Reforms in the Real Estate Sector

The last year has been monumental for the Indian real estate sector. The sector, which was once disoriented and unorganized, has emerged as a mature and regulated sector owing to the slew of progressive policy reforms by the government. To name a few, Demonetization, Housing for all, liberalized FDI rules, RERA and GST, have cumulatively impacted the sector paving the way for a revival.

In early November last year, India witnessed one of the biggest reforms with demonetization. The move aimed to wipe out the infamous parallel economy that worked on unaccounted currency. A bold move, demonetization initially created some chaos due to ambiguity however it has successfully achieved its goal to create a single economy. It has brought about transparency in transactions which has helped to strengthen relationships between developers and buyers. Demonetization also brought about an increase in fund inflows in the banking sector leading to a reduction in home loan rates bringing investments in homes within the ambit of most home buyers. There is still a long road ahead, but the move has served as a stabilizer for the real estate sector. Demonetization served to be the first step in the revival of the sector followed by significant announcements in the Union Budget 2017-18 on affordable housing and FDI rules, RERA and most recently GST.

As India adjusted to demonetization, the Government provided some relief in the Union Budget 2017-18. The centre granted infrastructure status to the affordable housing sector showing its intention to make ‘Housing for All by 2022’ a reality. The status grant comes with a plethora of benefits to developers such as availability of prime land parcels, access to funds along with faster approval incentivizing them to develop affordable housing projects. Moreover, the increased allocation of expenditure will ensure the target is achieved well within the stipulated deadline. We can expect to see a rise in affordable housing projects owing to this development. Further, the government also liberalized FDI rules making it easier for NRIs and Foreign investors to purchase properties in the country and facilitate the generation of foreign exchange for infrastructure developments and strengthen the nation’s economy.

Real Estate has been widely regarded as an unorganized sector; however, one landmark development is set to change the modus operandi of the industry. The Real Estate Regulatory Authority Act, recently implemented in May 2017 has been widely applauded by both, developers and buyers alike. The implementation of RERA has brought in the much-needed transparency and has infused accountability in the sector that has hitherto been unregulated. The act has not only encapsulated the interests of the home buyers but has also ensured speedy redressal of disputes which has helped gain confidence amongst the consumers. The act consists of a registration mandate, and strong penalties to ensure that the home buyers feel secure about their investments and further enhance the residential sales. It will play a vital role of a supervising authority for any land or house deal that takes place. Overall this act emphasizes in bringing in transparency, reliability, professionalism, and ensures timely delivery of the projects.

Along with the above-mentioned reforms, the most recent one has been the introduction of the Goods and Services Tax Bill (GST) in July 2017. GST aims to dismantle the multiple tax system and make way for ‘One Nation One Tax’. It will help create a unified market and eliminate cascading of multiple taxes allowing ease of doing business. These reforms are sure to improve buyer’s sentiment and spike sales in the near future.

Buying real estate is widely considered a safe bet by the Indian investors. Like every other market, real estate too has its highs and lows. The sector was earlier considered to be unorganized therefore the implementation of such reforms by the government was the need of the hour. These reforms have strengthened the association between a buyer and a developer immensely. The real estate market has also benefitted from the cumulative effect of these reforms which will help propel the growth of the real estate sector going forward. It is safe to say there is a bright future in store for the real estate sector.

About the Author:

Sanjay Jain, Group Managing Director of Siddha Group is a commerce graduate from Calcutta University; he started his career by joining his family’s business of Jute, Iron & Steel Trading and Cement manufacturing. When the real estate industry was thriving in 1993, his creative overdrive made him venture into the real estate development. Since, then he along with his peers has taken Siddha Group to a whole new level. He has been the creator of many firsts, like building Kolkata’s first  unique duplex residential complex at that time, introducing the idea of buying homes online via the Siddha APP, and the unique concept of Rooftop Skywalks. As the Group Managing Director, Sanjay Jain oversees the entire functioning of the company’s real estate development and ensures smooth-sailing of all the residential and commercial projects. He is currently focusing on the expansion plans of the group with new project launches in Mumbai. A voracious reader, he is also a world traveller. An accomplished and empowering leader of the Siddha Group, Sanjay Jain has more than two and a half decades of experience in the real estate industry. He has led the Siddha group to be one of the trusted and known real estate developers in the country. Siddha Group strives towards creating high-quality housing in India. Combining up market design skills, optimal materials and excellence in construction, Siddha is focused on delivering comfortable homes at convenient prices and within the committed time frames.