Mumbai’s real estate crimes are on the rise

Case studies showed examples of developers manipulating real estate values by either undervaluing properties at first or inflating them above market rates. 

Real estate is a big business and a sizable market in Mumbai. In Mumbai, real estate is a significant industry and business. Real estate-related crimes are increasing in the city concurrently with this growth. Many builders, including well-known developers, have been implicated in deceiving individuals. Reports about cases involving dishonest developers arrive at almost every police station every few days. Every couple of days, all police stations report cases involving people who have been cheating. Real estate scams have cost many people their entire life savings. 

Developer Lalit Tekchandani was recently taken into custody in a housing fraud case by the Mumbai police’s Economic Offenses Wing (EOW) on January 30. In Taloja, Navi Mumbai, the complainant invested Rs 36 lakh in Tekchandani’s construction project; however, a year before the project’s 2017 deadline, work ended abruptly. In a recent incident, an arrest took place by EOW of developer Jayesh Vinod Tanna on suspicion of defrauding 27 flat buyers out of Rs 40 crore in a Goregaon project. Another case, according to Ahuja Builders, involves a 20-year-old housing and investment scam. 

The father-son team of Jagdish and Gautam Ahuja (Ahuja builders) allegedly defrauded over two thousand homebuyers, according to lawyer Prakkash Rohira, who represents homebuyers in the High Court. Jagdish Ahuja is in custody, but Gautam is still at large despite police efforts to apprehend him. Furthermore, several developers have tricks by feigning to sell homes. 

Tax cheating developers

An increasing number of people in Mumbai City are worried that developers are involved in financial fraud, which is depressing and costly for the clients. Some developers have come under fire for allegedly using deceptive marketing techniques, like displaying features and amenities that do not match the products. Misleading representations have caused customers to invest in properties. 

Case studies showed examples of developers manipulating real estate values by either inflating them above market values or by first offering lower prices and then raising them during the deal. Project completion delays have been a common problem, putting purchasers in financial jeopardy because they had budgeted their investments based on deadlines. Some developers have missed scheduled delivery dates without providing sufficient justification or payment.

Developers are accused of compromising construction quality

In certain instances, developers have faced allegations of sacrificing construction quality, utilizing inferior materials, or taking shortcuts to increase their earnings. It poses a threat to built properties’ longevity and security. 

Developers may make it more difficult for investors’ clients to comprehend the big picture of finance if they follow the opaque transaction processes that have drawn criticism from some places. Because hidden costs are unpleasant surprises, buyers frequently perceive them as scams. 

Affected clients file a lawsuit

To address these problems, several impacted clients have taken legal action, registering complaints with consumer forums and real estate regulatory bodies. Consumer advocacy organizations have also been actively educating the public about these dishonest practices and pressuring authorities to punish negligent developers harshly. 

The chairman of Mumbai Grahak Panchayat, advocate Shirish Deshpande, asked a question about the Maharashtra Real Estate Regulatory Authority, stating that “the government seems to be falling short in preventing such crimes. “On May 1, 2017, the MahaRERA Act was signed into law to guarantee accountability and transparency. 

He continues, saying, “Developers defame the MahaRERA Act by submitting fictitious documents to the agency to legitimize their projects and defraud the public. The government does nothing. MahaRERA only provides dates; occasionally, it does not provide dates. After a year, some customers receive dates, which is advantageous for the builders. RERA does not entertain complaints filed by customers.” 

‘MahaRERA still isn’t solving over seven thousand complaints. The Consumer Forum sent a letter to the MahaRERA Chairman about this, but he has not replied yet. The number of complaints and stalled projects continues to increase. Builders aren’t taking the RERA Act seriously. Deshpande claims that despite the MahaRERA Act’s strength, its application is being done incorrectly. 

“When any complaint reaches our association, our committee scrutinizes it and decides whether to inform MahaRERA or resolve it internally,” said Harish Kumar Jain, president of the Brihanmumbai Developers Association. 

“The Association encourages developers to follow the rules, which will help the real estate industry’s reputation, especially since it will give consumers more confidence. Cheating cases are much less common now than in the past; Jain noted that it is uncommon to find even 10%of such cases. 

Mumbai will not be raising its property tax

Mumbai’s property taxpayers can once again celebrate the Maharashtra cabinet’s decision to keep the property tax at the current level. An official statement claims that this decision will relieve residents of Mumbai of an extra Rs 736 crore of burden. Are you a Mumbai property owner as well? Then, read this article to learn more about the latest changes to Mumbai’s property tax.  

The forthcoming increase in Mumbai’s property tax has also been put on hold by the Brihanmumbai Municipal Corporation (BMC) for the current fiscal year. By 2020, there will likely have changed since the last one in 2015. The business has held back the hike for two years to give the proprietors a break during the pandemic. It is fascinating that the Maharashtra cabinet decided to keep Mumbai’s property tax laws unchanged this year. The ruling relieved Mumbai property owners by allowing them to postpone paying property taxes for an extra year. Let’s take a look at this recent update in detail. 

Why does Mumbai have a deferred property tax? 

Several MLAs asked Chief Minister Eknath Shinde to postpone the hike for an additional year, citing the burdensome additional 16-20% property tax that would fall on homeowners. Ahead of the municipal election, the choice has been dubbed a scam. 

When would BMC give up on it? 

Refusing to raise the property tax in Mumbai for the current year is expected to cost BMC Rs 1,080 crore in revenue. According to officials, the pandemic has affected property tax revenue over the last two years. 

Because those who live in homes under 500 square feet are exempt from paying property taxes, the BMC is also giving up Rs 462 crore. This concession took effect on January 1, 2022. Owners of residential flats totaling about 16.14 lakh have benefited from it. 

Which other decisions concern property taxes? 

Until September 2022, the Panvel Municipal Corporation (PMC) will reimburse 50%of unpaid property taxes. Helping those who were unable to benefit from the prior 75% rebate is the aim of this decision. 

In the final week of July, approximately Rs 10 crore in property tax was collected, according to senior civic officials. In the current fiscal year, the collection total is Rs 62 crore. 

Mumbai property taxes: current information (February 2024)

The Maharashtra Cabinet decided not to raise the Mumbai property tax during its most recent meeting on February 5, 2024. According to the proposal of the Urban Development Department, the cabinet presided over by Chief Minister Eknath Shinde decided to maintain the current property tax system. Refusing to raise property taxes in Mumbai would spare the city’s citizens an extra Rs 736 crore in debt. 

In 2015, the Brihamantri Municipal Corporation (BMC) kept the property taxes at the same level. Mumbai’s Brihanmumbai Municipal Corporation (BMC) kept the property taxes at the same level. Mumbai’s Brihanmumbai Municipal Corporation reviews property tax increases every five years. In anticipation of civic polls in 2022, the cabinet earlier decided not to hike property taxes because of the COVID outbreak. 

In Mumbai, BMC collected property taxes totaling Rs 5,792 crore in the fiscal year 2022-2023. By choosing not to raise property taxes, the government has been demonstrating to owners of real estate inside the city limits how hard it works for them. These choices will lessen the financial load on property owners and encourage improved money management. Furthermore, Mumbai’s overall property value will continue to be appealing and will eventually rise with stable property taxes.                 

In the Asia Pacific region’s annual housing price growth index, Bengaluru comes in at number eight and Mumbai at number nine.

According to Knight Frank’s Asia-Pacific Residential Review Index for H2 2023, Singapore is the best-performing Asia-Pacific market, with a YoY growth of 13.7%. 

Regarding annual price growth in H2 2023, Bengaluru, Mumbai, and the National Capital Region have secured a position among the top 10 Asia-Pacific residential markets performing well. Bengaluru ranked eighth on the Asia-Pacific Residential Review, with a YoY growth of 7.1%, while Mumbai ranked ninth, with a YoY growth of 7%.  

Another significant residential market, NCR, came in at number eleven with a 6% YoY price rise during that time. Knight Frank’s Asia-Pacific Residential Review Index for H2 2023 states that Bengaluru, Mumbai, and the National Capital Region (NCR) will account for 60% of all sales volume in Indian markets in 2023. 

Non-city-centric developers are showing interest in Bengaluru, leading to a 24% increase in the number of launches in the city during H2 2023. In the second half of 2023, the town sold 27,799 dwellings. The city’s average price is Rs 5,900 per square foot or Rs 63,508 per square meter. 

The heightened demand during festive periods such as Navratri, Dussehra, and Diali is primarily to blame for Mumbai’s notable improvement in sales in 3Q 2023. The city sold 46,073 residences in the second half of 2023. The average price in the town is Rs 84,849 per square meter or Rs 7,883 per square foot. 

Overall, 29,888 units were sold in the NCR in H2 2023, with an average price of Rs 4,579 per square foot (Rs 51,226 per square meter). 

21 out of 25 Asia-Pacific (APAC) cities have positive annual price growth, according to the Asia-Pacific Residential Review Index for H2 2023. Singapore is the best-performing Asia-Pacific market, with 13.7% year-over-year (YoY) growth. 

Asia-Pacific Residential Review, which focuses on investors, offers a comprehensive analysis of the performance of the Region’s mainstream residential markets. 

“In 2023, residential property demand in India’s major cities has surged to its highest level in a decade, despite the increase in mortgage rates and property prices,” stated Shishir Baijal, Chairman and Managing Director of Knight Frank India. In 2024, residential demand will still maintain momentum due to notable tailwinds like the anticipated decline in interest rates and comparatively robust economic growth.” 

With a large inventory of completed new apartments that are unsold and high-interest rates, the Hong Kong residential market is the last in the world according to the index. Rising mortgage rates make it more difficult for buyers to afford homes, so they are more cautious. 

“The residential market experienced a surge in the past six months, following the FED’s decision to pause rate hikes, which encouraged potential buyers who had been waiting to make purchasing decisions,” stated Kevin Coppel, managing director at Knight Frank Asia-Pacific. Due to persistent supply-side issues like labor shortages, rising input costs, and construction delays, prices have benefited in many cities throughout the Asia-Pacific area”. 

According to him, cities like Bengaluru, Singapore, Sydney, Brisbane, Perth, Manila, Delhi, and Brisbane have all prospered from the wealth effect, supply outpacing demand, and promising economic growth prospects. 

Forbes Global Properties enters the Indian real estate market with plans to build in Goa, Delhi, and Mumbai.

In Navi Mumbai, Forbes Global Properties intends to construct a 100-acre project. It is negotiating for a housing project in Goa and a commercial project in Delhi. 

On January 24, US-based Forbes Global Properties revealed its entry into the Indian real estate market by providing brokerage services for upscale residences. In collaboration with landowners, it also intends to build two projects totaling 10 million square feet in Delhi and Mumbai. It also investigates the possibility of building a 10-lakh-square-foot residential project in Goa.

The amount of money the company planned to invest in India was kept a secret. 

Forbes Global Properties, a company founded in December 2020, not long after COVID-19, entered the Indian market using a membership network model. It is already present in 26 countries, where 17,000 agents serve clients with real estate needs.  

The international company will receive a membership fee from the Indian venture “Indian Forbes Global Properties.” The Indian venture’s chairman will be A.K Sharma. According to Sharma, the business would use a development management model to carry out projects. “Brokerage is our primary business,” Sharma stated. “India Forbes Global Properties will offer brokerage services for the luxury residential market and is considering purchasing equity stakes in at least two of these consulting firms.” 

India has a sizable market and economy. To better assist our clients looking to purchase and sell luxury properties, we have expanded into India. Forbes Global Properties CEO Michael W. Jalbert will reporters in this location. 

India Forbes Global Properties will first develop a 100-acre mixed-use project in Navi Mumbai in partnership with Orange Smart City, building a 1,200-acre integrated township. Infrastructure construction is the responsibility of the Mumbai Metropolitan Region Development Authority (MMRDA). 

PropEquity Analytics and India Forbes Global Properties FGP have partnered as well. 

“In 2019, there were about 5235 units in India’s luxury real estate market (above $1 million), with a total value of $5 billion. It is now a more than 100% increase in that number.  Approximately 13,600 units are worth $12 billion today. The demand from the NRI segment and the general expansion of the Indian economy are the main reasons for this number’s growth, according to PropEquity’s founder and CEO, Samir Jasuja. PropEquity is a cutting-edge online search platform for real-time data, intelligence, and analytics. 

The network of invitation-only Forbes Global Properties members represents many of the best properties available worldwide for purchase and is exclusive to the most illustrious brokerages in particular cities and second-home destinations. High net-worth individuals, inventors, and real estate investors will have access to some of the most sought-after and unique properties through Indian ventures.  

Positive effect: What Budget 2012 means for Mumbai’s Real Estate.

Allowing external commercial borrowings (ECBs) in the low-cost housing segment, the supply of affordable housing projects will increase in the outskirts of Mumbai in areas such as Karjat, Boisar, Nalasopara, Virar, Dombivili etc. on the heels of increased liquidity for budget home projects.

The extension of 1% interest subvention scheme on housing loans up to Rs 15 lakh wherein the cost of the house does not exceed Rs 25 lakh, for another year will also help sustain demand for affordable housing in Mumbai.

The increased allocation for highways and other infrastructure projects will help boost development of Mumbai’s outskirts and increase the supply of housing units there. This will result in price stability and affordability over the long term. The investment-linked deduction of capital expenditure in affordable housing, proposed to be raised to 150% from 100%, will also encourage more supply of low-cost housing in the city.

The reduction of the withholding tax on ECB interest from 20% to 5% will help Mumbai’s affordable housing segment by creating much-needed liquidity for budget home developers. End users will have more money available for home loans with the setting up of a credit guarantee trust fund to ensure better flow of institutional credit for housing loans.

The announcement of central assistance and Japanese participation in the Delhi-Mumbai Industrial Corridor project is a big plus. Areas on Mumbai’s outskirts that lie along the corridor will see increased land values.

By reinforcing the tax pass-through status for all types of Venture Capital Fund (VCFs), there will be renewed confidence levels of real estate private equity investors to invest in cities such as Mumbai (which has seen most of the PE investments post the Global Financial crisis.)