The year 2016 witnessed a major economic transition in India with the government’s landmark decisions, including clearance of long-pending legislations and establishing new regulatory policies. Last year was of big significance for the country’s realty sector too.
The Centre took some considerable measures like Demonetization, Benami Act, Goods and Services Tax (GST) and Real Estate Regulatory Act (RERA). These steps were intended to improve transparency and accountability, thereby impelling investment and end-user engagement.
Measures taken by the government for Indian real estate sector
The home loan rates saw a marginal dip, which might stimulate buyer demand. Industry experts from True Value Homes (TVH) believe that the housing sector will get respite in the coming months, as demonetization impact takes its toll. Property prices are expected to get slashed in certain areas, providing an opportunity for the homebuyers to make their move. Eventually, demonetization will prove beneficial for people looking to invest in homes.
- Real Estate Regulatory Act (RERA)
RERA is one of the key measures implemented by the Centre for maintaining development and regulatory transparency in the realty sector. If the RERA act gets implemented in the right spirit, it will drive greater volumes of domestic and foreign investment flows in the sector. It will also revive the confidence of home buyers in the realty market by mandating the registration of realty projects. RERA will surely bring credibility in the sector.
- Goods and Services Tax (GST)
GST, one of the longest awaited tax reforms, was unanimously approved by both the Houses of Parliament in 2016. GST will prove to be a benefactor for the realty regime, considering the anticipated flow of credit, which will increase the developer’s margin. GST is a positive move towards elucidation of Indian tax system. It is likely to usher transformation and wipe the slate clean for a fresh start on the ancillary taxation of all other real estate transactions.
- Benami Property Act
In 2016, the Benami Transactions (Prohibition) Amendment Act was implemented in order to bring the unaccounted money back into system, along with confiscating benami property and prosecuting the people involved. Similar to other regimes, the Benami Property Act also aims at enhancing transparency and professionalism in the realty sector. This will further reduce the title risks, thereby, boosting up the buyers’ confidence. It will also ensure that the tag of ‘corruption and unaccounted wealth’ stays limited to a handful of unethical players only.
- Permanent Residency Status (PRS) for foreign investors
The regime of granting Permanent Residency Status (PRS) to foreign investors was approved by the Union Cabinet in 2016. However, this regime subjects to several conditions and a provision for renewal after 10 years. As PRS allows the holders’ spouse/dependents to embark on employment in India, additionally permitting them to purchase one residential property for end-use, the demand for luxury property will increase, thereby, promoting the asset class expansively.
Sundarji—DGM Sales and Marketing, True Value Homes says, “The implementation of these norms will widen the scope for an open, investor-friendly economy. While it might take a short time for these policies to trickle down to end-users, these regulatory initiatives will surely have an overall positive impact on the realty sector in 2017.”