RERA effect on NRI Investment in REAL ESTATE sector in India
In recent times, the Indian real estate sector, has observed a lot of reforms, more so after the institution of the Real Estate (Regulation and Development) Act, 2016 and Goods and Services Tax (GST). Predominantly, the RERA has come out as ointment for the Real Estate Industry which has been in a turmoil for last decade.
After the Application of Real Estate (Regulation and Development) Act, 2016 in India there are bright chances of increase in the interest of Non-Resident Indian in Indian real estate sector. With transparency entering the realty sector, it is certain that the number of NRIs planning to buy property back home will increase.
Parveen Jain, Vice-Chairman, NAREDCO (National Real Estate Development Council), stated that as RERA will ensure timely delivery of projects and also all the information will be accessible online, this will enhance the confidence of NRIs who are planning to invest in the real estate market in India. But, the GST could have a negative influence on the purchasers, as there could be an increase in the price of the properties. Currently, potential buyers pay 12 per cent GST to developers if they are thinking to invest in a property which is under construction. Conversely, no GST is charged on the fully constructed property.
RV Verma, prior Chairman of the National Housing Bank, has a distinct take on the GST. According to him, the application of the GST in the construction and real estate industry will ensure benefit to the sector and its numerous stakeholders. This, in turn, will ensure greater transparency in valuing the transactions, as it will provide perquisites to the builders for declaring fair and real valuations. This will lead to more transparent and efficient pricing with the suppliers of residential housing standing to benefit from the input credits.
The NRI Verma, who is also a consultant to the World Bank, stated that the NRI should keep in mind certain factors while purchasing a property in India. He said that the NRI community should have access to the information about the builders, the status of various approvals and their track record.
Chairman, ANAROCK Property Consultants Private Ltd, Anuj Puri, said that NRIs interest in residential properties is not so much on investment growth as compared to owning a house for themselves and their families back home. The fact that residential property prices in India have reduced and that the developers are flashing highly appealing offers, has worked very well for such buyers.
Hence, the introduction of RERA has come out to be a real market force, and the transparency it brings will induce residential real estate back to the center market and this change will fetch the interest of NRI’s in Indian real estate market. Now many developers in India are coming up with projects which are at par with international standards, keeping in mind the NRIs preference of healthy lifestyle.
Note – Please note that the above article is for education purpose only. This is based on our interpretation of laws which may differ person to person. Readers are expected to verify the facts and laws