Secondary real estate market isn’t small by any means. Then why it should be left unregulated?
Industry body FICCI, along with Grant Thornton and escrow platform Escrowffrr recently held a conference in Delhi, where Thornton-Escrowffrr presented a report titled Improving Transparency in the secondary real estate. The report showed that as many as 72 percent of real estate transactions in Delhi-NCR were concluded in the secondary segment in 2017-18 while in Mumbai MMR, such sales formed 57 percent.
The secondary real estate market offers a thing that primary real estate seldom does- surety of ready-to-move-in property. It is the possession of ready-to-move-in property immediately after the transaction that drives home buyers to ditch the promise of freshly-made houses from developers and opt for investment that otherwise usually involves a lump sum amount.
According to the report presented by Escrowffrr, over 54 percent of the respondents felt that while buying a resale property, determining the authenticity of the deal, trust on the broker and ways to mitigate the financial risk played heavy on their minds. In order to regulate the secondary real estate market and to improve transparency, industry body FICCI, along with Grant Thornton and escrow platform Escrowffrr, has come up with these following new ideas:
- Mandatory Digitisation:
The government should focus on mandatory digitization of property records to reduce legal challenges.
- Rationalisation Of GST:
GST for secondary real estate needs rationalization. The effective tax rate has increased from the pre-GST 11 percent that included VAT, service tax and stamp duty to 18 percent GST and stamp duty. The stamp duty should be subsumed in the GST.
- Mandatory Escrow:
The report proposed mandatory escrow mechanism to protect all the parties involved in a sale. This step should improve transparency and reduce litigations.
- Single License For Brokers:
The government, the report suggests, should look at bringing in a single license fee for real estate agents across the country to match global standards.