The 2018 Realty Wishlist

by Vanshika Kumari Financial Writer

Even though sales in the ever booming real estate market have declined drastically last year, the reorganisations and regulations revolving around it have certainly kept it on the limelight, making 2017 not only a busy year for the industry but also a potentially defining year. These reforms are expected to change the real estate sector for the better.

All the regulations that have affected the realty market in 2017 is expected to do so in the following years as well, and besides these policies, GST and demonetisation implemented by the government had affected the real estate industry as well. The sale of land and properties were at a standstill early in 2017 due to effects of the government-implemented demonetisation. Successively, RERA (Real Estate Regulatory Authority) was presented to the realty sector, which furthermore limited real estate developers to start new developments. This also halted some projects as developers had to come in terms with the new regulations that RERA implemented on to developers.

The implementation of GST (Goods and services tax) from the 1st of July, 2017 also diminished sales in the real estate arena. Under the GST regime, all properties that were under construction levied a 12% tax. This had influenced the cost of real estate in India, which in turn worsened the marketplace for real estate.

Tejas Patil, the head of real estate services, Sanctum Wealth Management Pvt. Ltd. said that the implementation of GST has not helped the real estate sector at all. This has in fact increased the housing prices and, it is the end-consumer that has to bear the additional expense of 12% GST levied on properties.

Regulations that Affected the Real Estate Industry

RERA Act, 2016 - RERA was intended to provide home buyers with more transparency and security while purchasing real estate. RERA also facilitated developers and builders to be more accountable while transacting with real estate. This regulation included the compulsory registration of under-construction and new projects with RERA, and the submission of Good and Services Tax on under-construction houses. Although many experts believe it was a affirmative step that would impact the real estate industry positively, the short term implications of this were very detrimental.
Pradhan Mantri Awas Yojana PMAY and Credit Linked Subsidy Scheme (CLSS) - The government has been trying to make housing more affordable over the years. And 2016 and 2017 was one of the most successful years with the implementation of PMAY and CLSS. The government, last year, was focusing on building more houses for Economically Weaker Sections (EWS) and Lower Income Groups (LIG). The government had also introduced the Credit Linked Subsidy Scheme (CLSS) to help middle-class individuals purchase housing.Since the beginning of the Pradhan Mantri Awas Yojana (Urban), the government has provided over 30 lakh housing to the people in order to accomplish the initiative of ‘Housing for all by 2022’. This has allowed the lower income groups and economically weaker sections afford housing and this scheme is expected to enable more individuals to do so in the near future.
GST on property- After the implementation of GST, the prices of property have risen dramatically. Lesser people have been purchasing real estate and lesser projects were being constructed. The caused the real estate market to deplete. However, ready to move in houses won’t be charged tax, which in-turn dropped the demand for under-construction properties.

What can the real estate market expect in 2018?

Many builders and developers will aim at finalising their prevailing projects. There is going to be a limited number of new projects, especially in the ‘luxury’ and ‘mid-level’ section this year. Developers are now finding it hard to stick to regulations due to low sales.

However, the good news is that all developers now know what is expected of them. They have to abide to the latest rules and regulations brought about by the government. They have to provide the buyers with more security and transparency, thereby reducing the risk of a buyer to invest.

Because of the inherit risks involved in purchasing a property after these regulations have been put in place, it would be wise to purchase completed projects. The decline of the real estate industry could also mean that the property can be valued at a lesser price, making it a good investment for the future.