Good to Know

RERA

What is RERA

Real Estate sector has been growing over the past few years, but has been unregulated from the perspective of consumer’s protection. This sector has acquired certain disrepute, adversely impacting investment climate and hurting the interests of lakhs of home buyers every year. This Act was passed in the lower and upper houses of the  parliament in 2016, and shall come into force on May 1, 2017 to verify and formulate rules for the functioning of the regulator. According to RERA, each state/UT has its own regulations framed and including the National Capital. This Act enhances the overall transparency, accountability and efficiency in the construction industry. The Central/ State Governments enforced  section 2, sections 20 to 39, sections 41 to 58, sections 71 to 78, and sections 71 to 82 of the RERA Act in May 2016. Certain sections of the Act were not notified then, as the institutional structure weren’t established then, namely the Regulatory Authority and the Appellate Tribunal. The remaining sections of the act came to effect in May 2017. According to the Regulatory Authority and Appellate Tribunal, projects can be sold only after they are registered with the Authority.

Salient Features

Until now home buyers have been facing problems regarding cost escalations, delays in projects, one-side contract terms, arbitrary changes to plan etc. With the execution of this Act:

  • Developers have to register all new projects with “Real Estate Regulatory Authority” before booking, selling or offering new projects.
  • Ongoing projects have to receive completion certificates within a period of three months of commencement of the Act.
  • Developers have to disclose all details about the project on Regulator’s website including:
  • Details of the promoter such as registered address, type of enterprise.
  • Details of the project launched by the promoter whether completed or ongoing in the past five years including current cases, delay in projects, pending payments and details of land type.
  • Proposed facilities and location details are to be provided along with the sanctioned plan, layout plan, specifications of the project and plan of development works.
  • Project status has to be updated at every three month interval.
  • Developers have to deposit 70% of funds received from the buyers in a separate bank account and entitled to withdraw the amount to cover the cost of the project.
  • Developers are subjected to penalty for delay in projects.
  • Developer should sell the projects only based on carpet area where buyers can use. This implies the area covering external walls, service shafts, balcony and open terrace are excluded, but area covered by internal walls are included.

Impact of RERA

RERA has it impact on two key stakeholders i.e. builders and buyers. The act brings in more transparency between the builder and the customer, and ensuring the flow of institutional funds. Moreover, the home buyers are shielded from potentially unscrupulous activities of the builders.

With developers improving the delivery of quality product, contactors have to focus on quality of service, cost and time. The cost of capital for developers is bound to go up as the builders cannot sell the homes before the project approval is complete and that the 70% of the money from the buyers has to be deposited in an escrow account, hence debt is the only way of financing the projects.

New sectors are emerging as major drivers such as e-commerce, logistics and start-ups along with IT and ITES companies in the commercial real estate sector. Investments in infrastructure has also increased in cities such as Hyderabad and Pune with good demand in both MNC’s and start-ups.

RERA will help in boosting the buyers sentiment and the confidence and hence can actually lead to purchase of homes. Hence the act actually brings in regulation but not strangulation. This Act also improved the lending options from lenders and availing finance became easier with reducing litigations.

To sum up with, RERA is a growth oriented act to balance the key priorities of buyer’s interest, investors’ confidence, good governance and to build truest between two major real estate stakeholders: builders and buyers.

Road Ahead

As per CBRE (Commercial Real Estate Services) report Real Estate Sector in India is about to hit $100 billion investments by 2020 from witnessing a $7 billion investment in 2017. As a result of improved investor confidence and better policy reforms, India is one of the fastest growing G-20 economy in the world.

The supply under residential market has jumped by 70% in January – March period with biggest jump in Bangalore, Hyderabad, Pune and Kolkata. Housing sales have risen by 70% with the biggest sales in Hyderabad, Bangalore, Pune and Chennai.

World Development Report of UN states that India stands fourth in developing Asia for FDI inflows and real estate sector in India so far attracted $32 billion private equity.

The GST and Benami Property Act will also have major impact on the real estate business. With the Government moves like demonetization and digital economy, the unorganized and less organized segments of the real estate sector will have to move towards the organised segment or will have the suffer the natural death from the sector.

Indian Real Estate Sector is going to witness a healthy growth and demand in 2017 with credible, reputed and organized players. RERA is going to help builders reorient their methodology and helps real estate sector overcome hurdles it faces and contributes to growth of Indian economy.

foundersspark

When Mukesh Chandra Anchuri moved to Mumbai to work with Indian Oil, he had to find a place to rent. And like any one of us would have experienced while renting a place, Anchuri had to pay a huge sum, of around Rs. 3 lakh, as security deposit – something which was difficult to afford or even arrange within a few days. This made Anchuri wonder why one cannot leverage their credit card to pay the security deposit. There was no platform either where one could use their credit card to make rental payments.

He soon realized there was a bigger issue here. Most often, in a bid to evade taxes, landlords ask for payments to be made in cash – be it rent or the security deposit. And almost always, security deposits are a huge amount of money. With the idea of streamlining this process of rental transactions, Anchuri, along with his Indian Oil colleague Anusha Kurupathi Parambil and his classmate Muralidhar Naik from Birla Institute of Technology, Mesra founded Paymatrix in November 2015.

Before actually starting operations, the team researched on around 2800 people to understand the pain points. What came out of the research was that tenants faced an issue of lack of access to credit for big-ticket rental payments. And for landlords, the pain points faced was the lack of a platform to be able to streamline payments received from tenants. Also, most tenants and landlords wanted a proper trail of transactions made.

Taking all of this into account, Anchuri and his team built Paymatrix, a platform that lets tenants pay rent and security deposit with access to credit and lets landlords streamline payments.

How does Paymatrix work?

If you are a tenant, once you register on Paymatrix, you undergo an identity check through KYC (Know Your Customer) process and can start paying rent through Paymatrix electronically. And not just through netbanking and debit cards, tenants can also use their credit cards to make payments. In case the tenant does not have a credit card, Paymatrix offers short term personal loans with an interest rate of around 11-16%. For this, the company has partnered with 4-5 banks and a few NBFCs.

Once the payment is made on the platform, the amount is credited into their account by Paymatrix.

And if you are a landlord, Paymatrix offers a dashboard to manage payments from multiple tenants, set payment reminder alerts and automate payments.

This generates an electronic trail of all transactions made between the landlord and tenants.

Additionally, Paymatrix also offers services of screening tenants and making rental agreements. “We have templates of the agreement online where the landlord has to fill in the required details and that of tenants. They just have to pay the stamp duty online and we get the document franked, authenticated and deliver it to their doorstep,” Anchuri says.

And in states like Karnataka, the startup is working to leverage the e-payment of stamp duty.

Paymatrix Team
Paymatrix team: Co-founders Mukesh Chandra Anchuri, Anusha Kurupathi Parambil and Muralidhar Naik 
Every landlord on its platform can also screen potential tenants. Paymatrix offers a profiling service where a check is run on the tenant in terms of an identity, credit and psychometric analysis. “We charge as low as Rs. 150 per tenant and give a composite overview based on 182 parameters so the landlord knows who they are renting the house to,” co-founder Parambil says.

The company currently has around 4500 tenants and landlords on its platform and has its services in over 10 cities.

For every payment made on credit on Paymatrix, the company earns a convenience fee of 1.5-2.5%. It also earns through the rental agreement service and a subscription fee charged to landlords.

Paymatrix also has B2B model where it provides its services to commercial and co-working spaces. It manages rental payments for its incubator T-hub and manages rental collections for several other property management and real estate players in Hyderabad.

A big boost to Paymatrix has been the government’s move to dis-incentivize cash payments and the recent crackdown on fake rental receipts. Just earlier this month, an Income Tax Appellate Tribunal held that tax exemptions on house rent allowances cannot be given against fake rent receipts. According to a report on the Time of India, an assessing officer can now demand proof — such as leave and license agreement, letter to the housing co-operative society informing about the tenancy, electricity bill, water bill etc. — in allowing a lower taxable income as computed by a salaried employee.

“We are trying to bring all transactions that were once made by cash to an online platform thereby ensuring landlords are accountable for this income. We saw a considerable jump in our business after demonetization. More than tenants, landlords began taking to our platform as tenants were not able to make cash payments,” Naik, CTO says.

But Anchuri and his team recognizes the challenges that are still faced with landlords not wanting to disclose rental income. “Our target audience is very clear when it comes to landlords. We only target those in metro cities, those who hold multiple properties, are well-educated and can access the internet. They should be willing to optimize their tax liability,” Anchuri says.

In fact, Paymatrix also offers integrated tax filing services for rental income received by landlords.

Paymatrix has so far invested around Rs 50 lakhs into the business, which was bootstrapped. It also raised $40,000 funding and is now looking to raise an additional $300,000 for geographical expansion and to hasten up product development. It has also won awards like HYSEA 2017 for early stage consumer startups.

Road to scale

Going forward, Paymatrix wants to become a complete rental analytics player. Using the data points, it wants to be able to even create innovative financial products. For example, Paymatrix is working on a rental insurance scheme for landlords. This composite insurance protects landlords from potential default by a tenant or a mishap in the house. This also created opportunities for its partner banks and NBFCs.

Paymatrix is also looking at building a physical presence in the geographies it operates in, to be able to provide better services, especially to commercial clients.

Operating in a $4-billion market, Paymatrix sees an opportunity to introduce a lot more services. The 14-member team is currently seeing a 27% month-on-month growth and is recovering 70-80% of its operational costs. And with even government policies like the forthcoming Model Tenancy Act and the Benami Property Act working it its favour, Paymatrix hopes to break even within the next year.

Source : http://www.thenewsminute.com/article/how-cool-would-it-be-get-loan-huge-rent-deposits-fintech-startup-s-gamble-rentals-60148

DEMONETISATION (1)

Demons of Demonetization?

From the eventful evening of November 8th, 2016, the term of Demonetization has crept into our lives. Its implementation has been glorified to have created a huge inconvenience for people from all walks of life.

The regular citizen of the country struggled to get cash. Most of our precious time was spent in the queues outside Banks and ATMs. Many of the small and medium scaled establishments struggled to achieve their daily break even with their business models under question , especially those operating on wafer-thin margins.

If there is any chance to avoid cash transaction, people were ready to take it, even if it burned a hole in their pocket. More than money, Currency for once becomes sacred. People opted to buy groceries online or in large department stores that have POS machines so that they could avoid spending cash in their neighbourhood’s grocery store. With these changes in purchasing perspective, not only did the small and medium scaled businesses witnessed an unprecedented change but also are the invincible real estate players.

Real-Estate and the Parallel economy

One of the major sectors that have taken a hit is Real Estate and Construction. It is an industry where cash has been ingrained into the entire value chain from that of purchases to settlements to daily labor. Demonetization, while did hit out at the builders also have alarmed the workers, whose daily wages are usually paid by the contractor in cash. With demonetization, these payments have got indefinitely disrupted and in several cases these workers have become the subject of cash hoarding by the money launderers.

Real-Estate-Investment-Dropping

With this revolutionary change in the landscape, many mid-tier projects are either put on temporary hold or being delayed in progress to accommodate the subsequent developments. Despite the market predictions of downward trend in property prices, most of the sellers stay put, while there was a dearth of property buyers. While it may turn out to be too premature to comment on the prospects of the industry on account of this measure, one thing that is for sure is that it is going to rein in transparency into the industry gradually. Realtors after weighing in the potential risks of the circumvention and after lending an ear to the uncompromising stance of our Prime minister in chasing down the parallel economy,are having their fingers crossed. Most of them do wonder if the next googly from the government is indeed a mad chase after Benami properties.However, in such a case, we can definitely expect to see the market buckling to the imminent change.

Real Estate and construction sectors have a reputation of being a big bad world of black money, power and corruption. The sector is known not only to be volatile, but also unpredictable. It is also known to be an industry that always finds out its way despite any regulation for that it can game the system on account of its sheer market size and the interests of key stakeholders involved.However, despite all these, it shall be too premature to infer the effectiveness and influence of the act without us getting a peek into the numbers that shall start to roll out from government only by January end.

Real estate has been a corner stone for black economy for it a majority of the transactions were made in cash and thus stay unaccounted for taxation purposes.Demonetization has posed a challenge to this parallel economy with a majority of this unaccounted cash turning into worthless paper. Developers and resellers that otherwise insist homebuyers on having hard cash as a component of payments toward property purchases have turned wary and are now accepting a major chunk of payments through recognized channels. While demonetization did affect the real-estate sector in short term bringing in stagnancy with no buyers and takers, it does have some long term benefits for the industry as such.As the non-cash component size increases for the property purchases, size of home loan book can turn bigger with Banks and NBFCs. Further, banks being flush with cash, one can expect an imminent downward pressure in interest rates. This would not only allow access to affordable housing but also shall bring in transparency into the system. Builders and Realtors can eventually turn to be more responsible for the delivery of the projects for that majority of their cash flows from the lending institutions shall largely depend on the progress of construction. Further, with the buyer friendly provisions of the Real estate Regulatory Act, buyers shall be protected from delays in construction and handover.

Primary market, which involves the construction and sale of new projects, is well positioned to accommodate these regulations than the secondary market.The reason being a huge disparity between the registered prices and market prices that can dent the returns of the secondary seller of the property as he not only ends up paying higher registration fees but also have to account the gains for taxation. Developers of fresh real estate, on the other hand have a leeway to optimize their cost structures and thus better deal with taxation.

Demonetization and Rental market

There is one aspect of Secondary Markets of the Real Estate, where the brokers can find a little solace in these tough times – Rentals. Irrespective of the fluctuations in the market, people do need a safe place to stay .A majority of population still dwell in rented and leased spaces in urban areas giving way to a huge property rental market in these areas.

With demonetization, the rental market is also gradually expected to undergo a change. Earlier the deposit for renting a house, apartment or an office would require a payment of cash in advance. Similarly, most of the rent was transacted in cash. With demonetization, the mode of transfer for rent and rent deposits got altered significantly. Both the landlords and the tenants now prefer to opt for electronic modes for that at least it would ensure timely payments and collection. While one argument may sound that only the dearth of cash is propelling them to adopt electronic modes of payment for rentals and this shall turn back to normal once the regulatory uncertainties fade away. The counter argument on the other hand is that this act has atleast propelled the stakeholders to transact rent electronically, and made them well aware the benefits of cashless transfer and perils of cash handling. The cashless transfer would further assure the authenticity of transaction for both the landlords and the tenants.

Paymatrix is one such platform that reins in transparency of transactions between tenants and landlords, while offering much value and convenience to tenants and landlords. The platform facilitates timely payments and collections of rent and rent deposits while enabling one to pay rent and rent deposits on credit. Not only that, tenants by paying rent responsibly online on credit can build their credit histories. On the top of it, one gets to earn discounts and rewards on every payment. Landlords on the other hand can be assured of receiving rent on time and can effectively manage collections from multiple properties and issue rent receipts online. These kinds of platforms are bringing in much-needed transparency in the otherwise cash-dominated rental market.

Further information about the platform can be explored by visiting www.paymatrix.in

For feedback on the content, please write back to us at handfulofwonder@gmail.com

” The views expressed by the author on this website do not necessarily reflect the views of the website as such. Further Paymatrix doesn’t take any responsibility for accuracy, completeness, veracity, honesty, exactitude, factuality and politeness of comments or the content. Views expressed on the blog are entirely of the author and Paymatrix shall not take any responsibility, blame or any legal proceeding or litigation that may result from something written in or as a direct result of something written in a comment. The author of the content may or may not be appropriately compensated as the case may be for publishing their views on the website. Content presented in the articles are solely meant for education and information purposes and shall not be copied or re-represented anywhere without prior consent from the owner of the article.”
1

A New Beginning

Switch to any TV News channel, either in the economic or political spheres, one can find several commentaries concerned with the effects and impact of Demonetisation. It seems to be still the hot topic in 2017.  By the looks of it, it might still be in the coming weeks.

While there have been several arguments about the adverse effects of Demonetisation, there is definitely a silver lining around the surrounding developments, which we tend to overlook.

Demonetisation eventually stood as a propellant catalysing the digital awareness and subsequent empowerment of a large number of people throughout the country. With the onset of demonetisation of the old 500 and 1000 Rupee notes, a majority have been made to atleast embrace electronic modes of payment and cashless transactions; Merchants who otherwise were reluctant to adopt electronic modes now atleast have a POS to enable cashless transactions.

Earlier, in the last financial quarter, it was noted that the debit cards were majorly used in ATMs for Point-of-Sale-Device cash withdrawals say around 95% of the time. Now, with the limit on cash withdrawals and the shortage of currency, Point-of-Sale-Devicethese debit cards started to witness extensive usage in Point of Sale terminals. However, it is also to be noted that about 40-50% of the 750 million debit card users in the country are first time users on POS. More than 350 million of them are RuPay card holders, who are onto using their debit cards for first time to access their Jan Dhan accounts. Usage rate of Credit cards have increased manifold with them now being used for transaction tickets as low as 100 rupees. Similarly, requests for collection infrastructure, particularly POS Machines have registered an all-time hike. Most of the small and medium scaled establishments, which otherwise remained averse to adopt digital transactions, have now atleast evaluated the channel or are trying to adapt to the change as fast as they possibly can.

Not just with the cashless transactions, the topic of discussion has now extended to leading a paperless lifestyle. The earlier practice of presenting proofs for validation through hard copies of our identity documents has changed to that of a soft copy and paperless trail. Utility bills, Insurance Renewals, Tax Payments, even School and College Fee are now being paid online and soft copies of documents are being accepted as and where required for proof of identities. With technology creeping into our lives, how safe and private will the personal data be? That definitely is going to remain a concern!

The rise of a new Digital ecosystem

A few months ago, the Government of India introduced an initiative of Digital India. The agenda was to limit the paper trail, deal with corruption and to plug-in the loopholes in the system by ensuring transparency and faster decision making.

There are few digital vaults, especially sponsored by banks and depository participants, which are available over the internet and allow the users to store soft copies of various important documents such as certificates, documents and passports. Yes, one can be definitely sceptical about the security of any of the saved documents unless maintained by a reputed institution with impeccable cyber security architecture.

Paper or a physical hard copy is prone to different damages. With all the communication getting digital, it is best advised to improve our avenues for sharing, storage and access. For instance, Property Agreements often turn to be difficult to read and comprehend. That happens sometimes due to the age of the original document or any other damage due to its environment. Digitisation can be a solution in this regard making the documents accessible anytime and anywhere.

Further, digitization of documents can potentially bring with them much required transparency in property leasing and buying by creating an electronic trail and storage of requisite documentation to be eventually scrutinised anytime. Don’t believe me? Read ahead.

Few of the popular payment portals and e-vaults available, are Government initiatives and others are privately run. E-Stamp is one such Government funded Computer Application for paying  non-judicial Stamp Duty. The conventional system is eventually to be replaced by E-stamping in most of the states. Conventional modes of agreements and documentation usually involve procuring stamp papers from registrars or authorized vendors and eventually get the agreement documented and registered. This process was not only time consuming but was plagued with inefficiencies on account of significant human dependency. Stock Holding Corporation of India Limited, a government controlled custodian and depository participant overlooks the above mentioned procedure. It is the only Central Record Keeping Agency (CRA) established by the Government of India in this regard. This division is in charge of User Registration, Balance Administration, and the operations and maintenance of the application.

The e-stamp certification is an alternate to the lengthy and tiring stamping procedure. E-stamp Certificate, generated instantly from the application is tamper-proof and can be validated and tracked back.

Another key offering that emerged from the digital initiatives of the government is DigiLocker. It was launched in February 2015 to provide some virtual personal space for the storage of documents like a vault or a locker. This service is available to Indian residents and would require a user’s Aadhar or Unique Identification Number. The locker can store up to 1 GB of documents, certificates and identification proofs. The major idea behind this application in to reduce the use of physical documentation, related administrative expenses and to ensure safety and authenticity.

While the issues pertaining to sharing copies of agreements and related documentation are being addressed, E-signature and E-KYC are other areas of action. E-sign, as the name suggests, is an online signature service available in India. The user’s identity is authenticated by his/her Aadhar Card and eKYC (electronic Know Your Customer). All the user has to do is to link the above specified identifications to his/her mobile number. These documents would be used as per the user’s discretion without the need of the physical presence of the individual.

All these simple but ground-breaking ideas have seen the light of the day due to contributions of various federal and non-governmental think tanks such as CDSL and iSpirit. A new entire ecosystem has born involving a collection of APIs, usually referred to as IndiaStack.

Significant possibilities exist for the above technologies to address some of our basic problems including that of property leasing and renting. Often viewed as a herculean task, it is often viewed as painful for property owners to find the right tenant, validate his credentials and subsequently complete the documentation. Wouldn’t it be great if technology is leveraged to make this process a seamless and a convenient one ?

Paymatrix is one of the start-up working in this realms working towards building trust between tenants and landlords. Paymatrix is an online rent management application. It is a platform for both landlords and the tenants (prospective) to interact, share information and come to terms with each other’s requirements and specifications. With Paymatrix, users get to negotiate and make proper agreements online. Every activity and communication between the two parties is stored and each of them have a chance of maintaining the copies of agreements, rent receipts and any details regarding the house/apartment’s maintenance and safety deposit. Not only that, the platform also facilitates payment of huge rent deposits and rent on credit card and thus enables one to create a reliable tenant history. The platform already has thousands of tenants and landlords signed up from 6+ cities across India, with rent and rental deposits in millions of rupees transacted on the platform every month.

One can explore more about the platform by visiting www.paymatrix.in

For feedback on the content, please write back to us at handfulofwonder@gmail.com

” The views expressed by the author on this website do not necessarily reflect the views of the website as such. Further Paymatrix doesn’t take any responsibility for accuracy, completeness, veracity, honesty, exactitude, factuality and politeness of comments or the content. Views expressed on the blog are entirely of the author and Paymatrix shall not take any responsibility, blame or any legal proceeding or litigation that may result from something written in or as a direct result of something written in a comment. The author of the content may or may not be appropriately compensated as the case may be for publishing their views on the website. Content presented in the articles are solely meant for education and information purposes and shall not be copied or re-represented anywhere without prior consent from the owner of the article.”
unleashthewriter
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All you need to do is Register Yourself here. Write an article on any of the following topics of your interest and send it to “support@paymatrix.in” on or before the 7th of November, 2016
TOPICS :
  • Is Digital India enabling Cashless economy
  • The Great Indian Landlord
  • The Month End is coming ! [or]  Credit Card- My Precious 
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Shopping online

Most of us, at one point of the time or other, have been a witness of that awkward expression from your landlord, when you asked him to accept the monthly property rent online. While the usual answer was ‘NO’ from the landlord, let me explain several reasons why you should not plainly take that answer.

  1. Paying the monthly rent online establishes an electronic trail for your transaction and can potentially support your claim for HRA exemption with your employer.
  2. If your landlord doesn’t stay beside your property, paying rent directly into the landlord’s bank account shall ensure that your local property broker or manager is not playing around with you.
  3. Setting up auto-debits and reminders to your account shall ensure that you pay rent on-time to your landlord and shall save you from that embarrassment when your landlord follows up for rent.
  4. It’s a good idea to pay rent deposit or advance online for it acts as a proof of payment and saves you from any surprises while requesting a refund on leaving the leased premises
  5. The cash payment which you paid to landlord usually remains an unaccounted income for him and is what that constitutes a brick of the Indian black economy, which we all love to endlessly discuss about.
  6. Lastly, it also saves you the pain to visit the nearest ATM situated few lanes away and withdraw chunks of cash for payment to landlord.
  7. Next time you are paying rent online, you are not only doing a service for yourself but also a service to your society and the nation!