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Fair Rent Valuation.

To control rent of residential and non-residential building and to safeguard tenants Tamil Nadu, a State in India has Rent Act known as: Tamil Nadu Buildings (Lease & Rent Control) Act, 1960 <ref name=undefined

Fair Rent or Standard Rent
Fair Rent or Standard is the rent fixed under the Rent Control Act.http://www.taxspanner.com/glossary/standard-rent/

Non-Residential Building
A building is regarded as a non-residential building when the minor part of the building (i.e. less than half of its gross area) is used for dwelling.http://stats.oecd.org/glossary/detail.asp?ID=1833

Non-Residential Buildings comprise:
 * Industrial Building
 * Commercial Building
 * Education Building
 * Health Building &
 * Other Building

Fixation of Fair Rent
Section 4.1:Fixation of Fair Rent in accordance with the principles set out in the following sub-section: 2. The fair rent for any residential building shall be nine per cent gross return per annum on the total cost of such building 3. The fair rent for any non-residential building shall be twelve percent gross return per annum on the total cost of such building. 4. The total cost referred to in sub-section (2) and (3) shall consist of the market value of the site in which the building is constructed, the cost of construction of the building and the cost of provision of anyone or more of the amenities specified in Schedule I as on the date of application for fixation of fair rent. Provided that while calculating the market value of the site in which the building is constructed, only that portion of the site on which the building is constructed and of a portion up to fifty percent, thereof the vacant land, if any, appurtenant to such building the excess portion of the vacant land, being treated as amenity. The cost of provision of amenities specified in Schedule I shall not exceed fifteen percent for any residential building and twenty five percent for any non-residential building.

5. (a) The cost of construction of the building including cost of internal water supply, sanitary and electrical installations shall be determined with due regard to the rates adopted for the purpose of estimation by the Public Works Department of the Government for the area concerned. The controller may, in appropriate cases, allow or disallow an amount not exceeding thirty percent, of construction having regard to the nature of construction of the building.

Valuation
Let us consider a G+2 R. C. C. framed structure Building in Zaam Bazaar area, Jaani Jaan Khaan Road of Chennai has a land area of 3,500 sq. ft. Total Built-up Area is 8,000 sq. ft, out of which 3,500 sq. ft is non-residential and 4,500 sq. ft. is residential. The property is in a continuous building area and land use permissible is mixed residential use. The age of the building is about 5 years old. •	Assessed Land Value / sq. ft: Rupee 6,000 http://www.tnreginet.net/Guidelinevalue2012/gvaluemainpage2011.asp, Retrieved on 2012-05-19

•Prevailing Tamil Nadu PWD construction rate / sq. ft adjusted to subject property: Ground Floor: Rupee 1,175 & First Floor: Rupee 935/sq. ft. •Apportion-able land / sq. ft of construction area: 8,000 / 3,500 = 2.29, which can be called “as built FSI”http://www.cmdachennai.gov.in/Volume2_English_PDF/Volume2_Development%20Regulations_English_Sep2008.pdf, PP=9, Item:21, Retrieved on 2012-05-19 (Floor Space Index); 6,000 / 2.29 = Rupee 2,620 / sq. ft. (Say “L”)

SCHEDULE - I Amenity, item No. 15 is not applicable because there is no excess land available. Excess Land Measurement:If land married to ground floor foot-print area + 50 percent of that foot-print area is equal or less than actual land area, full value of land can be taken for valuation; otherwise, it is excess land. The treatment of excess land is shown graphically: http://commons.wikimedia.org/wiki/File:TNR-IND_LV_Rent_Act.JPG

Fair Rent Calculation for Ground Floor Non-Residential •Ground Floor Depreciated Reproduction Cost (DRC): 1,175 * 0.9 = Rupee 1,058 (Say “A”) (Minimum Depreciation of 10 percent is considered) •	Add 25 percent for having one or more of Schedule I amenities, which is (1,058 * 0.25) Rupee: 265 Say (B) •Section 4(3) Non-Residential Rent @ 12% of L+A+B i.e. 3,943 * 0.12 = Rupee 473 Gross and Rent Rupee 39 / sq. ft

Graphical Presentation: http://commons.wikimedia.org/wiki/File:TNR-IND-CB.JPG

Fair Rent Calculation for First Floor Residential: •First Floor DRC: 935 * 0.9 = 842 (Say “C”). Minimum Depreciation of 10 percent is considered. •Add 15 percent for amenity (842 * 0.15) Rupee: 126 (Say “D”) •Section 4(2) Residential Rent @ 9% of L+C+D i.e. 3,588 * 0.9 = Rupee 323 Gross or Rent Rupee 27 / sq. ft.

Graphical Presentation http://commons.wikimedia.org/wiki/File:TNR-IND-RV.JPG

Multistory Building
In the case of a building having more than one floor, the principle ought to be one of apportionment in accordance with the number of storey. If there are two or more storey, the market value of the land for the first floor will be half. If there are more than two storey, it will be proportionately distributed in accordance with the number of storey in the building.(A. C. Charities Vs Sadhana Aushadalaya 1968 (2) MLJ 406) In the case of a flat to fix the fair rent, the court should take into account the total cost of the building, including staircase and then decide it by number of flats if the flats are identical. The land around the building will be treated as common to all tenants and then fair rent is to be fixed. (Banu & another Vs P. Venkateswaran 100 LW 389)

Exemption
Section 29: Exemptions from Rent Act

Notwithstanding anything contain in this Act, the Government may, subject to such conditions as they deem fit, by notification exempt any building or class of building from all or any of the provisions of this Act.Section: 30: Exemption in the case of certain buildings - Nothing contained in this Act shall apply to:-(i)Any building for a period of five years from the date on which the construction is completed and notified to the local authority. (ii)Any residential building or part thereof occupied by any one tenant in respect of that building or part exceeds{Four Hundred Rupees}.(iii)Any lease of a building under which the object of the tenant is to run the business or industry with the fixtures, machinery, furniture or other articles belonging to the landlord and situated in such building. ILLUSTRATION (1): Where a Dal mill as such is the subject matter of the lease and where the intention of the tenant is to run the business with the machinery in the building in which such Dal mill is housed, The Act does not apply to such building; ILLUSTRATION (2): Where the lease is of land and building together with fixtures, fittings, cinematographic talkie equipments, machinery and other articles, the Act does not apply to such buildings; ILLUSTRATION (3): Where a hotel building together with the furniture, machinery and other articles necessary for the running of hotel business is leased and the tenant is to run the hotel business in such building, the Act does not apply to such building. The Exemption to include, "All the buildings owned by the Hindu, Christian and Muslim religious public trusts and public charitable trusts from all the provisions of the Act. Further exempts, "the buildings owned by all Government undertakings including Government companies registered under the Indian Companies Act 1956 and by all the Co-operative Societies from all provisions of the said Act.

Meeyalabbai (talk) 11:07, 17 May 2012 (UTC)) Meeyalabbai (talk) 08:37, 17 May 2012 (UTC))

(Meeyalabbai (talk) 08:24, 17 May 2012 (UTC)) --Meeyalabbai (talk) 04:00, 19 May 2012 (UTC) (Meeyalabbai (talk) 04:04, 19 May 2012 (UTC)) (Meeyalabbai (talk) 04:16, 19 May 2012 (UTC)) --Meeyalabbai (talk) 04:25, 19 May 2012 (UTC)

Valuation by Income Approach
Under International Valuation Standards Meeyalabbai