Sunil Dhawan | economictimes.com|Dec 03, 2016, 08.17 PM IST
2016 brought good tidings to home buyers. A proactive government and vigilant courts took steps expected to bring down home prices, make housing market more transparent and cut down delays in delivery. In a largely investor-driven market, now end-user will be the king.
The primary market is likely to remain unaffected by the demonetisation shock as it is largely financed through banking channels. But unorganised builders and the secondary market, both of which have been awash with black money, will take an immediate hit. Here’s what the impact could be.
As it is, affordability in residential sector is at a five-year high as income growth over the past five years (10 to 12 per cent per annum) has outpaced property price inflation (-10 to 10 per cent), leading to a demand-led recovery.
2. The Benami Transactions (Prohibition) Amendment Act, 2016
Tough times are ahead for those who have acquired assets beyond known sources of income. The new law, designed to curb black money, has a provision for up-to-seven-year imprisonment and fine while the amended law had only three-year imprisonment or fine or both.
The amendment allows the government to confiscate properties or assets held in fictitious or another person’s name to evade tax and hide unaccounted wealth. The act will cover movable, immovable, tangible and intangible properties and also include any right or interest in such property.
3.The Real Estate (Regulation and Development) Act, 2016
The new law puts in place institutional infrastructure to protect interests of home buyers. A Real Estate Regulatory Authority will enable buyers who have invested in real estate projects, including existing ones, to secure interest at 10.9 per cent per annum for delayed possession.
The law will bring transparency in real estate transactions, reduce litigation and speed up delivery. It may take some time to impact the market as all states, barring Gujarat and Uttar Pradesh, have missed the October 31 deadline to notify the rules and operationalise the Act.
4. Warning from courts
In 2016, courts read the riot act to property developers. A court direction to developer Supertech sums it all up: ” You sink or die , we are not concerned. You will have to pay back money to home buyers. We are least bothered about the financial status.”