high-density areas like Hong Kong and New York City, but many people are exploring building and buying small in order to live more simply and with fewer drains on resources. Sometimes, though, the environmental benefits are just a result of homeowners wanting to pay less for utilities and shorten their commutes, making downsizing good for the wallet, too.
Economic downturns lead to downsizing as well, and according the U.S. Census Bureau, the size of newly built single-family homes decreased between 51 and 200 square feet (4.7 and 18.5 square meters) from 2008 to 2009, making the national average about 2,400 to 2,500 square feet (223 to 232 square meters) [source:Heavens]. Those weathering the economic downturn in Japan also have turned to even smaller spaces, with closet-sized houses and "ultra-tiny" designs growing in popularity [source: Lah].
Some families, however, make a very deliberate decision to live in smaller spaces to be more eco-friendly and to help other families in the process. The Salwen family from Atlanta, for example, sold their house, bought one half its size and used the remaining money to help those in need in Ghana [source: Salwen]. As one of the principles of being environmentally friendly is to lessen negative impacts on the planet -- including its people -- the Salwens lowered their consumption and improved the conditions of others with the money they saved.
  • 1 - Hybrid, Custom, Evolving

If you've read articles on people who live in $200, 24-square-foot (2.23-square-meter) shacks made from junk or who sleep in capsule hotel rooms the size of old phone booths, you might have wondered if these are the wave of the future [source: Wadler]. People in London, Mexico City and the United States are using old shipping containers as homes, and the Keetwonen student dorm complex in Amsterdam is a veritable village of containers used to house more than 1,000 university students [source: Open Architecture Network].
Just as mid-century modern designs by Joseph Eichler in the 1960s didn't take off wildly during their time, but have since become models for reproducing and gleaning the best of their kind, some of what we see today as wacky may lead to practical innovations in mainstream green, environmentally friendly housing. Architects and designers coming into their own today have grown up with the greening of architecture, so it's likely to be less of an afterthought and more a part of good, holistic housing of the near future, with or without the miniature size, high cost and funky functionalism.

Thursday, 11 April 2013

TDS on purchase/sale of house – what it means for you

By: Maadhav Poddar, Associate Director-Tax & Regulatory services, Ernst & Young

Budget 2013, while did bring forward certain proposals which are welcomed by the real estate sector, but failed to delight and bring cheers to this sector as it did not to cater to sector's long standing demands and needs.

On direct tax front, while the proposal to provide additional interest deduction of Rs 1 lakhs for low cost housing (where loan taken is less than Rs 25 lakhs for a house valued at Rs 40 lakhs or less) is indeed welcome, the proposal to withhold taxes on transfer of immovable property above the threshold limit may add burden and worry to this sector.

From start of June 2013, taxes at the rate of 1% would be required to be deducted ( TDS) by every purchaser of an immovable property, other than agricultural land, while crediting or making payment to a resident seller, if the consideration for such immovable property exceeds Rs 50 lakhs. This requirement may lead to additional withholding compliance burden on purchasers and would negatively impact the working capital requirements of sellers/ developers.

On the indirect tax front, post 1st March 2013, purchase of luxury houses will become dearer. The reduction in service-tax abatement rate from 75% to 70% would increase the effectiveservice tax rate from 3.09% to 3.71% on pre-construction sale of residential units having carpet area of more than 2000 sq ft and where the amount charged for the unit is Rs 1 crore or above. This would lead to increase in the overall cost which would borne by the buyers. However, it is to be noted that service tax continues not to apply on transactions involving buying-selling of constructed houses/ property as there is no service element involved in such transactions.

To illustrate the impact of the above two proposals, let's consider the following example. Mr. A plans to buy either an existing house or an unit in the upcoming residential housing project in New Delhi after 1st June 2013 for a consideration of Rs 1 crore which has a carpet area of more than 2000 sq ft (approx. 222 sq yards). The impact of the direct and in-direct proposal discussed above shall be as follows:

Where a housing unit is booked in a project under construction from a developer, Mr. A will have to bear the additional service tax burden of Rs 61,800, due to the 20% hike in the effective service tax rate from 3.09% to 3.71%. This is because the developer would charge service tax as per the revised rates from the buyer and deposit the same before the 5th of every next month to the government treasury account while taking care of other service tax compliances.
Also, Mr. A would be required to deduct TDS@ 1% each time while making part-payment to the developer. Accordingly, Mr. A would also have to obtain a Tax Deduction Account Number ( TAN), deposit TDS before 7th of every next month and file quarterly TDS returns, failing which could attract interest and even penalty consequences on him. It is to be noted that taxes would be required to be deducted by Mr. A on the all advance payments (inclusive of service taxcomponent) at the time of making such payment or making a credit entry for the same in his books, whichever is earlier.

Where Mr. A decides to buy a completed house from the market, service tax shall not be applicable. However, Mr. A would still be required to comply with withholding tax compliances as explained above as the transaction value of the property is above Rs 50 lakhs.

Further, on a one crore house transaction in New Delhi, Mr. A would also have to dish out an additional amount of about Rs 7 lakhs as stamp duty and registration fee. Where, Mr. A decides to register the house in the name of his wife/ daughters, stamp duty and registration fee burden may reduce to about Rs 5 lakhs as Delhi stamp duty law levies lower stamp duty on women. Thankfully, such amount of stamp duty and registration fee still continues to be not subject to any TDS or service tax.