Annual Schedule of Rates - ASR Value / Guidance Value under RERA for CA Certification

Annual Schedule of Rates – ASR Value / Guidance Value under RERA

ASR is a government tool to find out the minimum value of a property at different locations based on various market factors. In Delhi, it is called Circle Rate whereas; in Mumbai, it is known as Ready Reckoner Rate (RR rate).

Following are some of the key aspects about ASR that property buyers should know:

- Normally, ASR is typically lower than the prevailing market rate of the property in a location;

- The government calculates the minimum stamp duty and registration charges based on the prevailing ASR value in the area;

- ASR is reviewed from time-to-time and the government tries to keep it close to the prevailing market rate in the area.

"The Annual Schedule of Rates is prepared to assess the market value of a property to calculate the stamp duty as applicable on the said property. These rates are determined by the Stamps and Registration Department of the state of Maharashtra. The ASR helps individuals find the official rates for properties in a particular area," explains senior faculty, Vidya Bhagwat, faculty department, REMI.

Experts point out various terms of ASR rates as known in the key cities across India:

- Circle Rate ­ Delhi, Bhubhaneshwar;

- Guidance Value ­ Bengaluru, Hyderabad;

- Guideline Rate (Market Value) ­ Chennai;

- Guideline Rate ­ Kolkata;

- Ready Reckoner Rates ­ Mumbai;

- Jantri Rates Gujarat.

ASR impacts the property prices:

"In cities like Bengaluru and Mumbai, the ASR is now very close to the actual prevailing market rates in most areas and for most asset classes. Thus, they are a good benchmark for the buyer. However, buyers should note that rates will vary from property to property depending on the quality of specifications, micro-location characteristics, reputation of the developer, payment terms, etc," says Amit Oberoi, head of valuation and advisory at Colliers. He further goes on to add, "It is necessary to set a realistic ASR level, so that the government can realise the actual revenue that is used for public good. Also, the government should consider lowering the stamp duty and registration rates, so that there is a greater disclosure of transaction values."

 

 

Tamil Nadu Real Estate (Regulation and Development) Rules, 2017

 

Tamil Nadu Real Estate (Regulation and Development) Rules, 2017

 

1)     Comes into Force from 22^nd June 2017

2)     Secretary to Housing is the Designated Authority until appointment of RERA

3)     All On going Project shall be registered before the Authority with in 3 months from the Act (i.e., 1-5-2017 plus 3 months i.e., 31-7-2017)

4)     The construction cost shall be the cost incurred by the promoter, towards the on-site expenditure for the physical development of the project including the cost incurred by way of fees/charges paid towards obtaining necessary statutory clearances including cost of Transfer of Development Rights, premium Floor Space Index charges, Finance Cost for the construction of the project and professional consulting charges.

5)     Sec 2(n) (i) of the Act is violated by inserting Rule 9(1) by giving power to convey UDS to the Allottees against conveying to Association

6)     Sale Agreement in Form A having separate heading as AGREEMENT FOR SALE and CONSTRUCTION AGREEMENT (against Single in all other States)

7)     Real estate Agent Registration Fees Rs.25,000/ for Individual and Rs.50,000/ for others

8)     In the Application, should have details of Consultants: Contractors, architect and structural engineers, site engineers, construction engineers, Quality Auditors, Geo-Technical Engineers, Town Planners, project management consultant.

9)     Rate of interest payable by the promoter and the allottee  State Bank of India highest Marginal Cost of Lending Rate plus 2%

10)  Timelines for Refund  incase of Termination – 90 days from the due date

 

11)  “Ongoing project” – Diluted and deviated from Act - Excludes

(i)          Common Areas gifted to the local body

(ii)           In Chennai Metropolitan Area for which application for completion certificate has been filed with Chennai Metropolitan Development Authority

(iii)           Outside Chennai Metropolitan Area, as no provision and procedure has yet been prescribed for issue of completion certificate, if the construction is structurally completed

 

12)  Fee shall not be levied for the Tamil Nadu Slum Clearance Board developed projects, Affordable Housing projects of the Tamil Nadu Housing Board and Housing projects executed by the Tamil Nadu Police Housing Corporation.

 

13)   Clarification on ongoing projects -

Explanation  I.-  Any  agreement  already  entered  between  the  promoter  and  the allottee before commencement of these rules shall not be affected.

Explanation II .- If the project has been conceived to be developed in phases, where the plans for the initial phase are approved by the planning authority prior 1-5-2017 then for such projects the requirement of obtaining 2/3 consent from existing allottee is exempted for addition/revision/modification of plans for subsequent phase/s of development, provided the scheme of developing the project in phased manner has been agreed upon by the allottee and promoter in the agreements executed between them;

Explanation III.- If the approval from the planning authority is obtained for larger extent of land, but where the development is conceived to be in phases, the promoter shall be permitted to register each phase as an independent project with the Authority. In such case, the requirement of obtaining 2/3 consent from existing allottee is exempted for addition/revision/modification of plans for subsequent phases of development, provided the development in phases has been agreed upon by the allottee and promoter in the agreements executed between them, when there is no reduction in the common area and there is no change in the total built up area of the registered phase/project.

Explanation IV.- It is not mandatory to substitute the prescribed form of agreement for sale, construction, the same shall be legally valid and enforceable and shall not be construed to limit the rights of the allottee under the Act and the rules and regulations made thereunder.

 

14)  Clarification on Withdrawal and Certifications 

 

a.      the engineer shall certify that the items shown in the cost of construction is matching to the physical condition at the site of the real estate project;

b.     the architect shall certify that the physical condition at the site is built as per the sanctioned plan; and chartered accountant shall certify the cost incurred on construction cost and land cost;

c.      the chartered accountant shall also certify the proportion of the cost incurred on construction and land cost to the total estimated cost of the project

 

small book on DEFECT LIABILITY UNDER REAL ESTATE (REGULATION AND DEVELOPMENT) ACT, 2016

DEFECT LIABILITY PERIOD UNDER REAL ESTATE (REGULATION AND DEVELOPMENT) ACT, 2016:

A Defect Liability period is a set period of time after the completion of a project and handing over the possession to the allottee, where the builder/promoter is held responsible/answerable to the allottees, for any kind of structural defects in the project and is duty bound to set right such structural defects within the given time and without any further collection of money / charge to the allottees.

The Real Estate (Regulation and Development) Act, 2016, which is laid down to establish regulation and promotion of the real estate sector in an efficient and transparent manner and to protect the interest of consumers in the real estate sector, has introduced a provision in which Act speaks/highlights on the “Defect Liability”.

Section 14 (3) of the Real Estate (Regulation and Development) Act, 2016 lays down that,

“In case any structural defect or any other defect in workmanship, quality or provision of services or any other obligations of the promoter as per the agreement for sale relating to such development is brought to the notice of the promoter within a period of five years by the allottee from the date of handing over possession, it shall be the duty of the promoter to rectify such defects without further charge, within thirty days, and in the event of promoter’s failure to rectify such defects within such time, the aggrieved allottees shall be entitled to receive appropriate compensation in the manner as provided under this Act”. 

One of the concerns in the real estate sector before this Act came into force was the quality of construction and sense of responsibility on the part of the builder/promoter towards the allottee.  The builder/promoter was not bound by any Act or Regulations to check on the materials used for the construction and also quality of construction in a project building.  The builder/promoter would not take any responsibility in rectifying the structural defects once the possession of the building was handed over to the allottee/s and allottee were forced to rectify the structural defects again by spending from his pocket, in spite of investing huge/heavy amount on the project building.  There was no sense of security to the allottees in regard to the quality of construction on any project building constructed by the builder/promoter/s.

 

 

Section 14(3) of the Real Estate (Regulation and Development) Act, 2016, now eliminates the absence of professionalism in the real estate sector and makes it mandatory for promoter/developers to rectify any construction/structural defects that may be noticed, even after possession has been handed over to the allottee/buyer/investor for a period of five years and within thirty days after the structural defect coming into the knowledge/notice of the builder and thus, making the allottee feel secure on his investment on the project building.

 

WHAT ACCORDING TO THE ACT IS DEFECT LIABILITY/STRUCTURAL DEFECTS?

As the word “Defect Liability/Structural Defect” is not specifically defined in the Karnataka Real Estate (Regulation and Development) Rules, 2017, thus giving rise to confusion on the definition, we are referring to the Rules framed by other States on Real Estate Act, 2016 which have explicitly defined the word “Structural Defect”.

 

Telengana State Real Estate (Regulation and Development) Rules, 2017 defines “Defect Liability” in its Agreement of Sale as,

“Structural defect or any other defect in workmanship, quality or provision of services or any other obligations of the promoter as per the agreement for sale relating to such development is brought to the notice of the promoter within a period of five years by the allottee from the date of handing over possession, it shall be the duty of the promoter to rectify such defects within such time, the aggrieved allottees shall be entitled to receive appropriate compensation in the manner as provided under the Act”.

The Telengana Rules, 2017 further defines the word “Defect Liability” as;

Notwithstanding anything contained in the above clause the following exclusions are made:

a)      Equipment (lifts, generator, motors, STP, transformers, gym equipment etc.,) which carry manufacturer’s guarantees for a limited period.

b)     Fittings related to plumbing, sanitary, electrical, hardware, etc., having natural wear and tear.

c)      Allowable structural and other deformations including expansion quotient.

d)     The terms of work like painting etc., which are subject to wear and tear.

 

The Haryana Real Estate (Regulation and Development) Rules, 2017 (draft rules) defines “Defect Liability/Structural Defect” as,

actual physical damage/ defects to the designated load-bearing elements of the building, apartment or unit like faults, breakage or cracks, appearing over time in elements such as load bearing columns, walls, slabs, beams etc. which can affect the strength and stability of the apartment or the building and shall include any of the following, namely:-

(i)               defects due to design attributes of reinforced cement concrete (RCC) or structural mild steel (MS) elements of an engineered (structurally designed) building structure;

(ii)             defects due to faulty or bad workmanship of RCC or MS work;

(iii)            defects due to materials used in such RCC or MS work;

(iv)            major cracks in masonry work that are induced as result of failures of RCC or MS work;

(v)             Any defect which is established to have occurred on account of negligence, use of inferior materials or non-adherence to the regulatory codes of practice by the promoter.

 

Explanation: - The promoter shall not be liable for any such 3 structural/ architectural defect induced by the allottee, by means of carrying out structural or architectural changes from the original specifications/ design.

 

CONCLUSION:

Thus, the clause “Defect Liability” will give rise to careful consideration on the quality of construction in a project by the promoters and in case of any structural defects, then gives the allottee/buyer a window to get the defects rectified by the promoter for a period of five years from the date of possession being handed over by the promoter and hence securing the interest and safeguarding the investment made by the allottee in a project building.

 

Best Practices –

1)     Promoters to enter into contract with Contractors / Suppliers / Service providers back to back (min 5 years) to pass on the risk of defect liability.

2)     If Contractors / Suppliers / Service providers are not covers for 5 years, then to rely on separate AMC’s to protect and mitigate financial risks.

3)     Promoter to consider the increased cost due to defect liability as part of their project cost.

Visit and download materials / forms / certificates / procedure under RERD Act @ www.reraconsultants.in

 

Telangana RERA – Major differences compare to Act and other State Rules -

                                                          

Government of India has enacted Real Estate (Regulation and Development) Act, 2016 on 26/3/2016.

 

 

Telangana State have notified the Rules and are Gazetted on 04-08-2017 BY ORDER AND IN THE NAME OF THE GOVERNOR OF TELANGANA Mr. SUNIL SHARMA, PRINCIPAL SECRETARY TO GOVERNMENT (TR&B) & SECRETARY TO GOVERNMENT (MA&UD) (i/c) - G.O.Ms.No.202 dated 31^st July 2017

 

These rules are called Telangana Real Estate (Regulation and Development) Rules, 2017

 

Gazetted on 04-08-2017 and effective

 

In order to educate, guide the Promoters, Agents, Allottees, our Consultants have prepared this smallbook on decode of – Telangana RERA Rules

 

 

Questions	Provisions & Analysis
Applicability of the Telangana RERD Rules 2017 -	These Rules are applicable to all Real Estate Projects whose building permissions have been approved on or after 01.01.2017 by the Competent Authorities viz., UDAs / DTCP / Municipal Corporations / Municipalities / Nagar Panchayats / TSIIC
Ongoing Projects Excluded	Ongoing projects having Completion Certificate as on 4th Aug 2017
Time Limit for Filing of Application for Registration of ongoing project	Within 3 Months from date of Rules notification   4th Aug 2017 to 3rd Nov 2017 (3 months from 4th Aug 2017)
Saleable Area	Carpet Area + Exclusive veranda + Exclusive balcony + Exclusive terrace + the proportionate share of Common Areas + any other Areas Specifically mentioned in Sale Agreement
Parking area	Means a covered or open area which is sufficient in size to park vehicles and which may be provided in the basements and/or stilt and/or podium and/or in the form of independent structure built for providing parking spaces and/or parking provided by the mechanized parking arrangements.
Land Cost	The costs incurred by the Promoter   1.      Acquisition of ownership and title 2.      lease charges, 3.      Interest Costs, 4.      Overhead cost, 5.      Marketing and/or brokerage costs, 6.      Legal cost 7.      Supervision cost 8.      Security deposits to land owner in case of JDA 9.      TDR Costs 10.  Paid to outgoing developer to relinquish ownership and title 11.  Stamp Duty, Transfer charges, Registration fees, land/zone change conversion charges, NALA charges, any taxes in relation to Land
Cost of construction	1.      Incurred by the Promoter towards 2.      On-site and off-site expenditure 3.      Mobilization advances to contractors, 4.      Procurement advances to vendors, 5.      Construction equipment, 6.      Site preparations 7.      Onsite and offsite construction activities, 8.      Payments/ instalments to local authority, 9.      Expenditure for the construction, 10.  Marketing and sale of the project 11.  Fees, Charges, Interest etc. and taxes and penalties to SG/CG/to any govt authorities 12.  Principal Sums 13.  Interest on Loans
Ongoing Project	a Project where development is going on for which Occupancy Certificate or Completion Certificate has not been issued Excludes - such Projects for which building permissions were approved prior to 01.01.2017 by the Competent Authorities
Application for Registration –	In writing in Form ‘A’ annexed to this order, in triplicate, until the procedure is made web based for filing of such application
EC Certificate from Advocate or Tahasildar	Shall be accompanied by Application
Fees for Registration of Real Estate Project   (same ass Karnataka)	Type Description Upto 1000 Sq Mtr Above 1000 Sq Mtr Maximum Fees     INR/mtr INR/mtr INR Group Housing Apartment / villa 5 10 500,000 Mixed Res / Commercial 10 15 700,000 Commercial Commercial 20 25 1,000,000 Plotted Land   5 200,000
Real Estate Agent Registration Fees	For Individual – Rs. 10,000 Other than Individual – Rs. 50,000
Interest Payable by allottee and Promoter	Highest SBI MCLR + 2 % (Same as KA)
Refund time for promoter	90 days from the date of due (Act 45 days, KA 60 days, TN 90 days)
Registration Form	FORM ‘A’ – Application for Registration of Project FORM ‘B’ – Affidavit cum Declaration by Promoter FORM ‘G’ - Application For Registration Of Real Estate Agent   (information required as same as Karnataka)
Compounding of offences	10 % of estimated real estate project cost (KA – upto 10 %)
ANNEXURE  [See rule 38] AGREEMENT FOR SALE (Important clauses in Agreement for Sale)
Inclusion of Saleable Area in the Agreement     By including the definition of Saleable Area - Gives clarity to the buyer	The Allottee had applied for an apartment in the Project vide application no. ___________ dated __________ and has been allotted apartment no. ___________ having carpet area of ______ square feet, exclusive verandahs, balconies, terrace area of ________ sq. feet, totally having a saleable area of ________ sq. feet type ________, on ____ floor in [tower/block/building] no._______ (“Building”) along with garage/covered parking no. __________ admeasuring ________ square feet in the _______________[Please insert the location of the garage/covered parking], as permissible under the applicable law and of pro rata share in the common areas (“Common Areas”) as defined under clause (n) of Section 2 of the Act (hereinafter referred to as the “Apartment” more particularly described in Schedule A and the floor plan of the apartment is annexed hereto and marked as Schedule B);
DEFECT LIABILITY - It is agreed that in case any structural defect or any other defect in workmanship, quality or provision of services for 5 YEARS       Specifically excludes from Defect Liability	Notwithstanding anything contained in the above clause the following exclusions are made -   a.       Equipment (lifts, generator, motors, STP, transformers, gym equipment etc) which carry manufacturer’s guarantees for a limited period. Thereafter the welfare association /society shall take annual maintenance contract with the suppliers. The Promoter shall transfer manufacturer’s guarantees/warrantees to the allottee or association of Allottees as the case may be. b.      Fittings related to plumbing, sanitary, electrical, hardware, etc. having natural wear and tear. c.       Allowable structural and other deformations including expansion quotient. d.      The terms of work like painting etc. which are subject to wear and tear   The allottees shall maintain the apartments in good tenantable conditions and carry out the internal repairs for the upkeep of the apartments. The association of the allottees or its assigns shall maintain the services and amenities in good condition and covered with proper AMC and insurance. The obligation of the developers shall be subject to proper maintenance and upkeep of the apartments/services and amenities by the allottee or the association of the allottees as the case may be
Additional Clauses / paragraphs   Clause 1.3	The Promoter shall not be liable for any manufacturing or other defects of any branded inputs or fixtures or services of any third party mentioned in the schedule/annexure to this agreement, unless it results in structural defect. The Association of Allottees shall take the responsibility for proper safety, maintenance (including continuance of annual maintenance/insurance contracts/agreements) and upkeep of all the fixtures, equipment and machinery provided by the Promoter, for which the Promoter shall not be liable after handing over.
Amenities shall be available only for use and enjoyment of the Allottees of the Project.   Clause 1.9	It is agreed that the Project is an independent, self-contained Project covering the said Land and is not a part of any other project or zone and shall not form a part of and/or linked/combined with any other project in its vicinity or otherwise except for the purpose of integration of infrastructure for the benefit of the Allottee (like club house). It is clarified that Project’s facilities and amenities shall be available only for use and enjoyment of the Allottees of the Project.
Force Majeure – includes   Clause 7.1	Delay or failure due to war, flood, drought, fire, cyclone, earthquake or any other calamity caused by nature or any Court stay or Government order affecting the regular development of the real estate project
Procedure for taking possession   Clause 7.2	The promoter shall not be liable for any defect or deficiency occasioned on account of any act or omission on the part of the allottee or any authority or third party on whom the promoter has no control
Cancellation by Allottee   Clause 7.5	The balance amount of money paid by the allottee shall be returned by the promoter to the allottee within three months of such cancellation or at the time that the Promoter is able to resell the said Apartment/Plot to another purchaser, whichever is later.
Representations And Warranties Of The Promoter	There are no litigations pending before any Court of law or Authority with respect to the said land or Project except those disclosed in the title report   No notice from the Government or any other local body or authority or any legislative enactment, government ordinance, order, notification (including any notice for acquisition or requisition of the said property) has been received by or served upon the Promoter in respect of the said Land and/or the Project except those disclosed in the title report.
The Allottee/s or himself/themselves covenants with the Promoter     11 clauses are included and making Allottees and Association responsible -	1        To maintain the Apartment at the Allottee's own cost in good and tenantable repair and condition 2        Not to change/alter or make addition in or to the building in which the Apartment or any part without the consent of the local authorities, if required. 3        Not to store in the Apartment any goods which are of hazardous, combustible or dangerous nature or are so heavy as to damage the construction or structure of the building 4        Negligence or default of the Allottee in this behalf, the Allottee shall be liable for the consequences 5        To carry out at his own cost all internal repairs to the said Apartment and maintain the Apartment in the same condition 6        Time to time for protection and maintenance of the said building and the Apartments therein and for the observance and performance of the Building Rules, Regulations and Bye-laws for the time being of the concerned local authority and of Government and other public bodies 7        Pay increase in local taxes, water charges, insurance and such other levies
Default by Allottee	The amount shall be repaid by the Promoter within a period of ninety days after termination or the date on which the Promoter is able to resell the Apartment/Plot to another purchaser, whichever is later
MAINTENANCE OF THE SAID BUILDING / APARTMENT / PROJECT	All other infrastructural facilities, including the equipment like lift, elevator, mechanical, electrical or electronic equipment, STP, etc., shall always be covered by appropriate annual maintenance agreements and insurance agreements with the authorized service providers and the costs of such AMC and Insurance shall be part of the maintenance charges payable by the occupants.  Unless the possession is delivered to the allottee, the Promoter shall be the occupant in respect of any plot/apartment/building
Formation Of Association Of Allottees And Consent Of Allottees	The Promoter shall submit an application to the Registrar for registration of the Association of Allottees as a society under the A.P. Societies Registration Act, 2001 (as applicable to the state of Telangana), within two months from the date on which the occupation certificate in respect of such project is issued   and a minimum of sixty per cent of the total Allottees in such a project have taken possession and the Promoter has received the full consideration from such Allottees. All the Allottees on payment of full consideration shall become members of such Association of Allottees formed by the Promoter