5 ways homebuyers would benefit from regulatory changes

By: | Published: March 10, 2017 12:52 PM

Governing a sector as massive as real estate is not an easy task. The interests of several stake holders are involved here. All their concerns have to be addressed when policies are formulated. A policy decision made at the right time taking into account all the problems of a particular sector can change the way that sector functions for the better.

Buyers are one amongst the biggest stake holders in this sector. Even the simplest of policy decisions will have an impact on them.

Governing a sector as massive as real estate is not an easy task. The interests of several stake holders are involved here. All their concerns have to be addressed when policies are formulated. A policy decision made at the right time taking into account all the problems of a particular sector can change the way that sector functions for the better.

“Lately there have been a slew of developments that have the potential to radically alter the nation’s realty sector. 2016 was a landmark year for those involved in this business. Legislation and taxation policies that took shape in 2016 have given all the players involved in the industry hope that its future is headed in the right direction. 2017 is also not too far behind in terms of producing some defining moments for the sector either,” says Ganesh Vasudevan, CEO, Indiaproperty.com.

Buyers are one amongst the biggest stake holders in this sector. Even the simplest of policy decisions will have an impact on them. So it is a must that they are aware of what they are in for with all these reforms coming their way. Here are some of the policies they need to know and a simple breakdown of how it would affect their real estate decisions;

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Real Estate (Regulation and Development) Act, 2016
This is without a doubt the biggest game changer the industry has witnessed. Several issues that have been plaguing realty in terms of governance and transparency have been addressed here. Appointment of entities to redress issues faced by buyers, ensuring that builders park 70% of project related funds in a bank account, making it mandatory for builders to pass on key project related details such as project plan, approvals and project completion schedule and penalties for project delays are just some of the rules laid down through this important piece of legislation.

“RERA is one of the biggest pro-consumer laws out there which has taken cognizance of the issues that have rubbed them the wrong way and has given them a remedy for it. The real estate sector also stands to benefit because of such monitoring as it will build buyer confidence in the industry,” says Vasudevan.

Affordable homes
The government seems to be determined to turn the “Housing for all by 2022” promise into reality. In the Union Budget 2017, the government has granted the infrastructure status to affordable housing. This would give builders in this segment more access to institutional funding at lower rates and incentives from the government for their projects. This move is expected to give a real push to the sector and help bridge the demand for affordable homes. The bottom line here is that the buyers will be able to purchase low-cost homes at a cheaper price.

Pradhan Mantri Awas Yojana
The Pradhan Mantri Awas Yojana (PMAY) is another scheme which will pave the way for “Housing for all.” It was put in place to address the housing needs of the economically-weaker section (annual income of Rs 3 lakh) and the low income group (annual income of Rs 6 lakh) by giving them credit linked subsidy. The government is expected to modify this scheme to include the middle income groups who earn Rs 12 and Rs 18 lakh per annum. These groups will have fixed subsidy slabs for the loans that they avail based on their income. This will make buying a home more cost effective for buyers falling under the income brackets identified by the government.

Goods and Services Tax (GST)
GST may come as a relief to buyers with the potential to lower property prices. It is expected to simplify the taxation system that is presently seen in the country by bundling up all the different taxes levied by the state and the Central government on the manufacture, sale and consumption of goods and services into a single tax. Under the present taxation system, the real estate sector is liable to pay several taxes to the state and Central governments. With GST there will be more certainty about the taxes that it is expected to pay.

“At present there is no clarity on which tax slab the construction industry and real estate sector will fall under. But it is hoped that the tax burden on the builders will be lowered. The Union Minister for Urban Development, Mr. Venkaiah Naidu, has recently assured the industry that under the new taxation system, real estate will not become more expensive as feared by many. The new tax regime is expected to roll out on July 1, 2017,” informs Vasudevan.

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Single window clearance
It is not always about the laws that have been passed but about the ones that have been in the pipeline for too long. One of the biggest demands of the industry is the implementation of the single window clearance system. One of the biggest grouses that buyers have against developers is the inordinate delays in handing over projects.

“The real estate community believes that the delays can be circumvented to a large extent if the single window clearance system becomes a reality. Getting all the approvals in place is a time-consuming process. They are many bureaucratic hurdles to clear before a project gets off the ground and in many cases they get delayed by at least a year, thanks to the approvals. If this policy change comes into effect, both buyers and developers can heave a huge sigh of relief,” says Vasudevan.

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