Limited land relief plan
Calcutta, March 29: The Bengal government is set to grant a never-before concession to developers of township projects, under which government companies will be allowed to hold and lease out land in excess of ceiling without prior permission.
However, no activity other than real estate development is being allowed such flexibility despite industry complaining about difficulties involving land.
“It seems the (amendment) proposal is highly lopsided. Does the government think only township development would be enough to spur economic activity in the state?” asked an executive with a Mumbai-based steel company.
If the amendment to the West Bengal Land Reforms Act, 1955, is not changed further before it is tabled in the ongoing Assembly session, it will exempt government companies involved in township projects from the land ceiling restrictions, an official at Writers’ Buildings said.
Nor will they need permission to lease out this land to other players, who can subsequently lease it out again.
The amendment, which the state government plans to introduce before the budget session ends on April 2, is also expected to do away with a clause that made it mandatory for projects involving ceiling-excess land to be completed within three years.
At present, anyone who wishes to hold or acquire ceiling-excess land for township projects needs to secure prior approval from the government under Section 14Y of the 1955 act. In Bengal, one can hold a maximum of 24.20 acres (non-irrigated) and 17.3 acres (irrigated) land.
Only local authorities such as municipalities or municipal corporations can hold land in excess of the ceiling without having to seek government approval.
“If the amendment is passed, the private promoters who get leases of ceiling-excess land from government companies will not require clearance for holding the land or further leasing it out to others. They will also not be bound to deliver a project in three years,” a government official said.
A local industrialist who has submitted suggestions to the government said the state should have relaxed the norm for all industries.
“The new government has decided not to acquire land; it wants us to buy land directly. But it is not facilitating the process through which industry can buy land directly. The land department takes a long time, at times months, to give clearance for holding ceiling-excess land,” the industrialist said.
Now, while an industry waits for 14Y clearance from the land department for a particular plot, the news reaches the market and land brokers start hoarding land. Industry had demanded at least retrospective clearance for ceiling-excess land.
Senior Writers’ Buildings officials said that developers had demanded the waiver of the three-year deadline for completing projects on ceiling-excess land, citing how projects often got delayed in Bengal because of various reasons.
“The new amendment will not impose any such time bar on the government companies for completion of the projects,” said an official.
The amendment will also allow certain new sectors to acquire and hold ceiling-excess land and to lease it out — but only with prior permission.
These sectors are: industrial parks, financial hubs, warehousing, farm-product industries, power plants, film cities, tourism projects, educational and medical institutes, bio-tech parks, food parks, ports, airports and shipyards.
The West Bengal government has decided to vest the 270 acres, directly purchased by Sajjan Jindal-promoted JSW Bengal Steel at Salboni in West Medinipur, with itself. “After vesting the land, it will be given to the company on lease,” officials close to the development said after a meeting between JSW Steel officials and the state land reforms commissioner on Wednesday. The state government will vest 270 acres after accounting for 24 acres, which is permissible, after JSW Bengal Steel makes an application for it.
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The NAR India 2011 3rd Annual Convention was just held at Hyderabad at a two day event (July 23rd & 24th) with educational programs, EXPO, panel discussions, brain storming sessions, cultural activities & special ticketed events, etc. Members from all over India and the entire world attended this epic extravaganza for realtors, builders & professionals from financial institutions to learn, network and share knowledge. The biggest ever in the world of Realtors, this event was the first of its kind and was the place to be for every practicing & aspiring realtor in the country. It was an eye opener for everyone connected with the real estate industry. Stalwart speakers took the cake with their spellbinding speeches and intense audience interactions. Ronald Goss emphasized on the role and importance of Property Management in the real estate industry by answering relevant questions like why an owner/investor would turn to third-party property management? He pointed out that true value of real estate management lies in the ability of investors to manage in case of recessions and added that the primary goal of a Property Management Company is to provide effective and efficient operations, increase the value of the asset by lowering down the maintenance costs and maximizing revenues. Property management firms make many property owners turn to property management services to avoid stress and hassle. The Panel discussion on leveraging Global Networks yielded many incisive insights. Speakers included Norman Flynn, Jeffery Hornberger, Gretchen Faber, Bill Armstrong, Baro Shalizi, Naresh Malkhani, and Farook Mahmood. Norman Flynn spoke about how NAR has expanded all across the world into 79 nations, of which NAR India was formed only 3 years ago. He appreciated NAR India as the group that started functioning in a very short lead time of 4 months which otherwise takes around 19 months. He ended by congratulating the NAR India group on its success. Baro Shalizi recommended that Indian realtors increase their business opportunities by utilizing NAR and NAR-India’s partnership. He emphasized that NAR offers unparalleled growth with 80 bilateral agreements and strategic partnership across 60 countries. He suggested realtors take the CIPS certification (Certified International Property Specialist) which can help in getting personal contacts, global referrals, and access to worldwide market research. Farook Mahmood focused on the functions of The International Consortium of Real Estate Associations (ICREA) mentioning that worldproperties.com is available in 20 languages & provides links to locating properties worldwide to the professional ICREA members’ roaster. Questions from the audience included queries on Indians in U.S. wanting to buy homes in India and Indians in India wishing to buy property in the U.S. via loans. The question of how women can contribute to Indian Real estate was answered by Ms. Jeffrey. She said that only women can show a better way to other women and lend a helping hand. She was happy to say that around 57% realtors in the NAR group are women. She also made it clear that everyone in the association helps each other with all kinds of issues. The association offers a chance to arrange leadership trainings, share best practices across table and so on. Mr. Armstrong added that the rate of involvement of women in Real estate is increasingly positive and growing. Mr. Bard ended the conversation by saying that women practitioners ought encourage each other and there is no ceiling for women’s growth and income. Mr. Ravi Verma emphasised on the need for synergies not only between the stakeholders within the real estate sector but also between associations such as CREDAI and NAR, who represent these different stakeholders. He further mentioned how the agreement between CREDAI and NAR can be extremely beneficial as NAR can leverage the broker network to create value for the developer under CREDAI umbrella. Speaking on financing problems, Mr. Verma highlighted the difficulty that the current developer community faced in raising project finance. He also pointed out that the shortage of housing is complemented with a demand supply mismatch that exists in the market. This is where the importance of brokers comes in as the broker can address this by estimating demand. The association which has been forged between CREDAI and NAR will trickle down to local associations. NAR brings knowledge & expertise which includes training from NAR USA, knowledge partnership with the Indian School of Business (“ISB”) and other affiliates. The research and expertise that these partners bring along can be beneficial to all the stakeholders. |
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Mr. Madhusudan Menon spoke about the continuous focus on financial inclusion and the rapid pace at which the government was driving this point, thus creating an immediate need for businesses to focus on the ‘bottom of the pyramid’. Speaking about his company, Micro Housing Finance Corporation (“MHFC”), Mr. Menon cited examples of telecom sector where merely through penetration the sector today has managed to charge one of the lowest prices globally. While giving an overview of MHFC, Mr. Menon showcased the lack of availability of funds for lower-income household mostly involved in the informal sector of the economy. Through various examples of his customers and how they have benefited from the mortgage solutions provided by his company, Mr. Menon showed how a profitable business model was possible by tapping the customers belonging to the lower income ranges. He however added that a few challenges still exist for the business to scale up. Challenges are what NAR India has faced since its inception. And it is these very challenges that have inspired NAR to offer this professional platform for Realtors across the country.
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The policy news from Bengal :-
The Industries Minister Partho Chatterjee, has made it amply clear that the government will NOT allow industrial land to be used for residential or even educational and health care projects. Land locked under various closed industrial units will have to be used for industrial purposes, the minister is quoted to have said. “I am focusing on land locked in closed factories. I have asked my department to prepare a report. If I can unlock these plots, there will be no dearth for industry,” Chatterjee said.
National News :-
And in what could be a huge change in the history of land dealings in India, property holders across the country may get a unique identity number, or UID, for their real estate, as a working group set up by the ministry of urban development has suggested doing away with the current system of registration and transfer of property. Such a move is expected to not only streamline and organise India's outdated land records, but also reduce the burden on courts by enabling faster resolution of property disputes.
The Supreme Court order quashing the acquisition of 156 hectares of land by the Greater Noida Industrial Development Authority (GNIDA) has hit consumers and real estate companies hard. According to reports, projects worth Rs 40,000 crore are at stake. This will eventually hit housing prices in the NCR, and, thus make affordable houses in this region a dream. Commenting on this issue, Pankaj Bajaj, President of CREDAI NCR said, “Most of the crisis hit land was lying fallow, and, thus reversing the situation by giving it back to land owners won’t be a big deal.” He sees the prices skyrocketing in the Noida extension region despite the nervous and bad mood.
Below is the verbatim transcript of his interview with CNBC-TV18's Shereen Bhan.
Q: What about consumers- the seven affected real estate developers are offering refunds, compensation or flats in other projects but the Supreme Court order suggests that third party interests in that sense are not really being looked at considering the fact that the land acquisition was illegal?
A: It did come as a surprise but one must realize that five or six projects, which have been affected, not much work had actually progressed at the site. In my personal opinion, the court might have a different opinion if the work had actually progressed to, say, the fourth floor or the seventh floor. And, they would have then factored in third party interests and the balance of convenience would have actually lied in favour of the developers and the end customers. But in this case, the court in its wisdom has decided that the balance of convenience was not that big a factor and they said that not much work has been done. In fact, they actually said that because not much work has been done at the site there was no reason to invoke the emergency clause. What was the hurry, the sites are lying fallow or some bare minimum work has been done. So it is not such a great deal to reverse the situation and give it back to the land owners. I do believe that if the work had actually happened, the judgment might not have come out the way it has.
Q: What happens to prices at the NCR region because that’s going to be the crucial question? This is really the hub as far as new residential development is concerned. The Greater Noida Authority has already said developers should be prepared to pay a lot more for the land. Can I ask you simply if affordable housing is now going to be a distant dream for the consumer?
A: Paradoxically, yes, in spite of all this nervousness and the temporary bad mood, prices are actually going to move up because the so called Noida Extension region was a dream come true for the middle and the lower middle class. We were talking about a supply of about 2.5 lakh apartments in a period of three- four years. Contrast that with the situation in Delhi where every couple of years the Delhi Development Authority (DDA) comes out with a scheme of a mere 5000 apartments and they get 5 lakh applications. And, there is a sense of lottery about it and here we were with 2.5 lakh apartments actually getting delivered. Now, if you are going to take away some of that supply it is only obvious that the balance area is going to see rise in prices and you are actually restricting supply. So, we have all along been saying that to bring housing into the affordable range and the only answer is to increase supply and this seems to have gone in the other direction.
This is for your information that the rules for Service Tax was amended in the Finance Act 2011 and now the same is to be paid on accrual basis and not on receipt basis.
An exemption was granted upto 30.06.2011 applicable for all industries including housing, stating that service tax could be paid on receipt and not accrual basis. No further extension has been notified by CBEC for the same till date.
Hence, you are guided that they pay the Service Tax at the point of accrual and not receipt after the date of 30.06.2011 and are requested that they immediately notify their Marketing and Accounts Departments to ensure compliance failing which unnecessary litigation may ensue.
For more clarity you may contact your service tax consultants who can guide you on the same.
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Primo Estates Pvt Ltd. has been appointed as one of the three preferred marketing partners by Jain group for their 5 Star residential project at Siliguri. The project was launched on 30th of January and the guest of honour for the occasion was famous Indian Footballer Baichung Bhutia. |
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