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At a session of the Reboot Karnataka conclave, panellists concluded that the government needs to come forward with necessary support for India’s struggling real estate sector. In particular, the government is required to offer incentives to boost property sales. A major helpful move would be to decrease the charges on stamp duty.
The pandemic has caused huge losses to the real estate sector. While construction activities stopped or slowed down due to the lockdown, property sales have fallen steeply. Right now, a large number of potential buyers are delaying their plans for later due to financial distress. The lockdown has led to job losses for many, while others are at the risk of losing their employment or suffering severe losses in their businesses.
However, the demand for homes is still high. In fact, many individuals and families who used to reside in rental homes have decided to buy homes for the sake of their own health and safety during the pandemic. At this point, lucrative property deals would greatly boost sales and infuse the cash-strapped industry with fresh credit. One of the main demands by real estate players is for the stamp duty on properties priced below INR 35 lakhs to be decreased. The demand for affordable properties is already high and the reduction in stamp duty would persuade the potential buyers to purchase the properties.
The developers are also demanding adjustments to the taxes on construction material. Right now, acquiring these materials has already become difficult for many builders as imports are blocked. Banks need to be less hesitant in providing loans, both to developers and property buyers. While difficulty in securing loans makes it hard for the buyers to make their purchases, the developers often end up with stalled projects due to lack of credit arising from lack of adequate loans. The NBFC crisis has already put the real estate sector in a bad condition, with a huge inventory of unsold properties.
Several property taxes imposed on the developers result in higher costs of production. This, in turn, increases the property prices and makes them more expensive for the buyers. Often, projects are delayed due to delays in approvals from the government.
However, it might be noted that the real estate sector in Karnataka is quite well organised. The developers are highly respected and they work well with each other when needed. RERA Karnataka as well looks after the welfare of the builders and property buyers alike, protecting their interests. While properties registered with RERA must complete their projects timely, the deadlines have been extended due to the pandemic. It is expected that necessary measures would be taken and the real estate sector would revive quickly.
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