Recent Changes In The Landscape of Indian Real Estate

The Indian government has introduced multiple regulatory changes to organize and structure the real estate landscape in India. The rapid changes are really transformative by all means. The regulation will not only be relevant for the existing land laws but will also give rise to a new set of laws which will be determined by the fiscal policies of the new government.

The changes are expected to have a cascading effect on the real estate business in India. The real estate business has so far been very unorganized and unregulated. Here we will emphasize the key legal and regulatory changes that form the foundation of such a powerful and impactful transformation.

Demonetization: The Indian Government was able to effectively wipe out old currency notes and establish the circulation of high-value currency notes of the new kind. This has been a mighty blow to the Indian real estate business because before demonetization the real estate business was surviving on the cash component of all business transactions. This had resulted in inflation in the real estate sector and caused an exponential growth in the Indian real estate market. As a result of demonetization, there is a significant reduction in stamp duties. Also, there has been a revision in the collector rates for immovable property. Overall this has led to the correction of real estate prices all over India.

GST: The implementation of Goods and Services Tax has also affected the real estate prices in India. GST will replace all indirect taxes such as service tax, VAT and excise duty etc. Before GST a bunch of indirect taxes was resulting in a lack of transparency during a business transaction for the developers and the buyers. But implementation of GST has simplified the tax process. As a result, now buyers are clear about the tax they have to pay during the purchase of a unit of the immovable property. For developers, the GST has structured the supply chain process. As a result, developers will get a higher margin. The real estate is poised to be organized and efficient.

RERA: The Real Estate (Regulation and Development) Act will usher in a new generation in the Indian real estate sector. RERA seeks to ensure that the terms and conditions pertaining to any real estate agreement be strictly adhered to. This will enforce a regulation between the buyer and the builder. And defaulting the law may lead to imprisonment.