Making Aadhaar must for property deals might lead to further slowdown

The real estate sector is already finding it hard to deal with the impact of note ban, GST and RERA

The government is planning to make Aadhaar mandatory for property buying to curb benami deals, in a move that follows a string of developments that have delivered a body blow to the real estate sector. Many in the industry feel that after bearing the brunt of demonetisation, real estate regulatory authority (RERA) and goods and services tax (GST), this move could slow down the market further.

According to sources in the government, the government wants to link property buying to the buyer’s Aadhaar number so that a record of all transactions is made. While no concrete decision has been taken in this connection so far, sources say that the move can be made in the next few months.

Senior officials in the government further said that all papers related to properties would be mandatorily registered online, so that no one can buy a property without registering with the authorities.

Under the Benami Transactions (Prohibition) Amended Act, 2016, government agencies have the right to confiscate unaccounted properties. Also there is provision of imprisonment for up to seven years and a heavy fine. The government plans to incorporate all these provisions together and attach it to Aadhaar so that a check on benami transactions can be kept.

The real estate sector has not only been fighting the downturn in the last few quarters but is also battling policies that are leading to changes in customer sentiment. While many agree that these moves are necessary to clean up the sector, the rapid succession in which these changes are happening have had real estate players worried.

“In November we faced demonetisation which hit us hard. Now we are dealing with RERA and transitioning into the new tax regime under GST. If this also happens now, the chances of the sector reviving in the next two years are slim to none,” said a major Delhi NCR property developer.

Industry experts, however, believe that things would be better in a year’s time and the effect would only be on properties which are being brought with black money. “It is just going to affect those who want to invest their black money. The organised sector sees investments mostly from buyers who are the end users. They do not buy for investing the unaccounted cash. Still there might be some affect on the industry but it will not last for more than a year,” said Parveen Jain, president of industry body Naredco.      

Others also believe that GST after demonetisation and RERA would also clean up and simplify buying of real estate in country. “Although GST will bring the required transparency in the sector, the change will emerge only after the first few months. After the successful implementation, we foresee the investors re-entering the sector. We are confident that GST will have a positive impact on the sector in the medium to long run and prices will start increasing moderately after a 3-year price plateau,” Sunil Mishra, Chief Strategy Officer, PropTiger.com, Housing.com and Makaan.com.