In the last two years, the Indian real estate market has seen major transformations. With the implementation of policies like RERA, GST, PMAY housing scheme and others, property buyer’s confidence has become stronger than ever. While RERA and GST were the major highlights of 2017, other key reforms like the National Urban Housing Fund, REIT, Insolvency, and Bankruptcy code were the developments of 2018.
Here’s a look at the Major Reforms that Shaped Indian Property Market in 2018:
Formation of National Urban Housing Fund
In February 2018, the Union Cabinet has given their approval for the formation of National Urban Housing Fund (NUHF) for Rs.60, 000 crores. This fund was created to facilitate requisite funds in next four years for different verticals i.e. Beneficiary Linked Construction (BLC), Affordable Housing in Partnership (AHP), In-Situ Slum Redevelopment (ISSR) and Credit Linked Subsidy Scheme (CLSS) and construction of houses to address the gap in Urban Sector progresses smoothly.
Amendment in Insolvency and Bankruptcy Code
In August this year, the government has amended the Insolvency and Bankruptcy Code under which homebuyers got recognition as financial creditors to the real estate developers. The reform brought cheers amongst home buyers as they now acquire equal status like banks and other financial institutions while recovering dues from any real estate firm.
Approval of RERA by North-east states
States like Arunachal Pradesh, Meghalaya, Manipur, Mizoram, Nagaland, and Sikkim, who earlier disapproved to apply RERA have given their nod for the creation of the act in their respective areas.
India’s debut to REIT Club
Almost after four years since its notification and continuous effort by the central Government, India’s first REIT was signed this year between Embassy Office Parks and US private equity firm Blackstone Group in September. With this, India joined the league of other global REIT markets like US, UK, Singapore, Japan, Australia, and Canada.
Real Estate Investment Trust, are actually those trusts that own and operate a portfolio of income-producing real estate. According to experts, this will lead to the formalization of the real estate market of India and will bring in more investment.
GST cut for Affordable Housing Projects
At the start of the year, the GST council has provided relief to the home buyers by cutting the rate from 12% to 8%. The new rate is now applicable on all the affordable housing projects constructed under the CLSS for Economically Weaker Sections (EWS) / Lower Income Group (LIG) / Middle Income Group-1 (MlG-1) / Middle Income Group-2 (MlG-2) under the Housing for All (Urban) Mission/Pradhan Mantri Awas Yojana (PMAY Urban).
With the new GST rate, buying a home now became more affordable for the prospective homebuyers in this segment.
The increase in Carpet area for homes under PMAY
Another major development which led to a boost in affordable housing projects is the increase in the carpet area of the homes. In case of MIG I, it was increased from 90 sq mt (968.752 sq ft) to 120 sq mt ( 1291.668 sq ft.), on the other hand for MIG II, it was increased from 110 sq mt (1184.03 sq ft) to 150 sq mt ( 1614.585 sq ft).
With these key reforms, the Indian real estate market has displayed a positive growth pattern in 2018 keeping the momentum continue for the coming year ahead.