The Uttar Pradesh Real Estate Regulatory Authority (UPRERA) has taken the decision to deregister 55 real estate projects across the state in the past three years. Officials from UPRERA have attributed this action to factors such as a lack of demand and inadequate financial resources.

According to UPRERA, there are currently two pending applications for the withdrawal of project registration. The largest number of deregistered projects were located in Lucknow, with a total of 12 surrendered projects. Following closely behind were Gautam Buddha Nagar and Varanasi, with eight projects each.

Additional districts affected by deregistration included Ghaziabad, Prayagraj, Agra, Meerut, Mathura, Muzaffarnagar, Chaundali, and Barabanki, each with three or two projects. Kanpur City, Gorakhpur, Bareilly, Moradabad, Unnao, and Amroha each had one project being deregistered.

An anonymous UPRERA official stated that the first application for withdrawal of project registration was received from Muzaffarnagar in July 2020, which was subsequently approved. Since then, a total of 55 projects have been deregistered across 17 districts of the state, with the most recent approval for withdrawal granted to Artha Infratech in March 2023.

The official further mentioned that two promoters have applied to surrender their projects in Ghaziabad and Lucknow. Mahagun (India), one of the promoters, has sought to surrender its Mahagun Mascot Phase-II project in the Crossings Republik township of Ghaziabad. The application is currently under scrutiny.

The reasons behind the withdrawal or surrender of project registrations are often attributed to factors such as lack of demand in the region, failure to meet anticipated sales targets, or financial constraints hindering project completion. UPRERA officials emphasized that promoters can surrender their projects only after settling all dues and claims from investors and homebuyers.

As per the Real Estate (Regulation and Development) Act, promoters are permitted to deregister or surrender projects if they are deemed unviable. The process involves a formal request from the promoter to surrender the project and the publication of a public notice, inviting investors and homebuyers who have booked apartments in the project to submit their claims for clearance.

It is crucial to ensure the protection of the interests of all stakeholders, especially homebuyers, throughout this process.

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The Ministry of Housing and Urban Affairs (MoHUA) has emphasized the importance of the real estate sector accessing finance from the banking system instead of relying solely on homebuyers’ advances for construction purposes.

During the CII Annual Conclave on Indian Real Estate 2023, Manoj Joshi, Secretary of MoHUA, stressed the need for the real estate sector to collaborate with regulators and banking institutions to establish a credible framework that differentiates between good and bad projects, allowing access to capital from banks.

Joshi highlighted the absence of a system that segregates reliable borrowers from unreliable ones, resulting in all players being treated as untrustworthy by the banking sector. He emphasized the sector’s responsibility to develop mechanisms, such as rating systems and performance evaluations, to enable this differentiation. Without a credible framework supported by regulators, financing real estate projects will remain challenging.

Joshi further stated that the current model, where homebuyers provide the entire finance, needs to change for a truly professional market to emerge. He pointed out that the real estate sector must enable regulators, through improved rating systems and appraisal processes, to differentiate between reliable and unreliable projects. Failure to do so results in all developers being perceived as risky, affecting the sector’s access to finance.

The article also shed light on the challenges faced by contractors and vendors in the real estate sector, who often struggle to obtain credit from banks. These stakeholders heavily rely on advance payments from government clients, while developers primarily rely on funds from homebuyers. This financial dynamic leads to working capital constraints, causing delays, increased costs, and inefficiencies.

Joshi emphasized that inadequate cash flow in the hands of contractors and vendors results in project delays and cost inefficiencies, extending the construction timeline. He raised concerns about the detrimental impact of not providing finance to such a vital segment of the economy, highlighting the need for a more nuanced approach to financing in the real estate sector.

Joshi also discussed the role of the banking system and the challenges it faces in assessing borrowers due to the public sector-dominated structure. He highlighted the importance of sharp appraisals and the ability to differentiate between good and bad borrowers to prevent the entire real estate sector from being perceived as high-risk. Joshi expressed the government’s intent to create formal structures that directly provide funds to vendors to address the cash flow issue.

Additionally, the article touched on the significance of urban planning in Tier-2 and Tier-3 cities, emphasizing that it remains a priority area for the government. The need for reforms and incentives to promote urban planning in these cities was highlighted, with a focus on providing affordable, low-cost housing units to meet the growing demand.

The real estate industry experts attending the conclave expressed optimism about the sector’s growth, acknowledging the positive impact of reforms such as RERA, GST, REIT frameworks, and the digitization of land records. They also emphasized the role of infrastructure development, including high-speed rail networks and metro systems, in fueling the growth of emerging cities.

The Ministry of Housing and Urban Affairs emphasized the importance of establishing a credible framework for accessing finance from the banking system in the real estate sector. Collaboration between regulators, developers, and banking institutions is crucial to enabling sustainable growth and addressing the challenges faced by the industry.

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The West Bengal bench of the Appellate Authority of Advance Rulings (AAAR) has upheld a previous ruling, stating that the sale or right to use a car park is not naturally bundled with construction services. As a result, it will not be considered a composite supply and will be subject to the higher goods and services tax (GST) rate of 18%.

This ruling came in response to an appeal by Eden Real Estates, a company involved in the construction of residential apartments.

Since April 1, 2019, GST has been levied at 5% on non-affordable housing projects without input tax credit (ITC). For ongoing projects, builders have the option to pay GST at the old rate of 12% with ITC, allowing them to set off the taxes paid on inputs. If the AAAR had treated the transaction related to the car park as a composite supply, the applicable GST levy would have been that of the primary supply of construction, which is lower.

Anita Rastogi, Principal (Indirect Taxation) at Price Waterhouse-India, explained that this ruling will result in higher costs for purchasing homes with parking spaces.

“While advance rulings are only binding on the parties involved in the specific transaction, tax authorities often rely on rulings favorable to the department. If a taxpayer, such as a builder, takes a different approach, it can lead to litigation. Therefore, some builders may adopt a cautious approach and charge 18% GST for the car parking space,” Rastogi said.

In this particular case, the real estate developer argued that the car parking space is provided exclusively to flat buyers, and stamp duty is paid on the total consideration charged to them, which includes the price of the apartment and the car parking space.

However, the AAAR bench noted that prospective flat buyers may or may not choose to opt for a car parking space when booking their flat. Consequently, the argument that the right to use the open parking space is naturally bundled with construction services and constitutes a composite supply was deemed invalid.

Furthermore, the “right to use” the open car parking space implies that the ownership of the open space is not transferred to the flat buyer, making it a separate service altogether.

The arguments primarily revolved around open car parking spaces, and the bench also highlighted that under the Real Estate (Regulation and Development) Act (RERA), an open parking space is not included in the definition of a garage.

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Renowned Bollywood actress Neetu Kapoor has recently made a significant investment by purchasing a luxurious apartment in a residential project located in Bandra Kurla Complex, Bandra, Mumbai. According to exclusive documents obtained by IndexTap.com, the actress acquired the property for a staggering sum of Rs 17.40 crore.

The apartment, situated within the prestigious Signia Isle by Sunteck Group, offers a spacious built-up area spanning 3387 square feet. This lavish dwelling promises an opulent living experience in one of Mumbai’s most sought-after locations.

To complete the property transaction, Neetu Kapoor has diligently fulfilled the stamp duty requirement, amounting to Rs 1.04 crore. The registration of the property was successfully finalized on May 10, 2023, marking a significant milestone in the actress’s real estate portfolio.

Inquiries have been made by contacting the Sunteck Group via email, and a message has been sent to Neetu Kapoor for further details regarding her prestigious acquisition.

This comes after Bollywood actress Alia Bhatt’s production house, Eternal Sunshine Production Pvt Ltd, recently made headlines for purchasing an apartment in Bandra West, Mumbai, worth a whopping Rs 37.80 crore. The property, located in the Aerial View Cooperative Housing Society Limited in Pali Hill, Bandra (West), spans an area of 2,497 square feet and was acquired from Gold Street Mercantile Company Pvt Ltd, as per the disclosed documents.

In an additional transaction on the same day, Alia Bhatt exhibited her generosity by gifting two apartments in Mumbai, with a market value of Rs 7.68 crore, to her sister Shaheen Mahesh Bhatt.

Notably, filmmaker Sajid Nadiadwala, through his production company Nadiadwala Grandsons, has also made a notable purchase. He recently acquired a sizable plot spanning 7,470 square feet in Juhu for a sum of Rs 31.3 crore, signaling his continued investment in Mumbai’s real estate market.

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INDORE: The Indore Development Authority (IDA) has unveiled its strategic plan to boost revenue generation, aiming to generate around Rs 6,000 crore in the upcoming fiscal year. This projection represents a significant increase, approximately 12 times higher than the revenue generated in the previous financial year, as outlined in the revised budget.

In its budget for 2023-24, IDA has categorized its income sources into six main areas, which include the sale of plots, sale of buildings, lease rent/freehold fee, rent, interest on bank deposits, grants, and other sources.

According to RP Ahirwar, the CEO of IDA, the authority anticipates earning approximately Rs 5,300 crore from the sale of plots located on the Super Corridor, as well as in scheme-140, 78, 94 phase-IV, 166, 155, 169, and 151.

In addition, IDA possesses approximately 1,800 ready-to-sell flats across Indore, which are expected to generate around Rs 411 crore in income upon sale.

Ahirwar stated that IDA currently has around 16,000 properties on lease, eligible for freehold conversion. In the previous financial year, approximately 1,700 leased properties were successfully converted to freehold by charging a fee. In the ongoing financial year, IDA aims to convert around 10,000 properties to freehold, generating approximately Rs 100 crore in revenue through rent and lease payments.

Furthermore, IDA holds bank deposits and fixed deposits totaling around Rs 500 crore, which are expected to generate an income of approximately Rs 40 crore during the current financial year. Additionally, the central government has allocated a grant of approximately Rs 45 crore for IDA’s proposed transport hub in an 8.5-hectare land area in TPS-3.

Ahirwar emphasized that this grant marks a significant milestone for IDA. He further expressed that their goal is not solely focused on revenue generation. The current budget encompasses various aspects, including road infrastructure, education, environmental initiatives, public facilities, and overall development. IDA aims to contribute comprehensively to the overall progress of Indore in the upcoming financial year.

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