Budget 2016: Revival in the real estate sector will impact many businesses

Narasimha Jayakumar99acres.comOne of the most awaited events of the year, Union Budget 2016-17 is expected to metamorphose the country’s real estate landscape from its current recessive state to a progressive sector. A revival in the real estate sector would impact multiple businesses, while giving a massive fillip to the overall economic growth of the country. To this end, we are looking forward to manifold policy changes in the upcoming Union Budget. Industry status for realtyThis has remained an unfulfilled wish of the real estate sector for long. An ‘industry’ status will serve as a game-changer since cost of funding provided to developers will come down significantly, and they can, in turn, pass on the benefits to the consumers, hence propelling sale volumes.  Passage of Real Estate Regulatory BillThis is another long-pending demand, which if accepted would make real estate more transparent and organised. While the multiple amendments made in the Bill have boosted confidence amongst buyers, it is essential to implement it at the earliest. Single Window ClearanceWhile land and construction costs make up majority of the share of the overall cost, construction delays add to the woes of home buyers. Undoubtedly, the procedural inefficiencies in the system can be held culpable as developers have to acquire multiple approvals from numerous authorities and obtaining the requisite clearances can run into months and years.Reduced home loan ratesThe Reserve Bank of India took progressive steps in 2015 to augment the realty sector by slashing repo rates. However, not many banks have passed on the actual benefits to buyers. The benefit should be passed on to the developers as well. With availability of cheaper finances, developers would be able to price properties competitively. Passage of Goods and Service Tax Bill Currently, home buyers are liable to pay multiple taxes on purchase of under-construction properties. In addition to the Stamp Duty and Registration Charges, other taxes such as Service Tax, VAT, Excise Duty, Custom Duty and Entry Tax, among others, are levied on home buyers. This combines to form about 22-25 per cent of the total cost of the unit. Since the focus is on affordable housing, the government must pass the Goods and Service Tax Bill in the Rajya Sabha. Implementation of REITsDespite being announced last year, Real Estate Investment Trusts (REITs) have not kicked off in India. The investment tool, which holds the potential of single-handedly driving the market towards revival, is pipped due to the presence of Dividend Distribution Tax (DDT). In order to spur REITs, it is essential for the government to make it more investor-friendly by providing tax sops. Need for real estate ombudsman in all key cities Falling in line with telecom and insurance sector, real estate sector too has to come under the ambit of the regulation with the Union Cabinet approval of the amendments to the Real Estate Development and Regulation Bill, which is still pending since 2013 (not yet made into law). Aimed at protecting the interests of residential as well as commercial property buyers, by promoting transparency and accountability into the sector, the Bill makes it mandatory for registration of all projects and real estate agents who intend to sell any plot, apartment or building with the Real Estate Regulatory Authority. It includes ongoing projects too that have not received Completion Certificates so far and these projects, the Bill states, need to be registered with the Regulator within 3 months.First of all the bill must be made into law quickly. This real estate watch dog or body must be adequately staffed and given full powers to protect consumer interests such as refund of full money with interest in case of inordinate project delays and also for shoddy construction by builder.While one may question Parliament’s jurisdiction to make laws related to real estate as “land” is in the State List of the Constitution, the matter raised above is contractual and it should be argued that the primary aim of this Bill is to regulate contracts and transfer of property, both of which are in the Concurrent List.Lack of the above is seriously impacting consumer confidence to buy new properties – especially their ability to protect themselves in case of contractual disputes with builder.