Finally, the long awaited control over real estate has come into play. The vigil government of India has effortlessly been working to establish accountability and transparency in the real estate sector so that the investors feel secure. It has brought thriving times back for the home buyers with reforms like Real Estate Regulation Act (RERA), Real Estate Investment Trust (REIT), Benami Transactions (Prohibition) Amendment Act, 2016 and Demonetisation. Let’s give a quick recap how the end of 2016 has brought changes in real estate sector.
- The Real Estate (Regulation and Development) Act, 2016: this act has enabled the much-needed protection to the homebuyer. The Real Estate Act has mandated all commercial and residential real estate projects having eight apartments or land over 500 square metres to register with the Real Estate Regulatory Authority (RERA) in order to launch a project. This will render better transparency and establish accountability in the execution of the project and its marketing. The projects which are already in progress and do not have a completion certificate will require getting registered within 3 months. Once the registration is successful, the promoters are provided with a registration number along with a login and password of the applicant to fill up essential details on the website of the RERA. In the case of failure to comply with registration a penalty of up to 10% of the project cost may be imposed or a three years’ imprisonment. A prior registration has to be done by agent dealing will selling and purchase of properties. The registration number will be provided which is to be quoted in every sale eased by an agent.
- Demonetisation: the demonetization drive has further made property prices fall after slow growth in the realty sector. The unaccounted money has lost all roles in the sector and the desired correction factor has come to play in secondary market making residential sector much more affordable. The demonetisation move has made luxury segment accessible.
- The Benami Transactions (Prohibition) Amendment Act, 2016: another strong step is the revision of the Benami Transactions (Prohibition) Amendment Act which prohibits benami (anonymous property) transactions and yields for seizing benami properties. The Act has put a check on all those who are in possession of assets beyond known sources of income. In a benami transaction, the name in which the property is taken is fictitious and the financer is the real owner of the property, thus providing tax benefits to the actual buyer.
To curb this type of illegal transaction, the Act has been amended and put into practice. The act has brought penal measure for entering into benami transaction which includes rigorous imprisonment of one year extending up to seven years, or a fine which could extend up to 25% of the fair market value of the benami property or both of them.
Along with these escrow accounts have been asked to be maintained on delayed projects. In a sector which has witnessed mafia rule and has been facing of illegal black money hoarding, these strict measures will certainly help the market to be regulated. The illegal hoarding will reduce which will reflect true and not exorbitant price making home buying in the reach of more and more people.