2018 witnessed numerous policy changes that acted as a wakeup call for the real estate industry. Many changes were brought in this year. The developers had no choice but to change the way they had been doing business while the buyers felt relief owing to the measures taken by the government to protect their interest and bring about greater transparency. Let’s examine the various policies and their impact on real estate/apartments in 2018.
The Act made it mandatory for any developer launching residential property over 500 square meters or eight apartments to register the project with RERA and upload all the details about the said project on the RERA website before any initiation for sale is made. This kept the developers busy through the past couple of months. As the year approaches an end, the number of projects and developers being registered is growing.
The Act is an active effort to bring greater transparency and accountability in the realty sector. RERA provides a porthole to check the credentials of any new real estate project to minimise risk and uncertainty and it is believed will go a long way in reinstating the consumer confidence in the real estate market.
Till today, about 1,100 projects and realtors have registered in Gujarat. About 223 housing projects have registered with Tamil Nadu RERA, and more than 14,000 projects have registered so far with Maha RERA.
The Act was amended in 2017, and in 2018 the tax authorities began cracking down Benami assets. The amended law empowers the specified authorities to attach Benami properties which can eventually be confiscated provisionally.
The income tax department has already identified and seized 542 properties. In addition to this, bank accounts holding funds worth INR 1,800 crore are being frozen, and more action is expected soon. The government also has plans to link all property transactions with Aadhaar to further crack down these properties.
2017 and 2018 have been groundbreaking for affordable housing in India. Affordable housing got the much-required infrastructure status in 2017, and in 2018 the government accelerated its efforts to build houses for the EWS and LIG. The Credit Linked Subsidy Scheme was also rolled out to aid the middle-income group in the purchase of homes.
To accomplish the ambitious dream of ‘Housing for All’ by 2022, the government has sanctioned 30.76 lakh houses since the launch of Pradhan Mantri Awas Yojna (Urban).
The Union cabinet has recently increased the carpet area of houses under the government’s affordable housing scheme to benefit the builders and middle-class home buyers alike. The carpet area has been raised from 90 sq. Meters to 120 sq. Meters and 110 sq. Meters to 150 sq. Meters for MIG-I and MIG-II segment respectively.
It is expected that the middle and the lower segment home buyers will have access to bigger and ready to move in houses at a lower cost in the coming years.
To bring down the cascading tax structure and reduce the tax burden on consumers, the GST was introduced under the ‘One Nation One Tax’ model. The service tax on the residential real estate, however, took a jump from 4.5 percent to 12 percent under the GST regime. There is an ongoing debate on the volume of input credit that can be reasonably computed and claimed by the developers. The ready to move in properties have become more attractive as there is zero tax on these. Thus current demand has been created in this sector, and the need for under construction properties has gone down relatively.
The National Real Estate Development Council (NAREDCO) has requested the government to drop the GST rate to halve for the real estate sector to 6 percent to help boost demand for new homes.
Cash transactions of over INR 2 lakh were banned. This significantly reduced the number of cash transactions that used to take place in real estate. Also paying installments in digital transfers has now become the norm. Accounts linked to Aadhaar and Pan Cards are now ensuring that all property transactions can be tracked in real time.
See Also: Outlook for Real Estate in 2018