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Wednesday, December 11, 2019

Regulate Real Estate


While policies for the housing sector are sound, their implementation is a problem
TSI | Issue Dated: January 5, 2014, New Delhi
Tags : Regulate Real Estate | Kushal Dev Rathi |

The Indian system has always followed practices which are based in its culture and tradition. We have a culture of saving which is based on the premise that our expenditure should never be more than our earnings. Our parents ingrain this principal right from the beginning.

Although it is changing with time, yet it remains intact in a lot of other ways. Real Estate is just an extension of this old Indian practice; it is here that requirement and saving both have been clubbed together.

With the upward trajectory of the country’s economy, people not only have avenues to earn money, it also given people the yearning for a better lifestyle. Once boys and girls get jobs their next aim is to settle down well and to help parents in affording a better lifestyle.

And real estate houses and plots have become the primary source of expending the money in search of all the above. It is a two-way process: parents buy plots or apartments in the name of their children so that they get a good amount of appreciation, which in turn might help the children to fulfill their wishes and obligations. The government too has been supportive. This can be best appreciated once we understand how much the interest on loans are and the amount of appreciation they get by way of their investments in the real estate sector.

A home loan which started with the interest as low as 6 percent has risen to the maximum of 10.5 percent but still remains in favour with the people. Appreciations on the investments made in real estate have been never less than 30 percent which means the calculations still favour the people.

But this does not mean that things are hunky dory because the issue of regulating the sector is a problematic one. It is indeed ironical that on one side there are very good policies which are beneficial to the people, but simultaneously it is these very policies, when it comes to implementing them, that all problems arise.
Examples of Noida, Greater Noida, Gurgaon and even Yamuna Expressway are a reflection of these good policies. But, I can say that there is still so much more that needs to be done.

In the real estate sector, people face impediments in the form of their work getting stopped or hampered; in return developers are unable to give their best for the consumers. People who can support and help improving the processes actually end up using delaying tactics and imposing unnecessary curbs, making the process lame duck.
Ultimately, it is the execution which is bad, not the policies. Builders are viewed as mulching cows by some people and often described as villains in the housing drama. Despite it, this sector has a great future. A country of 1.3 billion is a great asset, more so when the population is still rising. They are like billion hands of support which can give a big fillip to the economy. With a vast population, demands for housing units and land to construct is also higher. All of it helps in enlarging the scope and performance in the sector. Adding to the bright future of real estate is the fact that people with more money to spare and low interest returns on bank deposits are opting for real estate. If people have one house, they are going in for the second.

The concept of old age homes is also catching up as a phenomenon all across the country. And it is by no means confined only to urban centres; prices of land and houses have risen in cities like Lucknow, Kochi, Vizag, Jamnagar, Aligarh, Agra and many others. India is a land of family values and emotions play a significant part in buying property. People who are settled in businesses, land and property in the smaller cities have started looking for options close to their places and that is the primary reason why real estate is doing so well in such places.

Having said that, a lot is yet to improve. While there are regulators like RBI, SEBI and IRDA, there is still no independent and autonomous one for the real estate sector. This will enthuse confidence in the investors and developers and will help in setting standards and norms.

The absence of a regulator has allowed builders to run the sector at will. A regulator is beneficial for all the stake holders, buyers, developers and the country as a whole. People working abroad have shown an increasing interest to send their earnings back to their family members and it is obvious that they have been buying houses and apartments. Thus real estate is not merely an avenue for investment, it is also is a reflection of how well a country and its people are doing. This is in fact the right time to get all the parties together to examine these issues seriously and help improve working the real estate sector.

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Issue Dated: Feb 5, 2017