Navigating the evolving landscape of real-estate regulations in India
January 21st, 2024
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India’s real estate sector has long been synonymous with both opportunity and complexity. Over the years, stakeholders ranging from global investors to individual homebuyers have witnessed an evolving regulatory framework that seeks to balance rapid growth with sustainable development. The legislative landscape in relation to real estate sector, is now transforming, signalling a positive shift towards transparency, accountability and efficiency.
India’s real estate sector has long been synonymous with both opportunity and complexity. Over the years, stakeholders ranging from global investors to individual homebuyers have witnessed an evolving regulatory framework that seeks to balance rapid growth with sustainable development. The legislative landscape in relation to real estate sector, is now transforming, signalling a positive shift towards transparency, accountability and efficiency.
The Dawn of Regulatory Reforms
The introduction of the Real Estate (Regulation and Development) Act, 2016 (RERA), marked a watershed moment for the sector. Aimed at protecting homebuyers and enhancing the accountability of developers, RERA has been a pivotal step in restoring confidence in the real estate market. The Act ensures timely delivery of projects and establishes a regulatory authority that monitors transactions, providing a systematic approach to dispute resolution.
Another milestone has been the amendment of the Benami Transactions (Prohibition) Amendment Act, which has been instrumental in curbing illegal transactions and improving transparency. This, combined with the government’s push for digitization of land records through the Digital India Land Records Modernization Programme (DILRMP) as well as digitalisation of municipal/ panchayath records, is fostering an environment of trust and efficiency. Legislative trends show continued emphasis on liberalizing the Indian economy, with renewed focus on the development of real estate in a transparent manner as well as affordable housing projects.
Innovation in Compliance
The digitization of compliance procedures has ushered in a new era of convenience and accessibility. Online portals for project registration, complaint filing and project progress reports under RERA have reduced the red tape that once hampered the industry’s agility. The ease of doing business is significantly enhanced, bolstering investor confidence both domestically and internationally. Moreover, the transparency brought in by RERA has enabled buyers to be more informed about the projects they invest in.
Financial Regulations – A Step Towards Stability
Financial discipline has been bolstered by the implementation of the Goods and Services Tax (GST) which has simplified the tax structure in real estate transactions. Additionally, the Pradhan Mantri Awas Yojana (PMAY) is providing a fillip to the affordable housing sector, attracting investments and ensuring that the dream of home ownership becomes attainable for a larger segment of the population. The commitment of Rs. 79,000 crore (US$ 9.64 billion) for PM Awas Yojana announced at the Union Budget 2023-24, gave a huge boost to affordable housing.
The Reserve Bank of India (RBI) has also played a constructive role by easing lending norms for home loans and revising risk weights for the sector, which encouraged banks to lend more to homebuyers and developers, boosting the sector’s liquidity.
Moreover, traditionally, India’s real estate sector was closely guarded against foreign investment, with strict regulations permitting foreign entities to invest only through joint ventures or local partnerships, with emphasis on specific types of projects like townships. However, reforms initiated in 2005 and expanded upon in 2016, have opened the doors wider, allowing 100% foreign direct investment (FDI) under the ‘Make in India’ initiative for large-scale infrastructure and real estate developments, such as townships, industrial parks, shopping complexes, and more. This approach strategically directs foreign investments towards large, capital-intensive projects, while safeguarding smaller-scale real estate endeavours for Indian enterprises, thereby preventing the sector from being overwhelmed by foreign corporations.
The positive impact of these regulatory policies is not merely theoretical. It is an unfolding reality that has already started yielding tangible benefits.
Encouraging Sustainable Development
India’s real estate sector is on the brink of a sustainable revolution, propelled by the government’s focus on energy transition and achieving Net Zero goals. The introduction of the Green Rating for Integrated Habitat Assessment (GRIHA) is driving the development of eco-friendly and energy-efficient habitats. This shift marks a clear direction towards sustainable practices that promise long-term economic, social, and environmental benefits. The Smart Cities Mission, another ambitious initiative, aims to fuse sustainability with urban development, creating a replicable model.
The changing landscape of real estate regulations in India paints an optimistic picture of growth and enhancement. Collaborative efforts between the government, regulatory bodies, developers, and consumers emphasize a commitment to a sector that contributes significantly to the economy while upholding integrity and sustainability. This responsive governance structure aligns with citizen needs and market dynamics. Upholding and reinforcing these regulations will be pivotal for fostering a transparent, efficient, and fair ecosystem, vital for a healthier real estate market and a resilient economy. Despite its complexity, this evolving landscape paves the way for a more trustworthy and reliable real estate sector—a cornerstone for India’s prosperous future.
Source: financialexpress.com
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