Ever since the outbreak of the COVID-19 virus in China, and its spread across all parts of the globe, not only have millions of lives been lost, but economies across the globe (even those of well-developed nations) have been hit badly. Very few industries have been left completely untouched by the effects of the novel Coronavirus. This includes the real estate sector. In India especially, the real estate industry (which was already in a bad state before the pandemic hit the country) is seriously struggling. Owing to the lack of any modifications to the existing policies, the Indian real estate market has remained in a state of stagnation. Other challenges that have contributed to this include the failure to address the liquidity crisis and perhaps most important of all – failure to implement policy reforms. 

Many anticipated 2020 to be a good year for Indian real estate. The recent nation-wide lockdown which was imposed, however, did not do it any good. With numerous projects (both commercial and residential) being delayed, all construction activity and sales, have come to a complete standstill. With numerous MNCs and other SMEs having chosen to offer their employees work from home options, lease extensions for office spaces have been deferred, dealing a massive blow to the commercial real estate sector. Additionally, with social distancing norms being put in place, people wishing to search for homes haven’t been able to do so, as a result of which the residential real estate market has also been affected. The question therefore arises, if now is the right time for reforms to be implemented in the way the Indian real estate market functions and operates.

The State Of The Residential Real Estate Segment 

For a long time now, the residential real estate market in India has been affected by excessive bureaucratic red tape, registration charges, delays, etc. This has made it quite difficult for first-time real estate buyers who constitute the majority of all real estate buyers to make purchases. Archaic procedures that have been in place for decades seem to be at the heart of this issue. The first challenge that any real estate reforms should look to address, should be these procedures that cause immense delays, corruption, and a general lack of trust in the system. 

Reforms In Real Estate Taxation

Although taxes are part and parcel of the process all over the globe, they can be quite a hindrance to growth and stability when levied excessively. Not only are those looking to purchase real estate hampered, but also those seeking to sell real estate. Apart from being excessive, the existing procedures to register and pay taxes are also cumbersome and take weeks if not months to complete and be done with. 

Apart from the challenge posed by taxation to growth in the Indian real estate market, exorbitant stamp duties, registration charges, and other fees, also need to be addressed by reforms. It is estimated that in most states across the country, every one of these charges put together causes the price of real estate to increase by as much as five to eight percent, not to mention the fees that will have to be paid yearly through property ownership taxes, etc. 

While most people might be under the impression that any reductions to these taxes through reforms will result in the government’s revenue taking a beating, the fact of the matter is that such excessive taxations are also detrimental to the economy. This is because they discourage prospective real estate buyers and sellers who are seeking to make purchases and sell their real estate respectively, less keen to do so, causing a slowdown in the real estate market. The government, therefore, will have to address all of these issues, if and when it chooses to bring policy reforms into place, that are aimed at helping the real estate market grow and flourish. 

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