Indian real estate sector is governed by a mix of central legislations and
state-specific regulations. The Indian Constitution's concept of "land" provides
the basis for this system. According to Article 246, "land" is one of the
subjects covered by List 2 or the State List of the Seventh Schedule, which
prescribes the legislative subjects, the states are permitted to regulate.
from this, List 3 of the Seventh Schedule to the Indian Constitution, also known
as the Concurrent List, contains subjects that are governed by both federal and
state legislation, including "Transfer of property other than agricultural land,
registration of documents and deeds", "Contracts other than for agricultural
land", and related terms. Real estate in India is subject to a variety of
regulations since properties are intimately tied to issues regarding the land.
Since 2012, the Indian real estate market has been in decline.
This is a result
due to interplay of different variables like unemployment, a build-up of
inventory, the recession, a poor rental yield, murky taxes, and arbitration. As
a fallout of this, the returns or yields in the real estate sector have not
increased as expected. If we compare relatively, there is now less demand for
real estate. The recovery of builders' investments has slowed significantly as a
result of the decreased demand. Lack of transparency is the sector's main
The system was opaque in terms of cost, construction delay, building
quality, ownership, and legal disputes. The largest problem among these is the
delay in giving buyers their home. The number of properties under development
reached an all-time high over the past 20 years.
Real Estate (Regulation and Development) Act, 2016:
The Real Estate (Regulatory and Development) Act of 2016 (often referred to as
the RERA Act) was passed on 26 March 2016 and went into effect on 1 May of that
same year. As there was no specific law governing the Indian real estate sector
prior to this, it is regarded as one of the key pieces of legislation. The
issues of purchasing, selling, and registering land property are covered by real
A foreigner may invest in India's real estate market using the
Automatic route under the country's FDI policy, which implies that neither the
Reserve Bank of India nor the Indian government must provide their consent.
However, it is important to remember that such investments must adhere to the
FDI policy. In India, land is divided into a number of types, including
residential, commercial, and industrial areas.
Whether or not the land is
situated in a residential area, the owner of a land in India is obligated to pay
specific taxes in line with the State legislation. By using contractual
provisions, the landowners do their best to transfer some of their duty to the
party that is renting the property, but the owner of the real estate is still
- Macro-Economic Impact
The adoption of the Goods and Services Tax in conjunction with the RERA
initiative is seen favourably for the industry. Transparency and accountability
were the fundamental problems in Indian real estate sector, which have since
been resolved. RERA has had such an impact that when the website was first
introduced in the state of Uttar Pradesh, 15000 complaints were sent from the
Noida region alone in a single day. RERA, however, has had an unsatisfactory
reception in several jurisdictions. In Haryana, purchasers have expressed
dissatisfaction over the fact that RERA does not apply to them if they have
already moved into the house.
As a result, they are unable to protest about the builder's lack of services or
facilities. RERA has not yet been fully affected since each state is preparing
its independent legislation and standardized measures to deal with issues
related to the subject of land.
Provisions for Resource Sharing:
As a "quasi federal" country, it could be challenging to execute an act like
RERA in a fair and efficient manner all at once. Also, a bigger number of real
estate purchases is projected in the more developed states, like Maharashtra,
Tamil Nadu, Gujarat, Kerala, Karnataka, and Telangana, to mention a few.
Would the financial advantages from these progressive states be fairly
distributed to help other "less-developed" states in the sake of a shared
national aim of economic development? If not, how may India's strategic
interests be affected by a pattern of migration from less progressive to more
progressive states? These are some aspects where more clarity is needed.
Qualification of Real Estate Agents:
RERA puts in a mandate for real estate agents to register, but the Act falls
short of making mention in regard to compulsory certification of real estate
agents'. Real estate agents in OECD nations, even in small countries like
Singapore, go through rigorous training and public testing (which include
professional ethics, disclosure, and the mechanics of real estate laws).
For example, in the United States, both real estate brokers and salespeople must
pass a two-tiered test. Before receiving licences to practise and advertise real
estate in their state, all parties involved must first pass the state-organized
test. Moreover, breaking this rule might result in your licence being suspended.
Setting global-centric standards for real estate agents and creating a top-tier
talent pool for enablers is sensible and important as India opens its economy to
the rest of the globe. Although while real estate agents are currently required
to be registered, this does not vouch for their fundamental ability to manage
the complexity of real estate transactions.
A group of inexperienced salespeople and agents poses a significant danger to
domestic and foreign buyers and investors. Furthermore, it is considered biased
and against the interests of the purchasers when developers (their principals)
urge that projects be sold off-the-plan and completed as quickly as possible in
order to make quick sales commissions and "push" projects.
This new Real Estate (Regulation and Development) Act, 2016 legislation is
unquestionably a step in the right direction and is thought to do away with the
persistent problems of project delivery delays, consumer exploitation, a lack of
accountability, arbitrary procedures, and EMIs.
Although the Real Estate Regulatory Act (RERA) is a Central Act, each State has
its own version that attracts and encourages investment in the real estate
sector by re-establishing consumer confidence, safeguarding buyer interests, and
establishing the Real Estate Regulatory Authority and Appellate Tribunal. As a
result, there will be fewer lawsuits because of the strict rules and regulations
in this industry.
Consequently, the most important objective with the implementation of RERA was
to successfully create the Real Estate Regulatory Authority in all the states
within the specified timeframe, which regrettably has not been accomplished by
this point in most of the states. So, in order to achieve the goals of RERA, it
is important for all states to create these regulatory authorities.
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