Moneycontrol
| Source: Moneycontrol.com

The laws that changed the Rules this year

The absence of a nodal, central regulatory authority in the realty sector has caused a lot of ambiguity and there being no entry barriers. However, the year 2016 has seen phenomenal changes in the sector.

Munish Doshi
Acme Group

The Real Estate Industry contributes nearly 5-6% of India’s GDP. It is one of the more important sectors in the economy and one of the biggest employment providers in the economy.

The absence of a nodal, central regulatory authority in the realty sector has caused a lot of ambiguity and there being no entry barriers. However, the year 2016 has seen phenomenal changes in the sector, right from passing of the RERA to the prohibition of benami property transaction to demonetisation.  Let us look at how each of these laws affects the consumers and developers and the realty sector in all.

1.    The RERA:

The Real Estate (Regulation and Development) Act, 2016 is an Act approved by the Parliament of India which seeks to protect home-buyers as well as help boost investments in the real estate industry by bringing transparency in the real estate industry.

Impact
Consumers: RERA seeks to provide a single window for all information related all real estate projects. The consumer/flat purchaser can verify the credentials of any developer and then decide whether to buy or not.  The consumer will also benefit by standardised procedures and speedy dispute resolution; thus, saving time.

Developers: The Regulator would help streamline the industry and make it more professionally driven.  The Developers will have to plan and freeze the design well in advance.  The RERA will also help in the financial planning of the developer.  
 
2.    BENAMI PROPERTY ACT

The new amendment to the old law of Benami Property Transaction (Prohibition) Act, 1988, which came into force from 1st November, 2016 will help in removing the unwanted benami properties by unknown persons for someone else.

Impact
Consumers: The Act will soften the property prices and lot of new land parcels will be available to developers to construct, who in turn would pass on the benefit to the end users.

Developers: Apart from reduction in the land rates and larger parcels of land getting available at affordable rates, this will also get greater transparency in deciding the title of the property.  The major benefit is that this will attract number of private equity and NRI funds as the title will be much clear.  This will also eradicate unwanted unnamed investors holding large land parcels.

3.    DEMONETISATION

On November 8, 2016, the Govt. of India banned use of Rs 500 & Rs1000 notes as an official mode of payment and the Reserve Bank of India withdrew the old notes.

Impact

Consumers: Although hit by immediate cash crunch, in the longer run consumers will be benefited as most of the properties will be available by paying cheque.  Although the resale market will be hit badly but in a longer run this will ensure that the property was bought and shown legitimately by legitimate people only. Also, the influx of the money in the banks will ensure that the consumers are benefited in the long run, due to reduction in interest rates.

Developers: The professional realtors have always been selling the flats in a cheque payment since more than a decade.  This move will further bring in more professionalism in the sector.  However, in short run there might be few hurdles in the sentiment but in a longer run, the professional and organized developer affiliated with MCHI-CREDAI will be benefited.
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