What Ails The Resale Housing Market?
Despite being a legislation that may change the sector for good, the Real Estate (Regulation and Development) Bill, 2016, does not talk about the resale housing market, which is responsible for a large number of transactions.
PropGuide looks at a few points that lack clarity.
Transfer fees: Some developers have been found to charge arbitrary amounts in the form of transfer and documentation fees from buyers. They charge a hefty amount for resale units, making the purchase unfeasible for buyers.
Restriction on transfer: Developers have also been imposing restrictions on property transfers from original buyers by putting in terms and conditions in place. Property transfer is not allowed in many cases, unless a said percentage of the property value is paid or a particular stage of construction has been reached. This puts buyers in a tight spot as they have to keep the property irrespective of their financial condition. Until the developer agrees to register the property in favour of the new buyer, the transaction cannot be made.
No regulation of transactions: The Bill has regulated the properties sold by developers but there is a lack of clarity on properties sold thereafter. This leaves a lot of scope for sellers to manoeuvre transactions in their favour, making buyers pay more for resale properties.
Role of financial institutions: If the buyer has taken a loan to buy a property and now wants to sell it to a third party, the consent of the bank is also essential to complete the transaction. There have been cases of banks refusing to grant permission or charge a fee for doing so. A clear guideline on this could bring more transparency in this housing segment.
With more accountability and transparency in the resale deals, the segment could attract more investments.