Month: November 2012

What is Balance Transfer and how to do it?

Balance Transfer (BT) is a product that’s banks provide to customers who would like to switch from one bank to another bank to get benefited by the increasing home loan interest rates. A customer can transfer his/her loan from a bank to another by using this product. The terms and conditions for this product are same and the process goes same as like of fresh home loan application.

Before going for a balance transfer a customer need to arrange his/her person, income and property documents as he did before purchasing the property. Along with these documents the customer need to arrange his/hers home loan accounts one year repayment track, outstanding letter and List of Documents deposited letter from the previous bank. The customers need to submit all these documents to the present bank where he/she would like to switch his home loan. The process is same and starts with verification of customer’s home and office addresses, Pay slips, Bank statements and finally property documents with a visit of technical valuer to the property. The property need to support to the balance transfer the home loan otherwise the loan application will be rejected. There are cases where the property doesn’t support the loan amount applied even the loan is same as in the previous bank.

Once the process is done then the present bank will issue a pay-order in the name of the customer stating his loan account no on the pay-order. Usually it takes 8-15 working days to receive the original documents from the previous bank to present bank. The customer starts paying his/her EMI from the second month of the disbursement date. The balance transfer will give Income Tax benefit to the customer under section 80© of Income Tax act for Interest paid on home loan up to a maximum of 150000.

Bank of Baroda stops home loans to flat owners in Greater Noida West

29 Nov 2012, PTI.

NEW DELHI: Bank of Baroda has stopped releasing home loan instalments to flat owners in Greater Noida (West) in Uttar Pradesh, particularly Gaur City-1 project, in view of an ongoing litigation, the government informed Parliament today.

“Yes, Sir”, Minister of State for Finance Namo Narain Meena said in a written reply in Rajya Sabha to a question whether Bank of Baroda has stopped releasing the next housing loan instalments to house owners in Greater Noida (West), particularly Gaur City-I in view of litigation against acquisition of land by companies.

“Bank of Baroda proposes to release the housing loan instalments after the final judgement of Supreme Court,” the Minister said .

In view of the ongoing litigation, Meena said, “Bank has adopted a cautious approach for resuming the sanction of fresh home loans and also in releasing further disbursement in home loans already sanctioned in Gaur City-I and other projects in Noida Extension and Greater Noida, till legal position is crystallised.”

The Minister further said that Union Bank of India and Corporation Bank have “resumed releases” of home loan instalments.

He further said that the order of the Allahabad High Court granting approval to the Master Plan 2021 has been challenged in the Supreme Court. “The…SLP (Special Leave Petition) is at service stage,” he added.

Meanwhile, Uttar Pradesh too had filed a petition in the Supreme Court in connection with the issue, the Minister said, adding “no interim stay order has been granted by the Supreme Court.”

Under the Master Plan 2021, which was approved by the NCR Planning Board, construction and development work could be undertaken in the Greater Noida.

Housing prices up in 9 cities, down in 11 places: National Housing Bank

23 Nov 2012, PTI.

NEW DELHI: Showing a mixed trend, housing prices in 11 cities, including Bangalore and Kolkata, declined by up to 5 per cent in July-September, while rates in nine other places increased by up to 10 per cent, according to National Housing Bank (NHB).

Kochi saw the highest price rise of 10.1 per cent, followed by Jaipur with 9 per cent during the second quarter of this fiscal compared with the previous quarter.

In Delhi-NCR, Mumbai and Chennai, prices rose by 3.8 per cent, 0.5 per cent and 1 per cent, respectively, NHB data showed.

NHB RESIDEX tracks the movement in prices of residential properties on a quarterly basis. It covers 20 cities. From January next year, it plans to cover 6 more cities.

“Overall, there is a price correction. Even in nine cities where prices have gone up, there will be net decline if we factor in the rise in input cost and inflation,” NHB Chairman and Managing Director R V Verma told PTI.

Asked about falling prices, he said, “Builders cannot sustain at current prices because of oversupply. So, they are decreasing the price to clear inventory and boost sales.”

Housing demand has been affected for last few years due to high interest rates on home loans.

“The movement in prices of residential properties has shown marginally declining trend in eleven cities, ranging from -0.4 per cent in Faridabad to -4.8 per cent in Surat, and rise in nine cities ranging from 0.5 per cent in Mumbai to 10.1 per cent in Kochi during July-September, 2012 in comparison to the previous quarter April-June 2012,” NHB said.

Ahmedabad saw 3 per cent rise, Bhubaneshwar 2.3 per cent, Lucknow 2.2 per cent, Chennai 0.8 per cent, Pune 0.7 per cent.

Prices fell the maximum in Surat (-4.8 per cent), followed by Indore at -3.54 per cent, Kolkata -2.4 per cent, Vijayawada -2.4 per cent, Patna -1.8 per cent, Ludhiana -1.7 per cent, Bangalore -1.7 per cent, Hyderabad -1.3 per cent, Guwahati -0.7 per cent, Bhopal -0.5 per cent and Faridabad -0.4 per cent.

On the overall trend, NHB said that prices have started to decline in some smaller towns and the increase in other cities is mostly marginal, barring Kochi and Jaipur.

“There is some signs of convergence of prices around this level across the 20 cities,” it added.

Portman Holdings picks up 26% stake in Tata Housing’s Bangalore project

23 Nov 2012, ET Bureau.

 MUMBAI: Portman Holdings has picked up a significant minority stake in a Bangalore project of Tata Housing, the real estate arm of the Tata Group, for 65-83 crore.

The investment by the AtlantaBSE 0.38 %, US-based integrated real estate development, investment and management company, will be the first private equity investment in Tata Housing.

A senior executive at Portman said that the company, which has investments in two projects being developed by Kolte Patil Developers in Pune, will hold between 26% and 30% in Promont, a high-end residential project being developed by Tata Housing. The equity valuation of the project is 250 crore. Portman will invest anywhere between 65 crore and 83 crore, he said.

“Our strategy has been to invest in and develop residential projects with marquee developers in urban cities. We have worked with the Tata Group in the past, having partially designed and executed the Taj Welligton Mews service apartments in Mumbai. Promont fits our investment thesis well,” Rahul Anand, managing director of Portman Holdings India, told ET.

Tata Housing managing director and CEO Brotin Banerjee said: “Portman Holdings clearly recognises the opportunity for long-term and sustained growth in the Indian housing market.”

Portman has been investing proprietary money, but had plans to raise a $300-million fund from third party investors.

“We are looking at another transaction in Bangalore. There are 3-4 more deals in the pipeline. By the first half of 2013, we should be able to close six investments,” Anand said. Portman’s first investment in India is already three-year old and Anand is confident of achieving a 25% IRR (internal rate of return) on that.

Located at the highest altitude point of Bangalore, Promont is a high-end, gated, luxury community of terraced hillside residences with four apartment towers, villas and row houses.

Tax rebate allowed on capital gains after property sale

22 Nov 2012, ET Bureau.

MUMBAI: Income-Tax Appellate Tribunal (ITAT) of Chennai has held that interest on home loans will continue to remain out of the tax net even if the house is sold later.

The tribunal clarified that the interest paid on loans is certainly an expenditure that should be taken into account while computing the income from house property as well as in computing capital gains arising from sale of the same property. The order was given on October 31 by a two-member bench comprising OK Narayanan and SS Godara.

In this case, the taxpayer C Ramabrahmam borrowed money for buying property and claimed deduction for interest paid for the borrowed funds, while computing income from house property.

However, when the house was sold, the taxpayer treated the interest paid on loan as “cost of acquisition” for the purpose of computing capital gains and claimed deduction there too.

The assessing officer, however, refused to accept the claim on the ground that interest has been allowed as deduction under section 24 (b) of the Income-tax Act that deals with income from house property and the deduction cannot be allowed again while computing capital gains arising from the sale of house.

The first appellate authority, Commissioner (Appeal), allowed the claim of the tax payer but the income-tax department moved the Income-tax Appellate Tribunal (ITAT), the second appellate authority for deciding tax disputes.

The ITAT dismissed the appeal, holding that deduction under section 24 (b) of the Income-tax Act and computation of capital gains under section 48 of the Income-tax Act are covered under different heads of income.

The first section deals with house property and the other section deals with capital gains. The first deduction was claimed when the taxpayer computed income from house property, while the second claim was made when the house was sold and capital gains were computed.

The ITAT held that both these provisions of the Income-tax Act are altogether different, the taxpayer is entitled to claim deduction of interest paid on borrowed loans while computing capital gains too.

Ezzy Group enters Indian realty market, sets aside Rs 500 crore for projects

10 Nov 2012, PTI.

BANGALORE: Ezzy Group, an infrastructure and property management company, today announced its foray into the Indian realty market with an investment of Rs 5,000 crore spread over the next two years.

“Our objective is to offer something unique to the Indian realty market. We have set aside Rs 500 crore for our projects, both residential and commercial projects in the next two years,” Ezzy Group Chairman Shabbir Saifuddin Ezzy told reporters here.

Ezzy Group has raised funds internally to fund its projects and will invest in Bangalore and Mumbai, he said, adding the company also plans to bring in funds through FDI. “The projects will be in over a million square feet,” Saifuddin added.

The company will invest Rs 500 crore in next fiscal year in luxury real estate projects in Bangalore, a major share of which will be through equity investors, he said.

Ezzy Group has plans to issue an IPO in the long term, he added.

The project comprises 25 boutique row villas built to the highest specifications on par with international standards, Ashai Design Corporation (USA) CEO Tony Ashai said.

The company has invested close to Rs 150 crore in the two projects – Corinth and The Avenue – comprising luxury residential villas and apartments, Ashai said.

Both the properties have been priced between Rs 6,000 and Rs 7000 per square foot, he said.

Ezzy Group and Ashai Design Corporation (ADC), California, USA, will set up several such luxury residential projects in the country going forward, Ashai said.

Bangalore’s residential realty market defies downturn

9 Nov 2012, TNN.

BANGALORE: The city’s residential real estate market continues to remain robust and has bucked the slowdown that’s being felt in Mumbai and the National Capital Region. Bangalore is seen to be holding out because of more realistic pricing and end-user demand.

Data from research and consulting firm PropEquity showed that between January to August this year, the total number of residential units absorbed in Bangalore was 24,734.

That’s a 3% drop from 25,460 units that were absorbed in the same period a year ago. However, in the same period, NCR reported a 42% drop and Mumbai Metropolitan Region a 34% drop in absorption.

“Bangalore is mainly end-user driven and that has led to lesser volatility in this market,” said Samir Jasuja, founder and CEO of PropEquity.

Godrej Properties, which has launched a slew of projects ranging in price from Rs 30 lakh to over Rs 1 crore in the last one month, has already reported sales of 200 units.

“We have seen good sales in other markets (Mumbai and NCR) as well, but Bangalore has certainly been one of the strongest real estate markets in India in the recent past,” said Pirojsha Godrej, CEO, Godrej Properties.

J C Sharma, MD, Sobha Developers, said the current real estate environment was promising as banks had slashed their home loan charges and were offering competitive interest rates. “Since pre-payment charges have also been abolished, there is increased affordability ,” said Sharma.

Last week, Gurgaonbased textile company Bhartiya Group forayed into the real estate market with the launch of its first project, a 125-acre township , Bhartiya City, near Hebbal in north Bangalore.

Snehdeep Aggarwal, chairman, Bhartiya Group, said that the first phase of the township consisting of over 600 units – priced between Rs 29 lakh and Rs 1 crore — was close to selling out. “Ground reports say the demand is completely end-user driven ,” said Aggarwal.

Mayank Ruia, head-residential , The Phoenix Mills, said, “Sales off-take in the city has been impressive thus far. We have sold over 300 units since September, and the off-take continues at a healthy pace.”

The Mumbai-based developer has launched an ultra-high end residential project, One Bangalore West, in Rajajinagar, which has apartments priced at Rs 2 crore and more.

First generation entrepreneurs , senior management from the IT/ITeS sector , and non-resident Indians are fuelling the demand for luxury projects.

Banks track defaulters with social media

8 Nov 2012, TNN.

CHENNAI: An innocuous update like ‘Mani was at Kodai Club’ on a social networking site could provide a host of information to a bank. Financial institutions have started using social media to check customer profiles, analyse tastes and preferences, assess credit worthiness, and even chase down defaulting borrowers.

“Banks use social media for lead generation, customer engagement and recovery. Some banks have turned to new collection vendors who have explicit skills in social media applications so that they can trace loan defaulters, especially on mortgages,” said CVG Prasad, chief information officer, ING Vysya Bank said.

Banks and recovery companies abroad have been using social analytics — deriving business insights and extracting data from user profiles — for a while. “In the west, social media is used to track customers with pending loans who may be untraceable,” said a senior official from Development Credit Bank. Posts and updates can provide early warning signals about a customer’s financial status.

While banks still rely on traditional sources such as Credit Information Bureau of India to get information on corporate and retail borrowers, they are also harnessing social media. They look to social media sites for insights into lending to small, local businesses such as restaurants and beauty salons.

Comments on blogs and social media sites on quality of service can be a reference point for bankers to decide whether to give a working capital loan or not. Banks are also using networking sites to track business activities of exporters. If the social footprint hasn’t changed much in a year, it could influence lending decisions.

“If an organisation receives lot of negative feedback on its products and services, it may have an impact on its ability to pay future obligations. So this data may be used as one of the parameters to assess credit worthiness of an organisation. Social media can provide useful data on employee and customer perception,” said S Ganesh, chief executive officer, D&B Analytics and Decision Services.

Not all financial institutions are supportive of social media tracking. “Anybody can hack and write something on your wall. Not all information is authentic,” said K Venkataraman, managing director and chief executive officer, Karur Vysya Bank said.

House Warming Loan: New product from Federal bank stable

5 Nov 2012, PTI.

KOCHI: Kerala based Federal Bank today launched an innovative product, ‘House Warming Loan’, which will be offered to its housing loan customers for meeting house warming and other related expenses.

The loan, which can be availed by existing and new housing loan customers, is offered on acquisition/ completion of house/ flat, the bank said in a press release here.

The loan is offered at an attractive rate of 2 per cent over the housing loan rate. The quantum of loan can be upto 5 per cent of the Housing Loan limit with a maximum of Rs 2 Lakh.

Speaking about the launch, D Sampath, Additional General Manager and Head, Retail Business Department said the timely help in the form of House Warming Loan to Housing loan borrowers will enable customers to conduct house warming functions without resorting to raising short term loans at high rate of interest.

The Bank also came up with special offers to its customers during this Festive Season. Attractive Interest Rate of 10.45 per cent for Home Loans irrespective of amount. 10.45 per cent is the current base rate of the bank. Zero Processing Fee for all Housing loans and all Car Loans and 5 per cent Discount for Gold Coins bought from the bank

There are also fabulous Online shopping offers to customers, including Higher Discounts and Reward points for online purchases using Bank’s Debit Cards and Net Banking facility for the season.

The festive offers are valid from November 1 to December 31.

The private lender has a branch network of 1014 branches and 1,107 ATMs spread across the country. The Bank had total business of Rs 86,693 crore as at Mar 31 this year and has net Worth Rs 5,706 crore as at the end of fiscal.

Property prices firm despite high interest rates: Nomura

4 Nov 2012, PTI.

MUMBAI: Housing prices remained firm following limited supply, despite the slowdown and high interest rates, according to a Nomura report.

“House prices remained on an uptrend despite weak transaction in volumes, high interest rates and slowing economic growth, as supply has been limited with fewer projects being added, especially in key markets such as Mumbai and Delhi due to delays in the government approvals,” Nomura said in a report.

According to the Reserve Bank’s latest housing price index, house prices remained on an uptrend, up 24.1 per cent in Q1, compared to an average of 20 per cent over the last two years, it said.

The metro markets of Delhi, Mumbai, Kolkata, and Chennai saw the sharpest price increases of 21-42 per cent, said the Nomura report.

The steady rise in house prices is one of the many reasons why consumption has remained well supported and inflation expectations have remained elevated, despite the stress in other segments of the economy, it pointed out. The report further said steady gains in physical assets have also encouraged households to divert savings away from financial assets.

The RBI’s national house price index takes into account price situations in the nine cities–Mumbai, Delhi, Bangalore, Ahmedabad, Lucknow, Kolkata, Chennai, Jaipur and Kanpur–it said.

Housing prices in Mumbai grew at a tepid 3.1 percent in June quarter, while in Kolkata was the fastest at 28.9 percent, it said, adding Bangalore and Kanpur witnessed a fall.

Going by transaction volumes, there was a 6.4 per cent rise on a sequential basis, the quarterly index showed, while on a y-o-y basis it stood at 9.3 per cent, it said.

According to a report by property consultant Jones Lang LaSalle, seven major metros including Bangalore, Chennai, Delhi, Hyderabad, Kolkata, Mumbai and Pune, capital values rose marginally or remained more or less stable in September.

While capital value in Bangalore during the month ranged between Rs 3,000-6,000 per sq ft, the rentals fluctuated between Rs 8,000 and Rs 15,000.

Mumbai continued to top the list in terms of capital value in the range of Rs 4,800-32,000 per sq ft while the rentals touched Rs 95,000 per month for a 1,000 sq ft flat.

In Chennai and Delhi the capital value too saw a marginal rise ranging from Rs 9,000-17,000 and Rs 3,500-16,000 per sq ft, respectively. Similarly, the rents ranged between Rs 9,000 and Rs 30,000 and Rs 10,000 and Rs 23,000 (for 1,000 sq ft area) respectively.

In Hyderabad, Kolkata and Pune, capital values remainded stable ranging from Rs 2,000-20,000, Rs 1,800-15,000 and Rs 3,300-4,000 per sq ft, respectively.

Rents in these three cities ranged between Rs 5,000 and Rs 20,000 in Hyderabad, Rs 5,000 and Rs 45,000 in Kolkata and Rs 8,000 and Rs 12,000 in Pune.

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