LEGAL ASPECTS OF PROPERTY MATTERS

Invest in property and make a handsome profit

By Late K C Vajifdar, Advocate

( His last article in Accommodation Times )

Posted on 6th April 2001
 

One is at a loss to understand as to why this is so, but it is true that price of ownership flats in Bombay are rising almost everyday . It has become far better to invest in above ownership flat, rather than in shares , even though the share Market is also booming. The margin of profit which one can make after buying a flat and then disposing it off is phenomenal .

Why is this so ? Is it because of the principal of demand and supply , or is it artificial ? The prices of flats in the city vary tremendously compared to the prices in the suburbs. Today it has become a status symbol , to the prices in the suburbs . Today it has become a status symbol , to reside in the city. It means to add a feather in ones cap. Since the demand for houses has also become tremendously high the economic principle of demand and supply also come into operation .

If a person has surplus money should be invest in gold or silver, and make it a dead money ? Investment in Real Estate has become so attractive that people are ready to buy flats and offer attractive prices to the Promoters-cum-Builders. The Promoters -cum-Builders also take great advantage of the scarcity of the housing shortage . A few years back all the premises were sold on the basis of carpet area , which is the area actually used by the buyer of a flat . Then a new theory and the Promoters-cum-Builders started selling the flats on built up area i.e. even the walls diving the rooms were taken into consideration except the outside area and then lastly came a new theory which is known as Super built up area , which includes not only the carpet area, not only the area of the thickness of the walls but also the passage outside the premises and space near the lift . Can you believe even the Stamp Duty authorities charge the Stamp Duty on built up area and not on carpet area . It is no doubt true that Bombay is over populated and there is constant demand of the Housing Stock . Each and every family is growing and no place is available as Bombay is an island and now instead of building we are in the process of demolishing illegal and unauthorised work . No doubt people have no right to errect unauthorised structures but at the same time, what does one gain by demolishing the same . A viamedia should be found except where there is a link between construction and the under-world.

Money spins at a very fast rate in real estate business and indeed some people have taken a fancy to the same. People who have money rush to buy the premises which they could afford to buy , be it at Bandra, Kandivili, Andheri , Kurla or anywhere else and dispose it off at a very large profit . In this business there is no loss, only profits.

Now let us examine some of the prices which were in existence before and are existing now. Formerly in 1993 even at far off places like Nalla Sopara, Virar, Dahisar the prices were Rs. 250/- a sq. ft. Now it has jumped upto Rs.400/- per sq. ft. A clear profit of Rs. 200/- per sq. ft. In an area like Parel it was 1700 a sq. ft. Now it is almost Rs. 3,200/-per sq. ft. Prices have almost doubled . Seeing the returns , theatres are being demolished and even buildings are erected on play grounds after acquiring the same by took or crook .

With the introduction of Leave and Licence system there is now a tendency to keep the flat and give it at a very attractive license fee after receiving a flat deposit . The owner of the flat can be sure that he would never loss his premises because he is fully protected under section 13 A-2 of the present Bombay Rent Act.

Even in the new Rent Control Law i.e., the Maharashtra Rent Control Bill 1993 , section 13A-2 has been repeated into under section 25.

Let us now talk about commercial premiers . There is a great demand for the same and if the entire buildings is constructed for commercial purposes the Promoter-cum-Builders can get the permission money on the same. By labelling the premises for commercial purposes prices can even be doubled . As far as Rent Control Laws are concerned commercial premises are not yet protected when given on leave and Licence basis.

I may draw the attention of my readers here that the Maharashtra Rent Control Bill 1993, has been referred to the Select Committee for its recommendations and it remains to be seen whether the Select Committee makes any change in section 25 of the new Rent Control Law and would also add commercial premises for the purpose of giving the same on Leave and Licence basis .

So , what is the future in real estate ? Is it better to buy and sell property or is it better to jump into the stock market ? I am of the opinion that it will be far better to invest in real estate as prices will never come down and infact would go higher and higher . The sky seems to be the limit . So there should no hesitation on the part of an investor to invest in real estate whether it be for residential or commercial purposes.