Policy changes to attract NRIs to Indian realty in 2017
- Mona Jalota -
The Indian property market has always been quite attractive for non-resident Indians (NRIs) who are keen to have some roots in their home country. The reasons for NRI investments could be varied right from upgrading their family home, offering a better lifestyle to their parents, to having a signature property on their back home.
To address whether the current spate of reforms would have a positive impact on NRIs, it is essential to understand the typical concerns of NRIs investing in India. So far, the common concerns of the NRIs investing in India, have been the opaque nature of the business, lack of information, no concept of standardised due diligence, untimely delivery and completion of projects with tedious or no legal recourse for buyers. Especially for NRIs the cumbersome nature of follow-ups with developers for unfinished projects was one of the biggest demotivation to invest in their home country. The fundamental question is whether NRIs will be more confident in making an investment decision with policy changes such as RERA and GST attract NRIs to Indian realty in 2017? The government has largely addressed most of the above concerns by introducing some of the key policy changes including the Real Estate Regulation Act (RERA), and the Benami Transaction Act, REITs and the recently introduced the goods and services tax (GST).
RERA or the Real Estate Regulation and Development Act 2016 (RERA) will ensure regulations in this largely unregulated market. The purchaser will be more protected and greater transparency in the sector will be visible. RERA will put accountability on developers in terms of financial disclosure, timely development of projects and maintaining good corporate governance practices. While, GST is the single-biggest tax reform to be ever introduced in India. GST aims at eliminating the difference in indirect taxes applicable across states. The real estate sector stands to benefit from the fact that GST would provide more clarity on tax-credits for real estate transactions and allowance of input credit will reduce the price of properties.The Benami Transactions (Prohibition) Act provides an effective regime for prohibition of benami transactions. The amended law empowers the specified authorities to provisionally attach benami properties which can eventually be confiscated. Besides, if a person is found guilty of offence of benami transaction by the competent court, he shall be punishable with rigorous imprisonment for a term not less than one year but which may extend to 7 years and shall also be liable to fine which may extend to 25% of the fair market value of the property. Finally, the introduction of REITs (Real Estate Investment Trusts) will also have a huge positive impact on the Real Estate sector. REITs will open up a platform that will allow all kinds of investors – even those with smaller budgets - to make safe and rewarding investments into the Indian real estate market. REIT will allow investors to start with as small a sum as Rs. 2 lakh to secure units in exchange.
For NRIs, the investment sentiment is greatly boosted by the reforms that have resulted in greater transparency and the amended rules and regulations have greatly simplified the purchasing processes. The government has also taken bold steps like demonetisation to improve the confidence in the Indian realty market that will make NRIs more confident while investing in the Indian market. Additionally, the lenient FEMA policies and relaxation of laws by the RBI regarding property purchased by NRIs has resurrected the NRI interest in the realty market.
About the AuthorMona JalotaAuthor & Entrepreneur
Mona Jalota, Director - International & NRI, Residential Services, Colliers International India , A highly experienced Sales and Business Development person with an extensive experience in all verticals pertaining to Local and International residential Real estate, gained from the last 8 years. Has strong leadership qualities, solid industry connections and excellent administration and management skills.
Disclaimer : The views expressed by the author in this feature are entirely her own and do not necessarily reflect the views of INVC NEWS.