The year 2016 has been quite an eventful one for the Indian real estate sector. From the enactment of the landmark Real Estate Regulation Act to the changes made in the Benami Law and to the recent demonetization drive, the government has introduced multiple policies and initiatives that augur well for the sector in the long run. Despite the short-term hiccups, the sector is poised to become more transparent, efficient and sustainable in the long term. So, let’s take a close look at some of the initiatives and policies that were introduced during 2016.
Interest Subsidy Hiked for first-time Home Buyers
In the Union Budget 2016, first-time home buyers were given additional deduction of Rs 50,000 on interest for loans up to Rs 35 lakh, provided the total cost of property doesn’t exceed Rs 50 lakhs. This gave a major fillip to the affordable housing across metros and influenced sales in non-metros where prices were relatively lower.
Service Tax Exemption boosts Affordable Housing
As per the government, construction of affordable houses up to 60 square metres under any scheme of the Central or State government including PPP schemes became exempt from service tax. The move was a major boost for the affordable segment wherein public and private players would come forward together to construct more such homes. This initiative would also help in moving a step closer to the government’s “Housing for All by 2022” scheme.
Real Estate Regulatory Act
RERA, that came into force in March 2016, is touted to be a landmark development in the history of real estate. It is envisioned to bring in more transparency, greater accountability on the part of developers, protect home buyers’ interests and ensure speedy execution of property disputes, among others.
It has been well received by buyers particularly and helped boost their confidence at a time when real estate was going through a tough time. Builders, on the other hand, had their reservations on a few clauses but largely hailed the Act as a game changer for the realty sector.
Goods and Services Tax
While the ambiguity on GST still prevails, its implications on the sector are likely to be aplenty. There will be just one uniform tax and buyers will no longer have to be entangled in multiple taxes to be paid at the time of property purchase. It’s ‘real’ benefits to the home buyers will also be known once the rate applicable to the sector will be unveiled.
Benami Transactions Act
The Benami Transactions (Prohibition) Amendment Act 2016, that came into force on November 1, is cited to have a positive impact on the real estate sector. For instance, the government will have ample land available with it after the seizure of ‘benami’ properties which can be used for affordable homes, it can keep a check on land prices, have clear land titles and the lending institutions will be more confident. All this augurs well for the sector in the long run.
Demonetization of high currency notes
Last but certainly not the least, the recent drive by the Modi government to demonetize high currency notes may be having short-term repercussions on the sector. Declining property registrations along with lower sales enquiries is rampant but most builders reiterate that things will improve at the dawn of the new year. And rightly so, the sector, often been labelled as most corrupt, is set to become most organized, transparent and professional.
Thus, while some of the ‘real’ benefits of these major government initiatives are yet to be seen completely, it would be interesting to see how things unfold for the realty sector in the year 2017. We can jointly hope that the new year brings in ‘Achhe Din’ for the sector at large.