Linking properties with Aadhaar can help in the inclusive growth of the realty sector, bring down property prices to realistic levels in the long-term, and ensure effective identification of Benami properties.
Murmurs that the government may soon make it mandatory to link Aadhaar with real estate transactions have only been getting louder over the past few months. If that happens, it is going to be one of the boldest reforms that has been undertaken in the last several decades.
The Delhi high court in October had sought a response of the Unique Identification Authority of India (UIDAI) on a plea seeking linking of movable and immovable property documents of citizens with their Aadhaar number to curb corruption, black money generation and 'benami' transactions.
A bench of Chief Justice DN Patel and Justice C Hari Shankar issued notice to UIDAI and sought its response in the matter before November 20, the next date of hearing.
The impact could of linked Aadhaar with property purchase is expected to have a mixed outcome in the short-term as well as in the long-term. It can entirely revamp the face of the Indian economy and the realty sector. Before we dive into its probable impact, let’s understand why linking Aadhaar with the real estate sector is important.
Reports on ghost towns in China busted the sole purpose of constructing hundreds of homes when the homeless fail to occupy it. The same thing is now happening in India, as reportedly there is a large number of vacant homes in the country, and that number is growing gradually every year. While the government is looking forward to building a home for every citizen, the unaccounted properties have artificially pushed property prices for people who require them the most. Such unaccounted wealth not only sucks the resources, but also chokes liquidity in the system for several years.
Linking properties with Aadhaar can help in the inclusive growth of the realty sector, bring down property prices to realistic levels in the long-term, and ensure an effective identification of Benami properties.
Possibility of a short-term surge in the resale property
Linking property purchase with Aadhaar is expected to make it difficult to deploy undisclosed wealth into realty projects and land assets. If there are people who possess Benami properties, they may be compelled to sell such properties to avoid getting caught by the authorities. It may result in a surge in supply of resale property in the short-term.
Property prices may also become unstable temporarily. There are chances that some builders and property sellers increase prices to maintain their profit margin.
Boost to widespread inclusive growth
Some people possess properties and don’t disclose it in their tax return. Such realty owners usually keep the property vacant at prime locations. Such assets may now return to the market and prospective homebuyers can get an attractive price. Genuine homeless buyers will get a better chance to buy property. There are chances that the government will be able to release more locations for realty projects, therefore allowing greater land banks to developers ensuring sustainable growth in the long-term.
Better housing policy with the availability of highly accurate data
With realty getting linked to Aadhaar, it will help create a nationwide database, on availability of housing stock in the country. The government would be able to frame highly effective housing policies based on analysis of such data.
Can help in effective land reform
Land reforms are long overdue in the country. It is a highly sensitive issue, as well. There are a large number of court cases pending due to land ownership disputes. Linking Aadhaar with property will significantly reduce the number of new cases. Land acquisition is a big problem for the government when it comes to infrastructure development and the development of the industrial belt. Often, it becomes difficult for authorities to identify and segregate the agricultural from non-agricultural land. If Aadhaar is linked to property purchase, it will help differentiate the type and ownership of real estate in the country.
Aadhaar linking can be a big gamechanger for the realty sector and the entire Indian economy. However, it would require detailed research and planning, a collective effort of all the government departments.(The author is Group CFO, Elara Technologies that owns PropTiger.com, Housing.com and Makaan.com)LIVE NOW... Video series on How to Double Your Monthly Income... where Rahul Shah, Ex-Swiss Investment Banker and one of India's leading experts on wealth building, reveals his secret strategies for the first time ever. Register here to watch it for FREE.