EMPOWERING REAL ESTATE: TRIUMPHS FOR THE FUTURE
The various policy shifts are changing the dynamics of Indian real estate – and for good. The new regulations and legal directives are making transactions just and resolutions to any issues swift, benefitting the developers, consumers, and other stakeholders. RERA, NCLT and Consumer Forum have been further empowered to resolve real estate-related disputes. The role of the government as a regulator is crucial for implementing- ing supportive policies to create transparency, affordability, compliance and confidence in the real estate sector. Not to mention the responsible behavior of the real estate industry itself, in solving the issues of the sector. The other im- portant stakeholders are the real estate broker and buyers. While, the buyer’s awareness of the laws and rights are important, equally crucial is the best practices by the real estate brokers, that are well trained and certified. In keeping, the stronger regulatory body and revised bankruptcy code has been a blessing for the sector as they have boosted the trust and confidence among the buyers and investors. Real estate is being seen as a safe investment option, especially in the current time of uncertain global scenario and stock markets. REAL ESTATE REGULATORY AUTHORITY (RERA) ACT The first & foremost in the line of positive changes has been the Real Estate Regulatory Authori- ty (RERA) Act. Much has already been said about it - from provision of an escrow account to safeguard the project money and penalties on delivery delays to quality of project and no modifications in sanctioned plans after RERA reg- istration, to many more. What’s more, under RERA, false advertising to try to sell a proper- ty also attracts penalties and the builder must quote the price based on the carpet area as defined by RERA and not built-up, super built- up, PFS, etc. units. Indeed, all these directives protect the buyers from getting duped but, they also en- sure that each real estate player gets equal opportunities and does not gain an unfair advantage. In addition, the RERA Appel- late Tribunal adjudicates problems arising between developers and buyers. A conciliation forum fa- cilitates the amicable settlement, acting as a mediator between the parties to get their grievances solved before approaching RERA Tribunal. In fact, many a dispute have been settled timely and cost effectively by the conciliation fo- rum out of the RERA court, which has been a big relief for all the parties involved. LAND & PROPERTY LAWS The government has strengthened compliance and anti-bena- mi property measures, prohibiting and penalizing anonymous transactions, that has brought in the much-needed transparency in the land transactions. The digitization of property doc- documentation and registration has been the big enabler for real estate sector as it is streamlining property transfers. The online document verification platforms, e-stamping and online registration facilities in many states are simplifying the process and minimizing cumbersome physical visits for the developers and property buyers. Most developers are looking at either JDA models or buying land outright for the plotted developments and low-rise projects that make returns on investment very lucrative. Another positive move has been the amendment to the SEZ Rules, 2006, permitting the Special Economic Zones to lease space partially or in terms of floors, en- abling operators of office parks across the country to increase oc- cupancy of their properties. This partial de-notification has resulted in a lot of space getting freed-up and will increase occupancy with- in IT SEZ Parks. GOODS AND SERVICES TAX (GST) In terms of taxation reforms, with GST coming into the picture, multiple taxes applicable previ- ously like Service tax and VAT and RERA directives protect the buyers from getting duped but, they also ensure that each real estate player gets equal opportunities. Disputes have been settled timely and cost effectively by the RERA conciliation forum out of court, which has been a big relief for all the parties involved. The digitization of property documentation and registration has been the big enabler for real estate sector as it is streamlining property transfers. The government has strengthened compliance and anti-benami property measures. Amendment to the SEZ Rules, 2006 has resulted in a lot of space getting freed up and will increase occupancy within IT SEZ Parks. Under GST, developers’ construction costs are significantly reduced as multiple taxes are subsumed and reduction in cost of logistics is an added benefit. With the amended IBBI rules, the home buyers stuck in the insolvency process will get immediate relief. A coup of sorts will be the implementation of Amitabh Kant Committee report by all states, that has recommended ways to complete stalled projects. other indirect taxation in real estate have been wholly revamped, which has brought more clarity for the consumers and also reduced costs. Under GST, developers’ construction costs are significantly reduced as multiple taxes are subsumed and reduction in cost of logistics is an added benefit. What’s more, affordable housing is taxed at the lowest GST tax rate of 1%, immensely benefitting the buyers and incentivizing the developers. While, affordable housing developers are allowed to claim Input Tax Credit (ITC) on the GST paid for construction materials and services used in the project, there is a hope that similar relief will be extended to other housing projects as well. This will not only reduce the developer's tax burden, making housing economically vi- able for mid-income homebuyers but also, encouraging developers to minimize purchases from unor- ganized sector, further encourag- ing compliance. INSOLVENCY & BANKRUPTCY CODE (IBC) It was a major win for the home- buyers when the law recognized they cannot be treated different- ly from other "financial creditors" under IBC. In a further potential relief to thousands of home buyers of stalled projects, Insolvency and Bankruptcy Board of India (IBBI) is amending regulations of the IBC as well as the Companies Act that will benefit home buyers. With the amended IBBI rules, the home buyers stuck in the insolvency pro- cess will get immediate relief. One of the biggest reliefs for both the buyers and the developers will be the splitting of resolution plans for each project as several companies that face insolvency action have multiple projects. The move simplifies the resolution pro- cess as projects are at multiple stages of development and a large project may not see sufficient interest. This will speed up the resolution as separate resolution plans are likely to attract more buyers for projects. BRIGHT COMPLIANT FUTURE AHEAD The robust policy environment promises a bright future for real estate, as it aspires to be a force to be reckoned with globally. The parallels can be drawn with the insurance sector or stock market which progressed leaps and bounds once regulatory bodies were instituted. In real estate, the recent regulatory developments, digitization initiatives and structured reforms announced, all point in the direction of stability and progress for the sector. Such an eco-system is bound to create a multiplier effect on other connected segments of real estate. No doubt, several challenges remain to be addressed. Indian real estate potential still remains largely untapped, in comparison to global real estate markets. A collaborative approach is nec- essary from everyone in order to make a transparent real estate market, that will become a vi- tal contributor to the economic growth of the country. The current progress in policy frameworks and amiable laws are the steps in the right direction. The year 2024 starts with positivity and will ensure the continuation of the best practices by the sector, at- tracting new investments, boost- ing business efficiency, and raising productivity. AMITABH KANT COMMITTEE RECOMMENDATIONS The two most fruitful recommendations that will be beneficial for the real estate sector along with the aggrieved buyers are firstly the SWAMIH Fund to “proactively” finance the stalled projects and secondly, the setting up of a rehabilitation package for those developers who would commit to completing the projects in three years. This includes a “Zero Period” for two years starting with the onset of the pandemic in 2020 where interest and penalties on developers by the authorities would be waived. Developers would be allowed to get a “co-developer” on board to complete the work and a “partial surrender policy”, in which developers can give back some of the unused lands to the authority in exchange for a waiver on the dues for that land. RERA directives protect the buyers from getting duped but, they also ensure that each real estate player gets equal opportunities. Disputes have been settled timely and cost-effectively by the RERA conciliation forum out of court, which has been a big relief for all the parties involved. The digitization of property documentation and registration has been the big enabler for real estate sector as it is streamlining property transfers. The government has strengthened compliance and anti-benami property measures. Amendment to the SEZ Rules, 2006 has resulted in a lot of space getting freed-up and will increase occupancy within IT SEZ Parks. Under GST, developers’ construction costs are significantly reduced as multiple taxes are subsumed and reduction in cost of logistics is an added benefit. With the amended IBBI rules, the home buyers stuck in the insolvency process will get immediate relief. A coup of sorts will be the implementation of Amitabh Kant Committee report by all states, that has recommended ways to complete stalled projects. CONSISTENT A D STRINGENT REGULATIONS HAVE ENHANCED ACCOUNTABILITY IN THE INDIAN REAL ESTATE COUNTERING THE TRUST DEFICIT OF THE BUYERS. THE INCREASED REGULATORY OVERSIGHT HAS ALSO LED TO THE MATURITY OF THE SECTOR.
Tags : REAL ESTATE REGULATORY AUTHORITY (RERA) ACT LAND & PROPERTY LAWS INSOLVENCY & BANKRUPTCY CODE (IBC) AMITABH KANT COMMITTEE RECOMMENDATIONS LAND & PROPERTY LAWS