Self Redevlopment Website

ESTAtE ADVISORY

Important of Self - Redevlopment

ESTAtE ADVISORY

WHY SELF - REDEVLOPMENT

The Importance of Self - Redevlopment Has attracted the attention of the state Goverment. During Diwali 2019, the state Goverment has come out with guidelines encouraging self - redevelopment by offereing several incentives making Self - redevlopment more feasible and attractive. In apple to apple comparison between the two, re-development proposals will be non - viable and will become obsolete.

We would like to list few of the highlights of Self - redevelopment which clearly show the advantage of Self - development over regular Re - development:

SOCIETY IS THE MASTER OF ITS OWN DESTINY

We act as Development Management Consultants and not a joint venture partner / developer. The society is responsible for all decisions and outcome of the project, thereby ensuring that it controls its own destiny. It is not dependent on the Developer for any matter related to the self - development

NO LONG AND TEDIOUS LEGAL FIGHT

No third - party rights are created. Since no Development Agreement is executed and registered there is no issue of arbitration / court matter in case of default by the Developer

MORE AREA AND PROFIT FOR THE SOCIETY MEMBERS

There is more corpus and additional carpet area for members vis a vis regular re-development as the profit of the Developer is eleminited. The cost of funds is estimated to be 12.5% whereas the Developer will raise the funds at 18% to 21%. In view of the debacle of ILFS / DHFL /PMC Bank, the liquidity issue for the Developers is a big risk which most of the Banks / NBFC is not willing to take.

COMPLETE TRANSFERANCY

All approvals are in the name of the society. The society is aware of each and every step of the self - development process thereby ensuring complete transparency throughout the process of self - development.

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BENEFIT OF MARKET APPRECIATION

Selling of extra area / flats is within the control of the society. The society can decide how much to sell, when to sell and at what rate to sell. Any increase in the selling price is directly passed on to the members of the society.

GOVERNMENT SUPPORT

Several incentives and offers are expected from the State Government to encourage Self - redevelopment as per the guide lines issues beforen Diwali 2019. No LUC, Rebate of 4% of interest on finance cost, Additional Built up area permitted, Reduction in premiums and official charges, etc. will render regular Re-development proposals non - viable as compared to Self - redevelopment

INDEPENDENCE FROM DEPENDENCE ON DEVELOPER

The Society does not have to verify whether the Developer has enough funds to complete the project. In regular Re-development, the Developer does not give enough Bank Guarantee to complete the entire project and with the introduction of RERA, even the Bank Guarantee is not offered by the Developer citing the escrow account to be created in RERA. It is important to understand that the funds will come in the escrow account only through sale proceeds which is very tough in this market during the construction phase. Due to the impact of COVID 19, GST and lack of trust among the Developer Community, sales happen only post OC. Thus, the Developer has to ensure he has enough funds to complete the entire project. In most of the cases of Re - development, the project runs into several Crores of Rupees.No Developer will ever be able to give you the guarantee or FD of such a huge amount to resolve your trust issue.

EASY AND CHEAP FINANCE

SBI / Mumbai District Co-operative Bank is given the entire cost of the project which includes construction cost, FSI costs, TDR Cost, MCGM Charges, Rent, Monthly fixed expenses, etc. In short, all the costs related to completing the project are submitted to the Bank for approval. The Bank provides about 95% of the funding of the entire cost. The balance 5% can be raised by the society by selling some of the saleable portion internally or to an investor at a discounted rate. This will also help reduce the interest burden in the longer run.

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SAVING IN GOVERNMENT TAXES AND DUTIES

There is no stamp duty to be paid as there is no execution of the Development Agreement. Along with that, even the applicable GST on the re-development portion is eliminated thus saving a lot of money which is indirectly the profit of the society.

DIRECT BENEFICIARY OF ANY POSITIVE CHANGES

Any increase in FSI / reduction in charges / increase in sale rates, etc is directly passed on to the society and there is no need to discuss / negotiate / share any of the gains with the Developer.

Coming from the background of a successful Developer, we feel that we are at the right place and right time to offer our services as Development Management Consultants to societies seeking Self- redevelopment. As Developers having completed several projects over the past 50 years, we have several advantages over a regular Project Management Consultant (PMC) which we would like to highlight:

• Developer has real time experience of handling projects vis a vis PMC who always act as consultants and have never executed a live project by taking ownership of the project.

• Developer has real time knowledge of the execution / approvals / site related issues and handles them independently vis a vis PMC who have to rely on other professionals

• Developer has the necessary office set up and trained personnel to handle execution of real estate projects from inception to completion

• Developer is equipped with necessary government requirements like RERA registration, GST registration, etc

• Developer has marketing team and is aware about the market conditions / requirements since they have dealt with such situation directly for their previous projects

• Developer has experience in working with Revenue Department, Property Tax Department, etc. The rapport built over number of years in these departments always come in handy for future projects

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SCOPE OF WORK

Our scope of work as Development Management Consultant will be as follows:

• We shall recommend the team of professionals required to complete the project such as Architect, RCC Designer, Fire Consultant, Traffic Consultant, Legal Advocate for registrar purpose, Rain Water Harvesting Consultant, Bank Loan approval consultant, Marketing Agency, etc.

• We shall aid the society in the process of Bank loan approval for self – development in consultation with finance consultant.

• We shall get the plans prepared from the concerned planning architect as per MCGM rules and regulations and also in tune with the market requirement. The society requirements will be kept in mind while preparing the plans. We shall provide adequate car parking spaces, service ducts, lift lobbies, underground and overhead tanks, fire tanks, space for sub - station, etc.

• We shall get the building designed from the RCC Consultant at optimum design keeping in mind the allowance for various services and utilities.

• We shall confirm with the society all the amenities to be provided in the building and suggest them various options / brands / features /etc. We shall ensure that during the construction of the project, the specifications / amenities are provided as per the agreed terms.

• We shall engage with liasoning architect and comply with all the Government requirements to obtain various approvals and keep a track of the time lines as decided. All the approvals will be obtained in the name of the society.

• We shall suggest good contractors to society and help them compare the quotations for execution work. We shall also supervise the work and keep a track on quality and timelines.

• We shall aid the society in RERA registration process and compliance of periodic reports as per their requirement

• We shall suggest good legal team to aid the society in various matters like sale agreement / resolutions / various processes to be followed as required

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• We shall aid the society in preparing marketing plans for the sale portion and execute the sales plan with the understanding of the society.

• We shall ensure all the periodic compliances to SBI / MDCC, site reports, quality reports, etc are completed on time. We will suggest and implement regular reporting / updates about the Self-redevelopment project to all the society members

• We shall suggest a team of tax consultants / Chartered Accountant to comply with the regulatory filings / requirements of the system

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MODE OF PAYMENT OF FEES

Mode of payment of Fees will be as follows:

• After selling all the sale flats and car parking spaces, we shall first repay the Bank loan along with interest. Thereafter, we shall recover our fees from the balance sale proceeds.

The mode of payment of fees will ensure the following:

Since we are not recovering any fees till the project is completed and the Bank loan is repaid, it will be in our interest to complete the project at the earliest so that our fees can be recovered. This will indirectly help the society’s objective of completion and repossession of their flats in the new building.

Our intent will be to make the best possible building as it makes it easier to sell amongst the competition and also fetch higher sale price than expected resulting in overall enhanced profit for both the society and us.

By not recovering fees periodically during the course of the project, we shall avoid the Bank interest on such disbursed amounts thereby direct saving for the society.

Our fortunes will be connected to the society’s fortune in terms of future sale rates (increase or decrease). This will give confidence to the society about intent and belief in our services.

In the event, we are able to sell all the flats before completion of the building, we will save on Bank interest and take reduced disbursement as required. However, we shall recover our fees only post completion of the building and receipt of OC.

Thus, by recovering our fees at the end of the project and after the repayment of Bank loans, the society does not have to question our intent or ability to complete the project successfully.

ESTAtE ADVISORY

THANK YOU