Bangalore Service Apartments

countryboat.com . Serviced Apartments Bangalore, India.

 

Home

BusinessLists

Contact



 

 

 

 

 

 

 

 

 

Countryboat.com - Online Business Promotion

Bangalore Service Apartments

Book service apartments
anywhere in Bangalore It is easy! Mail-Now!
Email ID- yourhost@yahoo.com, Mob - 91-9845-67-05-76

New Age Hotels Called Service Apartments.
The Regulatory Laws Applicable to Serviced Apartments in Bangalore.
(First Published in the month of Aug. 2008)

Eminent Lawyer and well known media columnist P.S. ChanneGowda writes in the wake of the recent controversy about foreigners staying in Bangalore Service Apartments.

  • As on today, definition of Service Apartments is not available under any regulatory laws.
  • Apartments assessed to tax as residential-flats but are being used as service apartments by their owners.
  • The profit from Service Apartments goes mostly unaccounted.
  • A few years back Infosys Technologies Ltd was slapped with a fine of Rs 7.79 lakh (Rs 779,000) by the BESCOM for 'misuse of power' at its service apartments.
  • There is a view that service apartments are not commercial in nature. It is thus not clear whether the activities in a residential Service Apartments can be considered commercial.
  • The act of converting residential apartments as service apartments, according to a section of other residents, is commercial and illegal.
  • At least now, service apartments in Bangalore are not governed specifically by any laws, rules and regulations, which are applicable to Hotels and lodges.
  • The police is not sure whether they have authority to regulate activities in Service Apartments. They can not interfere with the working of an Service apartment unless there is law and order problem.
  • Police is likely to ask for new laws or pass the buck to corporation authorities which collects taxes from service apartments or to the Excise Department which has authority to issues license for serving liquor in public places.
  • The Corporation and other jurisdictional revenue authorities also have limited authority to regulate service apartment businesses, as their role is limited to collecting taxes.
  • It is unclear whether the food offered in some Service Apartments amounts to offering of food to public.
  • However City Corporation can stop activities of a service apartment when carried out in residential apartments since both under the old, 1995 and the new , 2015, Comprehensive Development Plans, commercial activities are prohibited in residential premises. The owners of residential apartments are required to obtain change in land use before using their apartments for commercial activities and commercial activities are not generally permitted in residential zones. Moreover the change is permitted after the fulfillment of criteria stipulated in the existing bye-laws that also include ample parking space, cooking establishments and proper facilities to ensure garbage disposal.
  • The Labour department can also interfere by taking in to issues of those employed Service Apartments, but is hesitating to do so as the Service Apartments are not declared as commercial establishments.
  • Comments about "Foreigners from Middle East" staying in the apartments appears to be prejudicial, socially unacceptable and unethical and is not shared by majority of Bangaloreans.
  • It is time Government comes out with suitable laws and rules to regulate the business of Service apartments.

The Service Apartments which are often called New age Hotels are not uncommon in Bangalore City. The concept of them is a decade old , though people have now suddenly started discussing about them more frequently and vigorously on account of few residents of the popular Diamond District Apartments, on the other day, have complained to the police against the operation of service apartments in their apartment building.

The Concept Is Not New:

The concept of "service apartments" was coined in Bangalore a few years back and it gradually gained momentum, due the unprecedented expansion of IT and IT-enabled services. It was started in a small and insignificant way by a few apartment builders who coined the concept of Service apartments as a marketing strategy and it worked. Some of them went to Dubai and other middle eastern countries and sold their apartment, assuring the buyers that they could use their Apartments as Service Apartments to earn money when ever they are not using them. The buyers saw duel benefits in the concept. The first is that they can come and stay in their own apartments when ever they come to Bangalore on vacation. The second is that their apartments will not be idle and unoccupied but will be well maintained by letting out for a reasonable rent. So, they happily agreed to the proposal. Thus many Builders sold their Apartment units in no time.

There were a few builders who could not sell all their apartments and hence they furnished the unsold apartments and started using them as Service apartments, till they are sold. As they offered Service Apartments at a price far less than that of hotels or lodges, many people who required short term accommodation during their short visit to Bangalore either for work or pleasure, opted for them.

Gradually this concept changed entire real estate profile in Bangalore . It satisfied all the players, the Owners, Builders /Developers and users, as the arrangement worked out to be more profitable to all of them. It has also attracted big players and over the years well planned and professionally-managed service Apartment projects have surfaced due to shortages of accommodation in Bangalore coupled with high rent the Hotels in Bangalore were charging their customers.

The Diamond District Apartment is one of the few popular Service apartment complex in Bangalore where in residential apartments have been converted as Service Apartments. Many of these apartments are assessed to tax as residential flats but are being used as service apartments by their owners. According to the protesting residents, more than 30% of apartments are being used as service apartments mainly to cater foreigners, there by causing nuisance and security threat to them. They have termed the act of converting residential apartments as service apartments as commercial and illegal and want the police to stop the same. Some of them have objected to the foreigners from middle east staying in the apartments.

Such comments appear to be prejudicial, socially unacceptable and unethical and is not shared by majority of people in Bangalore . Such comments need to be checked /prevented by police in the bud . Otherwise it may leads to other implications in future.

The police authorities are looking in to the matter though they are not sure whether they have authority to regulate activities in Service Apartments. They can not interfere with the working of a Service apartment unless there is law and order problem-- illegal activities are taking place, the place is declared a public place and the persons staying are not legally entitled to stay-- such as foreigners who have not declared their arrival in the city or staying after the expiry of the valid –visa- period. They are likely to ask for new laws or pass the buck to corporation authorities which collects taxes from service apartments or to the Excise Department which has authority to issues license for serving liquor in public places.

The Corporation or any other jurisdictional revenue authorities also have limited authority to regulate service apartment businesses as their role is limited to collecting taxe for the premises-- unless the Service Apartments are not brought under Hotels or Lodges category. It is unclear whether the food offered in some Service Apartments amounts to offering of food to public and the Service Apartments are public places.

However City Corporation can stop activities of a service apartment when carried out in residential apartments building, since, under both under the old, 1995 and the new, 2015 Comprehensive Development Plans, commercial activities are prohibited in residential premises. The owners of residential apartments are required to obtain change in land use before using their apartments for commercial activities and commercial activities are not generally permitted in residential zones. Moreover the change is permitted after the fulfillment of criteria stipulated in the existing bye-laws that also include ample parking space, cooking establishments and proper facilities to ensure garbage disposal.

There is view that service apartments are not commercial in nature. It is thus not clear whether the activities in residential Service Apartments can be considered commercial. In fact one real estate company by name Avalon Resorts had challenged before Supreme Court the move of the Delhi authorities to seal its premises, contending that it was only operating a 52-room service apartments catering to the residential needs of several big corporate houses and hence its activities cannot be clubbed with commercial activities.

The Labour department can also interfere by taking in to issues of those employed Service Apartments, but is hesitating to to impose it’s regulations as the Service Apartments are not declared as commercial establishments.

As on today, no definition of Service Apartments is available under any regulatory laws. It is generally considered that a Service Apartment is one which is usually a furnished flat or building with few basic services, where in people can stay for a short period. It will be having all facilities that a normal house can have. It will be rented out to public for a shorter period, ranging from one to few days or even months.

While some of the Service apartments provide only shelters to individuals, groups or families with facility for their own cooking and washing, many Service Apartments are also providing food, linen and other services , as offered by any other hotel .

The Service Apartments are useful to people who do not have to stay long enough in a place to set-up home and want something more spacious, economical and homelike than a hotel room. They are a sort of houses cum hotels as they combine flexibility and comfort of a house and services and security of hotels.

Many people prefer Service apartments to Hotel rooms, as they are unnoticeable unlike hotels and are available at affordable prices- some times 50 less than the prices of Hotels and Lodges. Unlike Hotels and lodges which are restricted to main areas and roads , the service Apartments are available in all most all areas, where there is demand.

As Service Apartments offer everything that a hotel offers but in a home-like environment and at a reasonable cost, they have become very popular in Bangalore and their business is tacitly encouraged by Government, particularly Tourism Department, in order to attract more and more people to Bangalore. Thus it has come a fast growing big hospitality business.

It is easy to set up Service Apartments since any existing building or an apartment can be easily and quickly converted in to Service apartments in no time unlike Hotels which require huge budget and more time. Moreover at least for the present, they are not governed specifically by any laws , rules and regulations, which are applicable to Hotels and lodges. The amounts the Service Apartment owners or operators earn from Service Apartment business goes mostly unaccounted. Thus more and more individuals, Firms and Companies have converted and are still converting residential apartments and houses to service apartments. They are quietly running a parallel hotel industry.

There are people who run more than fifty service apartments with many rooms ranging from few to hundreds rooms, letting them out to clients throughout the year. The charges may vary from Rs 800 to 8000/- per room or a flat / house depending the facilities they offer and their location. They offer moderate to luxurious facilities, amenities and services and charge accordingly. By converting their buildings into service apartments, the owners have much to gain. The rent they get from Service Apartments is three to five times more than the monthly rents of ordinary apartments. They also pay less taxes to the corporation as the premises are registered as residential premises. The question of many of them paying Income tax does not arise since many of them are not even paying the mandatory professional and the luxury taxes to the commercial tax department. The electricity and water charges they pay will be on residential rate which is 3 to four times less than commercial charges.

A few years back Infosys Technologies Ltd was slapped with a fine of Rs 7.79 lakh (Rs 779,000) by the Bangalore Electricity Supply Company for 'misuse of power' at its guest houses in the city. for by paying residential charges, which is lower (one-third) than the rate applicable to guest houses that fall in the commercial category.

Infosys had, then about 60 duplex apartments (Adarsha Gardens) in the posh Jayanagar suburb in south Bangalore which were being utilized by the company as serviced apartments for their transit employees or guests, who stay from weeks to months, time to time. The Investigations conducted by vigilance cell had found that Infosys was paying power tariff applicable to residential houses though the apartments were being used as guest houses, for which commercial rates are applicable. It is not just limited to Infosys but many other leading corporate companies such as Hindustan Levers, Reliance etc. also have resorted to same practices clarified a BESCOM Vigilance officer.

Thus it is not surprising that more and more people are taking up the business of Service Apartments and hundreds of service apartments have come up, scattered all over Bangalore particularly, in central, south-east, eastern, southern and recently north-east parts of Bangalore. These apartments are mostly concentrated in areas which are very near to the Air Port or Corporate offices like that of above mentioned Diamond-District Apartments, which is located on the popular Airport Road, in the vicinity of Indira Nagar and Koramangala extensions, which are considered to be the most sought-after areas in Bangalore.

The business of Service apartments is the new hospitality trend in Bangalore where more and more people are offering accommodation, mostly to Corporates clients as service apartments or guest houses. Most of the people who have to be in the city for long durations on company assignments, businesses , treatments(health), are preferring Service Apartments to hotel accommodation. Even Companies, including MNCs find it convenient to rent out service apartments to reduce cost . Most of them prefer hot-spots and locations closer to the workplace, and hence most of the high cost apartments are spread across the city in places like Koramangala, Indiranagar, Airport Road and M.G. Road.

Even the players in hotel industry find it beneficial and easier to acquire property in these popular locations, and convert them to service apartments, as the property owners are willing to let them. While Star hotels are definitely still their domain, they are concentrating on low tariff service Apartments which are equally in demand in Bangalore city as they provide people customised benefits at affordable cost and are a better alternative for the diet conscious. They can attract easily corporate clientele in the ever growing hospitality market by making them more popular when there is acute shortage of hotel rooms

It is said that the UB City project , coming up on some 13 acres of land on Vittal Mallya Road , will have huge space for Service Apartments and the said Serviced Apartments will be managed by Oakwood-Worldwide. The project will have more than two hundred five star service apartment units with a mix of studio, one or two bedroom apartments . There will also be a rooftop helipad.

In the years to come, there will be many more such service apartment complexes all over Bangalore. Already many MNCs like IBM, GE, Texas Instruments, SAP Labs , McKinsey and Indian IT companies have hired and are regularly hiring Service Apartments for the stay of their employees, consultants, clients.

It is time Government comes out with suitable laws and rules not only to regulate the business of Service apartments but also remove the existing ambiguity surrounding them .



Link To Bangalore Service Apartments Main Page

Link To Bangalore Category Home