5 Biggest Events That Impacted Real Estate In 2016

The real estate in India had gone through a lot of ups and downs in 2016. From policy changes to new laws and reforms, real estate stakeholders are calling this year a big roller-coaster ride but they expect the coming year to be more stable. As initial days of 2016 saw step up in real estate transactions owing to the passage of the Real Estate Bill, realtors hoped the entire year would pass in the same manner until the demonetisation happened.

Here are few other events that will leave their mark in the history of the Indian real estate in 2016.

Real Estate Bill became a reality

The Real Estate (Regulation and Development) Bill, 2016, came into effect this year. Expected to be a game-changer for the industry, the law is expected to bring more transparency into the system. The central and respective state government have yet to formulate rules, but most of the states have notified the guidelines. Being a home-buyer friendly bill, the industry is hailing the move and expecting it to bring back the buyers to the market. With more transparency and accountability, realtors have to refrain themselves from getting involved in unethical practices as this will lead to a stiff action against them which includes penalties and legal cases against them. This is another reason behind the trend of increased preference for the projects which are nearing completion rather than those which are ready-to-move-in. As all the under-construction projects are covered under the Act, there are little chances of getting duped due to project delay.

Also read: Time to Act: Part Of Real Estate Law Comes Into Effect

Smart Cities took shape

One of the most talked term in the real estate in Narendra Modi's regime is smart cities. As the list of 100 cities came out in the initial three months of 2016, the rest of the year witnessed the selection method and criteria for selecting specific smart city in different phases. Cities qualified in phase I and phase II have been allocated funds and soon there will be a visible change. The most interesting part of this scheme is the partnership that is being offered by the other countries to collaborate for developing the smart city. 2017 is expected to be more aggressive when it comes to smart cities development as the municipal authorities have been asked to submit the status report on groundwork being done. This will be directly influencing real estate prices in these cities as better infra often invites price appreciation.

Also read: 10 Challenges Before India's Smart Cities Mission

GST Bill and Benami Transaction Bill

Expected to get introduced in this winter session, Goods and Services Tax (GST) Bill failed to get tabled this season due to political slugfest post-demonetisation. The Bill will ring in the uniform tax regime in the Indian economy ranging from 5 per cent to 28 per cent. Although there is no clarity about the charges to be levied on the real estate, it is expected that properties will invite GST of up to 18 per cent.

Unlike GST, the Benami Transactions (Prohibition) Amendment Act, 2016, got the President's consent in August and came into force from November 1, 2016. With this amended Act coming into effect, it will expedite procedures to deal with benami property, and further help authorities to execute such procedures in a stringent manner. Ultimately, this Act will limit the use of unaccounted money which is often parked in the real estate sector.

Also read: Update: Real Estate Buyers Will Love GST Even If They Have To Pay More

Demonetisation drive

As the Prime Minister made the announcement to ban high denomination currency note, its impact on real estate was imminent. The immediate effect on the realty market was seen on the resale market and land deals where black money component was involved. Although in the long run, the move will flush out the unaccounted money from the real estate market, currently, the realty transactions have slowed down. However, with the introduction of Rs 2,000 currency note in the market, the industry is confused about its result and its impact on real estate as it might bring black money into the market as it will be convenient to keep cash logistically.

Also read: Govt Bans Rs 500 and Rs 1,000 Notes; Move Will Cure Realty Of Many Ailments In Long Term

Housing For All

Affordable housing, one of the ambitious projects of Modi-led government, has seen major development in the year 2016. Several states, including Kerala, Uttar Pradesh, Odisha etc., have come up with the low-cost housing plan, taking affordable housing dream to another level of success. Apart from this, to get support from private players, the government has announced several incentives for the developers of the affordable housing project. This includes 100 per cent tax exemption on profit, easy availability of finance, etc.

Apart from this, the cabinet approved Permanent Residency status to foreigners which will allow them to invest a minimum of Rs 10 crore to be brought within 18 months or Rs 25 crore to be brought within 36 months. Further, the foreign investment should result in generating employment to at least 20 resident Indians every financial year.

Also read: 7 Biggest Challenges Before Housing For All Mission

With 2016 ending on a positive note, 2017 is expected to bring more stable regime for home buyers and real estate developers alike.