An analysis conducted by Zapkey.com has shed light on the practice of real estate developers charging additional common area maintenance charges (CAM) from homebuyers at the time of possession. The analysis showed that these charges, ranging from Rs 10 to Rs 30 per square foot per month, are collected in advance and are separate from the property’s cost.

Typically, builders collect advance maintenance charges for a period of 12 to 24 months, which is the duration within which they plan to transfer the responsibility of building upkeep to the resident welfare association (RWA) or society. However, the Real Estate (Regulation and Development) Act, 2016 (RERA) does not provide any specific formula or standards for these charges. It only mandates that developers are responsible for providing and maintaining essential services until the association of allottees takes over the project’s maintenance, with reasonable charges.

The wide variation in CAM charges was observed across 15 real estate projects in Mumbai analyzed by Zapkey. Even projects with similar amenities such as gymnasiums, clubhouses, and swimming pools exhibited a significant difference in charges. Premium projects in South Mumbai had considerably higher CAM charges.

For instance, the analysis revealed that Rustomjee Crown in Prabhadevi charged Rs 30 per square foot per month for CAM, resulting in a monthly cost of around Rs 50,000 (including GST) for a 1,404 sq ft apartment. Peninsula Bishops Gate in Breach Candy, another luxury complex, imposed a CAM of approximately Rs 25 per square foot per month, translating to a staggering Rs 1.37 lakh per month for a 4,700 sq ft apartment.

It is worth noting that maintenance charges paid to the RWA are exempt from GST up to Rs 7,500. If the monthly charges exceed this amount per member, GST is applicable on the entire levied amount.

Some projects divided the CAM into separate categories for building maintenance and layout/federation maintenance, especially in cases of multiple towers. This allowed for a more even distribution of CAM charges across owners as possession of different towers occurred over time.

While most agreements explicitly mention the advance maintenance charges, some projects did not provide exact figures. In such cases, the agreement typically stated that the charges would be pro-rated in proportion to other allottees in the entire project.

In general, the total advance maintenance charges collected by developers ranged from 0.5 to 1.4 percent of the property’s registered value. Projects with higher percentages included Piramal Revanta, Runwal Bliss, and Rustomjee Crown. Premium projects such as Peninsula Bishops Gate and Godrej Urban Park were on the lower end of the range, primarily due to their high property values.

Advance maintenance charges refer to the fees collected from residents for the upkeep of commonly owned property areas in a housing society. These charges are collected periodically and are particularly applicable in under-construction projects until the RWA/society is formed and operational. In Maharashtra, maintenance charges are proportional to the property’s area, and developers cannot demand CAM before receiving an occupation certificate.

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Seventeen luxury vehicles, including Ferrari, Lamborghini, Land Rover, Rolls Royce, Bentley, and Mercedes-Maybach, with a combined value of around Rs 60 crores, along with jewelry worth Rs 5.75 crores, Rs 15 lakh in cash, and various incriminating documents, digital evidence, and accounting records, were seized during a search operation conducted at seven locations on June 1 under the Prevention of Money Laundering Act (PMLA), as stated by the ED.

The ED initiated PMLA investigations based on multiple first information reports (FIR) filed against the IREO group. The investigations revealed that substantial sums of money were also diverted through the M3M group. An ED statement released on Monday disclosed this information.

According to the ED statement, “Investigations revealed that, in one transaction, the M3M group received approximately Rs 400 crores from the IREO group through several shell companies. The land, owned by the M3M group, had a market value of around Rs 4 crore. Initially, the M3M group sold the development rights of the land to five unrelated shell companies for Rs 10 crore. However, it was discovered that these five companies were actually operated by the 3M Group. Immediately after, the M3M group sold the development rights of the same land to the IREO group for approximately Rs 400 crore. The shell companies then transferred the entire amount back to the M3M group. All shell companies were owned and operated by the M3M Group, under the direction of its promoters, Basant Kumar Bansal and Roop Kumar Bansal, as well as their family members.”

The statement further highlighted, “Through this scheme, IREO, and M3M illicitly siphoned off approximately Rs 400 crore belonging to investors and customers, with the proceeds of the crime remaining within the M3M Group.”

During the search operation, key individuals such as Basant Kumar Bansal, Roop Kumar Bansal, Pankaj Bansal, and others intentionally evaded the investigation.

In another development, the names of IREO vice-chairperson Lalit Goyal and Roop Kumar were mentioned in an FIR registered by the Haryana anti-corruption bureau (ACB) on April 17. The FIR charged former CBI judge Sudhir Parmar and his nephew Ajay Parmar with sections related to corruption and criminal conspiracy. Sudhir Parmar, who was suspended on April 27, has been accused of favoritism towards real estate developers including Roop Bansal, Basant Bansal, and Lalit Goyal.

IREO’s lawyer, Sameer Chaudhary, denied any misconduct or wrongdoing on behalf of the company in connection with the ACB FIR in an email response on May 11.

Sources indicate that the ED is likely to initiate PMLA investigations in the ACB case in Panchkula based on the April 17 FIR, following the registration of an enforcement case information report (ECIR). This move by the ED is bolstered by a May 12 Supreme Court ruling, which established a strong connection between criminal activity, proceeds of crime, and corruption offenses.

The ED has been investigating allegations of fund diversion by real estate developer IREO, targeting the funds of investors and home buyers. In November 2021, the ED arrested Lalit Goyal, and in February 2022, they filed a prosecution complaint against him in a special PMLA court in Panchkula. Lalit Goyal was granted regular bail on medical grounds by the Punjab and Haryana High Court in August 2022.

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Chandru Raheja is a prominent figure in the Indian business landscape, known for his immense success as a real estate tycoon. He is the founder of K Raheja Corporation and currently serves as its chairman.

Education and Career Journey of Chandru Raheja

Born in 1941, Chandru Raheja pursued his higher education at the University of Mumbai, where he earned a law degree. With a strong academic foundation, he embarked on a remarkable career that has left an indelible mark on India’s real estate industry.

Raheja’s business empire spans various sectors, primarily focusing on property development. His company is renowned for its involvement in the construction of malls, department store chains like Shoppers Stop, IT parks, and hotels. Notably, Chalet Hotels, under Raheja’s stewardship, boasts exceptional properties such as the JW Marriott in Mumbai and the Westin in Hyderabad.

Unveiling Chandru Raheja’s Enormous Net Worth

As of April 24, 2023, Chandru Raheja’s net worth is estimated to be a staggering $3.9 billion, according to Forbes. This remarkable wealth positions him at the 748th rank on Forbes’ prestigious Billionaires’ List. In India, he secured the 46th spot on the coveted India’s Richest List.

The Personal Life and Family of Chandru Raheja

Beyond his professional achievements, Chandru Raheja enjoys a fulfilling personal life. He is happily married to Jyoti C. Raheja, and together, they reside in Mumbai. The couple has been blessed with two sons, Ravi Raheja and Neel Raheja, who actively contribute to managing the K Raheja group. Notably, their contributions extend to renowned ventures like Mindspace, Commerzone, Crossword Bookstores, and Shoppers Stop.

Chandru Raheja’s journey exemplifies entrepreneurial excellence and strategic vision, solidifying his status as India’s wealthiest real estate tycoon. His remarkable net worth and diverse portfolio serve as testaments to his enduring success in the ever-evolving Indian business landscape.

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LIC Housing Finance, a leading non-banking financial company (NBFC), has witnessed a 5.5% surge in its Q4 consolidated net profit, reaching Rs 1,180.3 crore compared to Rs 1,118.6 crore in the same period last year.

The company’s CFO, Sudipto Sil, anticipates a positive outlook for the housing sector, stating that interest rates have likely peaked and customers are returning to the loan market, indicating a revival in real estate demand.

During an analyst call, Sudipto Sil mentioned that interest rates have been steadily increasing over the past three quarters, leading to customers deferring their purchasing decisions. However, Sil believes that the interest rate trajectory has reached its peak, as evidenced by the decline in bond yields by 30 to 40 basis points. He further added that interest rate stability is expected in the future, and customers have already demonstrated their willingness to return to the market. Sil also highlighted the positive factor of rising price points in the real estate market, indicating an increase in demand.

Despite challenges from global headwinds, the Indian property market has managed to overcome risks associated with rising interest rates due to a surge in post-pandemic pent-up demand. All sectors of the real estate industry, including residential, commercial, retail, and warehousing, have started to recover from a prolonged downcycle this year.

India Ratings and Research (Ind-Ra) conducted an analysis that revealed a 15% year-on-year sales growth in FY23 for the top eight real estate clusters. Although the market faces pressures from higher input costs, increasing mortgage rates, and domestic and global recession, it is expected to absorb these challenges and eventually witness a rise in demand. Ind-Ra revised the outlook on the residential real estate sector to ‘neutral’ from ‘improving’ for FY24.

In terms of Q4 results, LIC Housing Finance reported a 5.5% jump in consolidated net profit, reaching Rs 1,180.3 crore. Its net interest income grew by 22.1% to Rs 1,990.3 crore, and revenue witnessed a 21.04% increase, amounting to Rs 6,415.11 crore. The company’s operating margin stood at 15.70%, net profit margin at 12.75%, gross non-performing assets (NPAs) at 4.41%, and net NPAs at 2.50%. The company’s board has recommended a dividend of Rs 8.50 per equity share of Rs 2 each for FY23.

Brokerages, such as Jefferies and CLSA, have expressed optimism about LIC Housing Finance’s performance. Jefferies highlighted that the company’s Q4FY23 PAT exceeded estimates due to stronger net interest income and lower provisions, while CLSA noted a 50 basis point expansion in net interest margins (NIMs), the highest in 24 quarters. Both brokerages acknowledged the improvement in asset quality and credit cost reduction.

LIC Housing Finance’s CFO remains positive about the recovery of the real estate sector and expects stability in interest rates. The company’s strong Q4 results and positive market outlook from industry analysts further support this sentiment.

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