The real estate industry has undergone a lot of changes, both good and bad, in the past few years. While the sector has seen a lot of regularization and improved accountability, it has also been at an all-time low since 2012. The introduction of the Real Estate Act, GST, Relaxation of FDI regulations and launch of the smart cities plan, that should have had a positive impact on the industry failed to rescue the ailing industry. Even as the industry tried to cope up with its existing struggle, Demonetization happened. While experts claim that the move will benefit every industry, in the long run, its short-term impact on the industry has been nothing less than hazardous. With property transaction volumes falling by 30-50 percent, the industry is in dire need of some immediate help to 'remonetize' itself.
Here are five steps that can help the real estate industry quickly:
- Taxation Benefits
To give immediate help to the industry, taxation benefits can come in very handy. If the deduction limits under both Section 80C and 24 (b) are increased, it might have an extremely positive impact on the industry. For owner-occupied houses, if the deduction limits are increased from 2 lakhs to a substantial amount, it can change the dynamics of the owner occupancy vs rental occupancy market
- Decentralize Decision-Making
While the topic has been discussed on and off and several bills passed to empower Urban Local bodies, many states have not followed it entirely. One of the most fool-proof ways to expedite housing for all is to make states responsible for it
- Rationalize and regularize land prices as well as taxation
The land acquisition price is highly dependent on the location and hence needs to be regularized on priority. With the industry in need of cash flow, rationalizing location-based pricing can bring in a lot of new buyers to end the stagnation that the real estate sector is facing. In addition to land prices, it is imperative to regularize various duties and taxes like the stamp duty, value-added taxes, development charges etc. Another measure that can help is bringing complete tax transparency in the REIT structure
- Extra Commercial Borrowing to be made available for developers
If the developers have the benefit of availing 'Extra Commercial Borrowing', it could significantly reduce their borrowing cost and help pump in money in the industry. This will have an impact on both housing and non-housing segments and in return, benefit the industry as a whole
One of the simplest ways to regularize the industry is the fast and effective introduction of digitization of records. Labeling out government, forest, lake, public and private lands will make the process of approvals much smoother and faster. If the access to this data is made available to the public or relevant parties, it can help fast-track the entire development process.
It is imperative that people come together to bring one of the most stable investment sectors out of the pothole that it has fallen in.