A: To predict real estate market is very difficult or speculative. It is the market with its own dynamics, highly unorganised and liquidity factor very low unlike stocks.
However, it is also the reason for it being a long term investment with large amount of sum involved. Every individual or family should have real estate in their portfolio to at least 20-30 percent. Hence the question should be; is buying/selling the property fitting into my scheme/plan of investment for achieving my goal.
Q: What does freehold & leasehold property means?
A: A freehold property is one where there is a whole and sole owner, ownership is full & unconditional and there is no lessor/lessee involved. It last for indefinite duration of time.
Leasehold property is one where the property is leased/rented to lessee/tenant for definite period of time like 12 months or 99 years.
Q: What is property assessment or municipal tax? Which properties attract these taxes?
A: Assessment tax also referred as property municipal tax, is revenue earned by civic authorities for services being rendered to public viz; water, sewerage, education, streets, etc., which is based on rateable/capital value decided by assessment department.
All the private properties (lands, lands with building, others) either freehold or leasehold, attract assessment tax. The lands or land with buildings owned, occupied, used by state, central & civic authorities will not be assessable for tax.
Also lands reserved for non-build-able public use in developmental plan i.e; playgrounds, gardens, roads, etc., are exempted from the tax. Lands/premises owned and used by public charitable trusts viz; temples, hospitals, schools, etc., are partially exempted from the tax.
Q: How to calculate the property assessment tax?
A: According to the BMC proposal, property tax on residences will be calculated at 0.41% of its capital value. For offices, the tax will be at 1.95% of the capital value, and for banks, it's at 3.91%. The new tax will be calculated on the basis of the current market value or capital value of the property based on factors, like age, price, location, and type of property.
This is being changed from the current system of calculating property tax based on rental value of the property that was set in the first year of assessment. BMC, however, claims that the change was long overdue.
The rateable value (R.V.) of the tax is calculated on capital value which should be based on fair & reasonable marketable rates. The main barrier is fixing the capital value of a property.
According to BMC, the tax is currently being levied on the built-up area as the model is based on ready-reckoner rates that are linked to built-up space.
Q: How is the title insurance done?
A: Title insurance companies search public records to develop and document the property’s chain of title. This means they will detect known claims or defects in the title of property.
If they find liens or encumbrances, they will insist that steps be taken to clear them. After that the insurance is tabulated & premium fixed.
Q: What is CRZ (Coastal Regulation Zone) and how is it categorized?
A: Courtesy: Specification for coastal regulation zone chart and its development
(National Hydrographic Office, Dehradun, India)
In general the land between low tide line and high tide line is the Coastal Regulation Zone. The rapidly increasing human population and industrial development along coast have resulted degradation of coastal ecosystems and diminishing the living resources. In order to conserve coastal resources by controlling their depletion and manage the development activities, the government regulations prohibit certain activities and also list the permissible activities within the CRZ.
Coastal area classification and development zone:
For regulating developmental activities, the coastal stretches within 500 meters of HTL (High Tide Line) on the land ward side are classified into the following different 4 categories of coastal regulation zones (CRZ).
Category I (CRZ-I)
The areas that are ecologically sensitive and important such as national parks, sanctuaries, reserve forest, wild life habitats, mangroves, coral reef area close to breeding spawning ground of fish and marine life, heritage area, and areas likely to be inundated due to rise in sea level due to global warning. It covers the area between high tide line and low tide line.
Category II (CRZ-II)
The areas that have already been developed up to and close to the shoreline. For this purpose, developed area is referred to as that area within the municipal limits or in other legally designated urban area which is already substantially built up and which has been provided with drainage and approach roads and other infrastructure facilities, such as water supply and sewerage mains.
Some development on land ward side of existing road and structures and proposed road shown on the coastal zone management plan are permissible in this zone.
Category III (CRZ-III)
The area that are relatively undisturbed and those which do not belong to either category I or II. These will include coastal zone in the rural areas (developed and undeveloped) and also area within municipal limits or in legally designated urban areas, which are not substantially built up.
Category IV (CRZ-IV)
Coastal stretches in the Andaman and Nicobar, Lakshadweep and small islands except those designated as CRZ-I, CRZ-II and CRZ-III.
Q: What is SEZ (Special Economic Zone)
A: It is specially demarcated area within domestic territory which is treated as foreign territory for trade, commerce, incentive, and taxation. In short the trade & commerce conducted from this area is given special treatment for tax and other government procedures. The main objectives of the SEZ are
Generation of additional economic activities
Promotion of exports of goods and services
Promotion of investment from domestic and foreign sources
Creation of employment opportunities
Development of infrastructure facilities
Others for development of otherwise economically weak zone
Q: What is RERA - Real Estate (Regulation & Developement) Act?
RERA is an Act to establish the Real Estate Regulatory Authority for regulation and promotion of the real estate sector and to ensure sale of plot, apartment or building, as the case may be, or sale of real estate project, in an efficient and transparent manner and to protect the interest of consumers in the real estate sector and to establish an adjudicating mechanism for speedy dispute redressal and also to establish the Appellate Tribunal to hear appeals from the decisions, directions or orders of the Real Estate Regulatory Authority and the adjudicating officer and for matters connected therewith or incidental thereto.