Hyderabad: The real estate sector is coming to grips with the newly introduced Real Estate Regulatory Authority (Rera) as well as GST.
The builder community is seeking from the Government exemption of the mortgage clause in the State. Under this clause, the builders give an affidavit to the local authority pledging ten per cent of the built-up area approved. The same is returned to the builder when the building is completed without deviations from the approved plan along with the occupancy certificate.
If there are any deviations, the builders forgo the mortgaged space even as the government can take steps to demolish the deviation. The Rera rules in Telangana, which have come into effect from August 4, specify that the builders register the project and its specifications with Rera. They also do not allow the builders to collect advances for a project or advertise it unless it is registered with Rera.
“There is no scope to not adhere to the details submitted to the Rera. Exempting the current ten per cent mortgage will free up the cash flows to that extent,” said C Prabhakara Rao, president, Telangana Builders Federation.
The builder community is also asking the Government to integrate approvals from fire department, Airport Authority, pollution control board and others along with the online application for approval by GHMC.
“While the present online application for approval in the real estate segment is good, there are still some departments that we need to visit for permissions. Since the projects and their specifications will be registered with Rera, a single window clearance combining approvals from all these departments is needed to reduce the lag,” said Jakka Venkat Reddy, secretary, Telangana Builders Federation.
Since builders will market only when the project is approved, removing delays through a single window will cut down interest costs. “The Rera rules in Telangana are just and protect the buyers’ interest. They also specify that lifts and escalators, which see wear and tear, be under annual maintenance contracts. Also, for electrical switches and appliances, the warranty will be transferred to the home buyers,” said Reddy.
In this direction, the builders’ body has met vendors and suppliers. “We said we will buy only from those vendors who give five years warranty,” he explained.
Also, the builders’ body is requesting the Government to reduce the stamp duty from the current six per cent to about two per cent. With GST coming in, the VAT and service tax, which added up to 5.75 per cent, have been subsumed. The new tax rate is 12 per cent.
“Since the tax outgo is up from 5.75 per cent earlier to current 12 per cent, we are asking State government if it can reduce the stamp duty to about 2 per cent. This will reduce the costs for the home buyers,’ said Reddy.
TBF wanted the Government to setup RERA office or at least an inward counter soon to allow builders submit files immediately.
To reduce revenue leakages to the government, developers and banks can insist on having the sale deed at the same cost as mentioned in agreement of sale and bank loan documents. With this, State revenue from registration and stamps will increase.