We live in a world where owning material things is given much importance, like owning one's own home. In India, people give a lot of importance to the real estate even if it's amidst a pandemic. We find a great deal in converting our liquidity into assets, and what's better than investing in something that you can proudly say is yours.
When we talk about real estate we usually think about the development of land in relation to immovable property, but various aspects include lease, sale, mortgage, license, etc. With an increase in population, there is increased growth of real estate. The laws to govern real estate are smooth and help in better functioning of immovable property. Considering today's scenario where the whole market is affected due to the Covid-19 crisis, it's time to check into the laws and policies of immovable property. Since India is a country with diverse laws, acts with aspects of devolution and inheritance, this draws a large influence from history. With various years of judicial precedents, there are various aspects of real estate, which are either binding or have a strong impact on our society.
Real estate laws come under the combination of Federal and State-specific laws; this is in accordance with Article 246 of India's Constitution. The term land is a matter of the State List of the 7th schedule to the Constitution of India. While Transfer of Property, registration deeds and documents, contracts other than agricultural lands, fall under the Concurrent List of the 7th schedule of the Constitution of India.
RERA Act 2016
There has been a revolutionary change in the real estate sector by enacting the Real Estate (Regulation and Development) Act, 2016 (Real Estate Act), which came into effect from 1st May 2017 and had around 34,600 projects and 26,800 real estate agents registered under this Act. RERA came into place when the terms and conditions of lease and sale-purchase were only in favor of the builder after seeing this. There was a dire need for updated rules.
Objectives of RERA Act 2016
· Mandates every project to be registered with their respective state offices within three months of the Act's commencement.
· It protects the interest of the homebuyers and boosts investments in the sector.
· It brings about provisions like completion and delivery of projects, making information available to the buyers, government approvals, land title status, and consent of 2/3rd of the allottees on any alteration or addition of the project. Such provisions to bring transparency and accountability in the real estate sector.
Policies under RERA Act 2016
· Under RERA, registration of land by builders is made compulsory, and this Act provides duties of the promoters. The registration under this Act can be exempted in certain cases, e.g., the area of land is too small.
· The Act regulates the selling and giving possession of the property to the purchaser. In case there is a delay in giving possession, the builder has to provide a penalty to the customer/buyer as per the guidelines provided under the Act. Under the RERA, real estate agents also have to get registered.
· The RERA provides for separate real estate courts for property disputes, and the special courts established under RERA has jurisdiction over the same. For such disputes, the district courts do not have jurisdiction, and hence they cannot pass an injunction.
Section 3 mandates prior registration of the real estate project with RERA, and it restricts builders and promoters from advertising any of their property. Section 3(2) states a certain exception from registration.
Section 9 of RERA mandates registration of the real estate agent; without obtaining registration, the agent cannot facilitate any purchase or sale of any property under this Act.
The Act entails punishment on the failure of registration of the project. It states that if the promoter fails to register the project under section 3 of RERA, then he shall be liable for a penalty which may extend to 10% of the project's estimated cost. It also punishes you for furnishing false information during registration.
The formulation of the Real Estate Act and the recent judicial scrutiny of the alleged unfair practices carried on by builders have been exemplary. The Real Estate Act beneficial legislation is being liberally interpreted by the Judiciary. Every effort is being made by Judiciary to mitigate difficulties being faced by homebuyers in obtaining possession of their homes for which they shell out their investments and incomes. Hence, the Act and the judicial dictums have, to a great extent, strengthened the position of homebuyers. Even in today's time where the world has been dealing with Pandemic India has registered to be with higher levels of transparency observed in India due to regulatory reforms, enhanced market data and sustainability initiatives not only that it is ensuring extremely positive signs of how much India has covered in the real estate sector and a strong base in which to build on transparency gains. But pressure exists from investors, businesses, and consumers to further improve real estate transparency to compete with other asset classes and meet heightened expectations about the industry's role in providing a sustainable and resilient built environment in the age of COVID-19.
Real Estate vs. Pandemic
The government gives great importance to the real estate sector as it contributes largely to the country's GDP. To kick start the new financial year, the 2020 budget was expected to bring some positive change in terms of sales and tax reforms. The COVID-19 caused the great depression to the market. Social distancing accelerated the decline of brick and mortar retail and reduced the foot traffic of lodging and indoor properties; work from home introduced uncertainties for office space, disrupting rent payments, and threatening business models. But the feared rent apocalypse for residential and commercial real estate has created a buzz in the whole industry.
Surprisingly the Indian market is not at all doom and gloom. Before entering the pandemic, the Real Estate industry had seen a relatively better shape except some like malls, retail stores, etc. Commercial and Residential Real Estate has been given some appreciation and concession as a 1.5 lakh tax benefit was extended on housing loans also, the Maharashtra government announced a 1% slash in stamp duty charges. As per the data, tremendous growth is expected in India after China, as most giants are looking into India as the next investment destination. Many big brands from developed countries have passed instructions for shifting their manufacturing unit from China and looking into suitable manufacturing setups in India; this will be beneficial in terms of employment, raw materials, and demand for residential and commercial properties.
Most importantly, there will be net cash flow growth. Property price will be appreciated, credit enhancements will be higher, and the average loan values will be lesser; it will bring a new change in the finances of the country. Thus investments done at this time will be beneficial for both the buyer and seller.
We can see that the laws governing Real Estate are wide, one has to focus on legal compliance if they are to deal with Real Estate. RERA has been the starting point for real estate laws, and that has helped not only consumers but also Builders in making the procedures less cumbersome. Though the COVID-19 pandemic bought an abrupt halt to the real estate industry, it accelerated the declines it faced created new challenges for other sectors. However, the fallout has not been consistent, but it has given some good benefits across sectors and geographies. The government sector has been extraordinarily supportive, so massive downfall is not anticipated in the market. India is learning new ways to manage the virus and manage the various financial sectors of the country. At the same time, the shock has been severe. So have been the policies working for some good range of recovery and protection for commercial estate, renters, lenders, and owners so, therefore, its win-win situation for all involved in this procedure.
KC Law college Mumbai.
· https://iclg.com- real estate laws and regulations
real estate laws- an overview by KhyatiDhuparr-
· Property reforms - http://indiapropertyrights.org
· The Gazette of India