The real estate sector has been one of the industries that have witnessed a sea-change in the last decade under a different Government and with a new policy and budgetary framework in place. From GST and RERA to other measures, the regulatory environment has been improved considerably in this period. The focus on affordable housing has also been aimed at tackling the housing requirements of the masses while demonetization and other measures have helped control abnormal escalation in prices.
Yet, prices of property are still sky-high, particularly in metropolitan zones, making affordability a persistent challenge for several buyers. Housing accessibility also remains limited, with rental developments lagging behind, despite some positive changes in the sector. Here are some hits and misses worth noting.
Biggest Positives:
- The Government’s push for affordable housing through schemes like the PMAY (Pradhan Mantri Awas Yojana) and CLSS (credit-linked subsidy scheme) in 2015.
- RERA (Real Estate Regulation and Development Act) 2016 served to enhance transparency while safeguarding homebuyer interests and ushering in more accountability for real estate developers.
- The IBC (Insolvency and Bankruptcy Code) and amendment that recognized homebuyers as financial creditors also revamped the real estate landscape, empowering homebuyers in insolvency proceedings and helping them participate actively in decisions that impacted project outcomes.
- The 2016 demonetization initiative helped combat the usage of cash predominantly in real estate transactions, making investors shy away from putting unaccounted money into the industry. This helped check hikes in prices too.
- The implementation of GST in 2017 also helped streamline taxation throughout the sector by lowering multiple indirect taxes. It eliminated cascading taxation while promoting a more transparent and organized system despite the initial hiccups.
Some Misses:
- Staggered and delayed RERA implementation throughout multiple states, leading to inconsistencies and lower effectiveness of the entire regulatory ecosystem.
- Unresolved project delays and defaults by developers despite pro-active regulatory measures.
- The absence of targeted incentives and policies for rental housing, leading to several individuals being left without affordable yet viable housing choices.
- The lack of industry status for real estate which has hindered growth and led to challenges for developers in getting access to tax benefits and institutional funding. Restricted financial support has also hampered big-scale projects.
- The cost of property acquisition for buyers has gone up to 20% despite the GST reduction, taking additional charges like registration fees, stamp duty, legal costs, and transfer fees into account. Rationalization is the way forward although concrete measures are still some way off.
According to the National Sales Head, Square Yards, Rahul Purohit, the demand for granting infrastructure status to the housing sector is highly crucial and has been missed in recent years. He opines that this move will help property developers access funding for large-scale township projects while also getting more affordable credit to develop affordable housing projects. He also states that the Housing for All by 2022 scheme announced in the 2015 Union Budget was the biggest plus point for the industry.
This evolved with the passage of time with increased targets and additional injections of capital, while targeting 40 million rural and 20 million urban housing units by 2022. This stands as a hallmark of the efforts made by the Government to revitalize the sector according to him.
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Published Date: Nov 28, 2023
