Real estate has always been a favourite avenue for the investors to park their funds, as it guarantees a good return over a short time-frame. The sector has also been much dear to the corrupt black money hoarders to stash their black money, especially through the route of benami transaction. Adding fuel to the fire, there was no regulator to regulate the sector prior to November 2016, the month in which the real estate rules came to be executed.
The trinity of the aforementioned reasons culminate in form of an inordinate surge in the price of real-estate and housing therefore failing to cater to the demands of increasing urbanisation. Most of the houses which are bought under benami transactions remain vacant and does a double whammy.
One, it gives legitimate to a property owned legitimately by a person through “illegitimate money” provided by the person. Secondly, as it mostly remains vacant, it adds pressure on the existing houses to house the people coming to the cities in search of jobs and education. The absence of regulation on the sector gave the impunity to the developers from any faulty/delayed construction.
This year is historic in context of “real estate sector” because of the passing of two bills – Benami Amendment Act and the Real Estate Act.
While the former seeks to curb the misuse of black money in transacting benami property, the later seeks to regulate the sector by the setting up of a regulatory authority. Benami transactions have been explicitly defined and the methods for implementation has been drawn.The Benami Amendment Act would dissuade people from entering into benami transactions as the act mandates jail/fine for those involved.
So the colossal number of houses held by the corrupt will come into the free economy and will be put into use to cater to the housing demands of the people. This is turn could lead to a decline in the prices of real-estate leading to more demand from the consumers. Real estate rules will empower the customers as the onus will lie on the developer to complete project in a time-bound manner and will be liable for any defect in the development.
The way two acts would impact the sector will depend on the way the rules are executed by the authorities. If the demand of growing urbanization, Smart City and Housing for all has to be met, real-estate have to play a pivotal role.