The year 2017 was a year of landmark decisions for the realty sector that saw concerted efforts by the government to bring in transparency and boost consumer sentiment with RERA and GST. While the government has initiated several policies and reforms, there is still scope for more. Let’s delve deeper.
Single-window clearance
Project delays have plagued the sector for quite some time now. While several other factors are to blame, the tedious approval process is one of the major impediments to the development of the sector. At present, a project needs to be cleared by as many as 40 departments, including the environment, fire, water, revenue, and so on. If we were to believe the market reports, it takes anywhere from one to two years to get the requisite approvals in place!
Thus, if a single competent authority is responsible for approving development plans and building plans, the problem of project delays will reduce to a significant extent.
Unlocking land parcels
According to an estimate, close to 57,392 acres will be required to build two crore homes, if one were to assume an average size of 500 sq. ft. for each home and an available FSI of 4. As of now, huge land parcels are reserved by central and state government entities such as the railways, ports, and defence authorities. For achieving the ambitious ‘Housing for All by 2022’, these under-utilised and idle land parcels must be freed for development through land regulations, land readjustment, and pooling policies.
Focus on rental housing
As per the census 2011, the urban rental housing stock in the country stood at 27.5% of the total housing stock, which is quite low when compared to global standards. Considering rapid urbanisation, this ratio for India should be much higher. To address the growing housing demand, the government should work towards building a sustainable rental housing policy.
We can convert the unsold stock into rental housing, can’t we? It’s something that I believe even Finance Minister Arun Jaitley is considering where in a recent report tabled in Parliament he noted that “The rental market is also an important part of the urban ecosystem.”
Relooking GST
At present, under-construction properties are levied a GST of 12%, which is higher than the previous taxes. While the government has reduced the rate for affordable housing projects under PMAY, the rate cut should also be extended to the entire sector. Moreover, with GST in place, stamp duty should either be reduced or merged with the existing GST rate to reduce the burden on homebuyers. Lastly, the government should also utilise the funds collected from GST to improve the trunk infrastructure in cities.
Focus on new cities
Transit-oriented Development (ToD) has become the talk of the town recently. However, there is no discussion on its viability in Indian cities. Nobody is talking about pedestrianising the core areas in the city or laying tracks for bicycles.
The haphazard or rather mindless growth of our cities has put immense pressure on existing infrastructure.
I believe that state government should focus on building new cities. Why? Well, it is not a smart idea to cram more people into one city, no matter what plans you have for its infrastructure! For instance, instead of putting pressure on Bangalore’s infrastructure, why not develop Mysore or Hubli more? To me, it seems like the panacea for Indian cities struggling for space!
Infrastructure status
The long-pending infrastructure status to the real estate sector will also help in a huge way. Developers will get easy access to funds from financial institutions, obtaining approvals would get easier, and of course, the industry tag will make the sector more organised and professional.
While I write this, all the eyes are set on Mr Jaitley as the Union Budget session for the current fiscal is about to begin. While we wait with bated breath, let’s hope some of these ideas become reality today!
