RBI extends EMI moratorium - latest update

As India struggles to get back on its feet in the rest of the world, the Reserve Bank of India is exploring ways to make the life of the common man less stressful.

The first EMI moratorium was announced on 27 March 2020 and was to cover debt repayment between March 1 and May 31. As the COVID-19 pandemic still continues, it was clear that postponement expansion was needed. That is why today (22 May 2020), RBI Governor Shaktikanta Das extended the moratorium on loan repayment saying - “In view of the expansion and continued disruption of lockdown due to COVID-19, the decision to allow lending institutions has been taken. From June 1 to August 31, 2020, another three months to extend the moratorium on term loan installments.

How does an extended EMI moratorium help?

About 122 million people lost their jobs due to the outbreak of COVID-19. To add to this, self-employed individuals are struggling to make ends meet due to loss of income during the epidemic. If you are wondering, about 51% of India's workforce is self-employed! This means that a large part of India's working population is now finding it difficult to manage its expenses and pay back its debts.

The additional 3-month extension would provide some much-needed relief to these individuals. They will now be able to take out their loans such as car loans, home loans etc. If they miss an EMI payment then they run the risk of negatively affecting their credit score.

Now that the loan is deferred for 3 months, and money is not deducted from their bank accounts, most people will have little money to watch them until things start appearing.

Important points to keep in mind about EMI moratorium

Although the RBI EMI moratorium is good news for many people, what should you know here-

· The EMI moratorium is not a mandate, it is a competent provision. Banks have the right to decide whether they want to follow it or not. Individual banks will also be allowed to decide whether this moratorium will be extended to all borrowers.

· If you have decided to avail the moratorium, the EMI will be extended with interest applicable to your outstanding principal amount during the unpaid time. This will increase your overall interest cost. If you have the money to manage your loan EMI, it is best to stick to the original repayment schedule, especially if you have a notable outstanding loan amount for a loan against a home loan or property.

· The moratorium prevents payments for principal and / or interest components; Bullet repayment; Equal Monthly Installments (EMIs) and credit card dues.

Repo rate reduction

Apart from announcing the moratorium, RBI also announced a drastic reduction of 40 basis points in the repo rate to 4%. The reverse repo rate has also been reduced by 40 basis points to 3.35%.

Repo rate is the interest rate that RBI charges for the funds to be given to banks. This drastic reduction in repo rates will also reduce the lending rates to banks. Lower lending rates will give people hope to think about reinvesting. It is also said that EMI will come down on home, auto, personal and term loan rates in the near future.

Increasing interest from house-buyers as families stay at house

Although the residential real estate sector was expecting zero sales from the first quarter of the new fiscal year, the lockdown has surprisingly brought people closer to the desire to buy a house.

The current epidemic has had an unprecedented impact on the residential real estate market. With families spending more time in the home, organized real estate players have seen increasing interest among buyers. Potential buyers also include NRIs, who are demanding digital presentations from developers in metro cities. Weak rupee depreciation and low interest rates are also factors contributing to the decision.

With work-from-house being the new normal, even existing buyers are changing their existing bookings as they look for larger apartments. While the numbers are still not comparable to March quarter sales, large developers say there is latent demand but for this to translate into sales, the job market and economy will have to respond better.

Many developers feel that there will be not only a recovery, but also a rebound in residential. The decision to favor decision-making has accelerated due to houses being closed for two months. Noteworthy recovery may take 6-12 months as real estate is a highly suppressed category, but expect first-time house buyers and mid-segment buyers to take advantage given the experience in the last two months will be encouraged.

According to research, demand was seen in the top two cities in India in the last two years, with unsold inventory levels falling 7% in 2018 and 4% in 2019.

In the first 40 days of the lockdown, the Maharashtra government has reportedly seen the sale of only 3,806 properties, which earned the state a nominal amount in registration fees. Typically, the state government earns Rs 25,000 crore per year from the real estate sector. While many state governments have allowed online registration, developers say they expect not only a return but a demand for rebound.

As far as demand is concerned, there are some very interesting patterns. Developers and real estate companies are questioning people who have never visited the site and are responding to digital advertisements. It can be said that consumers are realizing the importance of owning a house. People have started research and are ready for minimal transactions. A strong demand revival is expected once the lockdown is lifted, provided people have a fixed job.

Although the outlook is more promising for the residential sector than retail and commercial, a visual recovery is at least two years away. Developers believe that the digital sales trend will also grow in the coming years as innovative sales and marketing solutions are being worked on and drone shoots and virtual tours are becoming more and more common.

Benefits if you sell or list properties for rent online

Today, in this running world, where time is a hurdle and everything is available, just one click away, selling property is becoming quite popular online. Gone are the days when online mediums were only considered for shopping for clothes or accessories. However, the online medium is becoming very well known and engages consumers in buying, renting and selling properties in India and other parts of the world.

Online property portals are attracting everyone's attention, giving you the highest benefit of selling and buying without any hassle. They offer many options for people to buy and rent property. It is therefore advisable to list properties to sell or rent online. No matter where you live or a place to look for a property, property portals help you browse through the results from across the country and make you aware of your decision.

Here are some benefits that suggest you post your property now for free:

 

Sell ​​and acquire

Fast results and immediate cash are expected when selling property online. Listing the property online can result within a week of registration. The reason for this is that online listings on the Internet cater to a wider audience.

No fear of losing money

If you wish to cancel the property and have not taken the PIN or voucher generated online to the builder for further action, you can claim a full refund. Portals also provide the facility to post your property for free. Thus you can sell your property without spending anything.

Online booking

One can post a property addition online and make a booking from house. With various online payment modes and gateways, today you can sell your property online and receive payments very quickly. And if you are worried about your credentials and details online, do not be. Just make sure, online portals are reliable followed by a secure payment gateway. Those who are considered safe to give your information.

Out of options

An online property portal gives you lots of options to view. Yes, most developers and even their agents and brokers list properties to sell or rent online to ease your worries. You can choose the best option for you.

Specific research forbuyers

All information is available on such portals, from cities to locations, especially for the project with its specification and configuration and pricing details. You can also compare two plans or two localities as per the requirement and then arrive at your purchase decision.

Discounts and offers

In the current scenario, some portals are offering many great deals and offers to buyers, as well as convenience to sellers. From the registry, discounts on the original price of the property, and stamp duty-free, car, and parking free, various offers are available online when booking your property.

Some useful tips forselling property online:

• Make sure you are ready to sell, once you have a contract with an agent or lawyer or a list of properties to sell or rent online, you will usually end up with a fixed-term contract are committed. Otherwise, it may prompt you to pay the defaulter fee. 
• Clarify your demands and the characteristics of the property that any buyer is pre-qualified. There is no need to waste time to show property to someone who cannot afford it.
• Get a fair valuation, and then do not acquire the property.
• Make sure it is ready to show, or be seen. If it is empty land then get rid of weeds or litter. 
• If it is a flat, apartment or business location, make sure it is in good repair. 
• When a house or house is involved, make sure it is clean and tidy.
  

  SUGANTA REALTY SERVICES LLP

Why real estate should be good to investment in this lockdown

Fight continues in the world due to the outbreak of COVID-19. To further maintain the risk from snowballing, the Indian government has indicated to fully affect the lockdown. As a result, nowadays, most of us are working from home. Outside life has come to a grinding halt. No matter how uncomfortable it sounds, it is probably the only way to prevent perennial corona viruses from spreading further.

Although our daily routines have been affected, this does not mean that people should lock themselves inside their homes, stop all their plans and only watch worrying news on TV about this threat. These are some of the best times when one can spend time with family, do various hobbies and introspection. The current situation is an ideal time to think about investing in sources of passive income. Eventually, some of the best opportunities emerge from a crisis.

Zoning on various options can be seen in various options like term plans, stock market and real estate. While every investment option has its pros and cons, as of now, when the stock market is recessionary and the banking sector is in a tailspin, real estate can be a great asset to place bets on. If anyone wants to do it risk-free yet, makes a commendable return, with many residential and commercial real estate options available.

Full of attractive offers: Recognizing this opportunity, developers are coming up with many attractive offers. Property prices have already corrected in the last few quarters. After COVID, many developers are offering further discounts and attractive offers to maintain their financial books. There are projects where one now needs to pay 5% to book a property. The remaining payments will start after 60 days. By that time, it is expected that the crisis will mostly end.

However, such plans are a fleeting event that developers are launching to boost sentiment. Prices have already come down and once the situation returns to normal, such attractive schemes will also be lost. Therefore, this may be the best time to buy real estate. It should not be surprising if one gets ready-to-use assets for a price equal to a new launch.

Higher yields: Real estate can offer risk-thrilling competitive returns. Although residential real estate has been stable in recent years, commercial real estate has been issuing attractive returns. A commercial property in a prime location can easily give an average annual appreciation of around 7-10%. At a time when share prices and financial markets are volatile, such a comeback can be a game-changer.

Concurrent Rental Income: Real estate can provide continuous income in the form of monthly rent. The rental component always makes real estate a very unique proposition for investing. A quality commercial property can provide returns of around 5-8%. Similarly, residential projects can give returns of around 2-3%. Therefore, this is the right time to capitalize on those possibilities.

Increased liquidity: This is a good time to invest in real estate because home loan is going to be cheaper. RBI has recently cut the repo rate by 75 basis points. The rate drop is a welcome move for the industry. In a short period of time, as a calibrated response to the reduction in repo rates, most banks will also reduce their home loan rates.

Feasible Hard Asset: The biggest advantage of real estate is that it is a tangible asset. At a time when there is too much risk investing in paper money, real estate is a safer and safer asset for betting.

Real estate is a separate asset class that can ensure appreciable ROI, hedge against income and provide recurring income in the form of rental yields. However, it has its drawbacks, as a real estate asset will take at least 2-3 months. Nevertheless, investment in real estate is always made keeping in mind the medium to long term perspective. A short-term perspective can be counter intuitive.

So in these times of social distinction, do not just shut yourself down. Use isolation downtime, do some in-depth research, learn about the various sources of passive income and make the most of this time to make meaningful investments.

STAY HOME, STAY SAFE, STAY ALIVE

SUGANTA REALTY SERVICES LLP

Interpretations of the Indian real estate sector from the Union Budget

Below are some of the expectations of the Indian real estate sector from the Union Budget 2017-18:

Encouraging Developers to Build Affordable Housing Projects: The government may announce several new measures to encourage developers to build affordable housing projects to fulfill their "Housing for All by 2022" mission. If "housing for all by 2022" has become a reality, the government will have to provide tremendous incentives for the real estate sector to make homes more affordable and produce much faster to meet overall objectives. Currently, there has been no intervention from the government in terms of land acquisition or land development costs which remain high.If the government can work towards reducing pain for these budget housing segments, more relevant housing units will be built quickly and successfully by private developers. In addition, the government is required to expand the scope of External Commercial Borrowing (ECB) for construction finance for a broad range of housing projects and is not limited to low cost / affordable housing. Tax benefits should be relaxed further for home buyers. For the first time all home loans should be revised to include all home loans up to Rs 3,00,000 including interest and not limited to a value of only Rs 50 lakh. The government has already announced benefits of home loans to low-income people by providing a rebate of up to 4 percent on home loans of 12 lakh taken under the Pradhan Mantri AwasYojana.

                                                                                                 

To grant industry status to the Indian real estate sector: The demand for granting industry status to the Indian real estate sector has been pending for some time. Directly or indirectly, the real estate sector contributes more than 15% of India's GDP. Developers are forced to borrow at high interest rates in the absence of industry status. Due to high borrowing costs and non-availability of funds, construction activities are delayed and hence the cost of houses increases. Once the status of the industry is given to real estate, it will become easier to make affordable housing a dream for all. So far, the affordable housing target is far behind and this can only be achieved if the sector gets industry status which will help drive housing demand in India.

Clarity on GST: While the Goods and Services Tax (GST) tax structure has been announced last year, the clarity of GST as to which tax rate will be applied to the real estate sector is still awaited. This will define the way in which the real estate sector will grow in this financial year. A GST clarification will also be required on the abatement scheme and whether credit for input tax will be allowed if the composition scheme is availed by the developers.

Single window clearance for the real estate sector: Developers have long been demanding for single window clearance to address delays in government approval. If developers are able to get all the necessary approvals on time, then they are able to execute their projects on time and this will also reduce the cost of homes. Therefore, to avoid unnecessary delays in construction and to reduce the cost of homes, single window clearance is required.

Need to increase house rent deduction limit: Salaried individuals receive House Rent Allowance (HRA) as a component of their total salary, and can therefore claim substantial deductions in cases where the salary and its HRA component are high. However, a salaried person or a self-employed person without an HRA component or those making lump sum payment without an HRA component can only claim a maximum deduction of Rs 5,000 a month under Section 80GG. This budget should address this variation in house rent reduction limits.

To make tax slabs and tax reporting easier: Government can focus on easing tax reporting structures. In addition, the benefits of demonetization practice should be extended to the common man through relaxation of tax slabs and offering higher level of exemption. The idea is to reduce the actual tax incidence as well as broaden the scope of tax, with the stated intention of reducing corporate tax.

Apart from the above points, the real estate sector is expecting some more announcements in the Union Budget 2017-18, such as higher tax savings on income tax sups, housing loans and house insurance premiums for first time home buyers and providing clarity on beneficiaries Under the Pradhan Mantri Awas Yojana etc.