Real Estate

Aadhaar linkage may stifle secondary realty sales

Bindu D Menon Mumbai | Updated on January 09, 2018 Published on November 27, 2017

Sales in secondary property market are largely undervalued to avoid payment of taxes

Developers optimistic of long-term gains

As the government is mulling to link property transactions to Aadhaar, market watchers note that while the move would help in weeding out benami property transactions, it may have an impact on secondary or resale property market.

Sales in secondary property market are largely undervalued to avoid payment of taxes and as much as 30-50 per cent of the total value is typically paid in cash.

Slowdown likely

Property brokers and players BusinessLine spoke to pointed out that mandatory linkage to Aadhaar may cause a slowdown in resale market.

Last week, Union Housing Minister Hardeep Puri indicated that all property transactions would be linked to Aadhaar soon to weed out the possibility of benami transactions.

Nandan A Piramal, Director - Sales & Marketing, Peninsula Land Ltd, said, “We support the government’s initiative to link Aadhaar card with all property transactions. It is an excellent step towards creating a more transparent environment that will bring in accountability in real estate dealings.”

His views were echoed by Amit Ruparel, MD, Ruparel Realty. “This act will not only help to identify forged documents but also avoid unauthorized buyers,” Ruparel said.

Unregulated market

Interestingly, even though the primary real estate make comes under the regulatory framework via RERA, the secondary market has been left out.

Divya Seth Maggu, Associate Director, Valuation & Advisory Services, Colliers India, said, “To avoid paying higher taxes and registration fees, a number of properties were registered at lower prices than the actual transaction value. However, now with Aadhaar already being linked to bank accounts, mobile connections, PAN cards, subsidy accounts, etc, the proposed linkage to property deals, will help in curbing black money transactions in real estate.”

“With the recent policy changes that have impacted the sector considerably, most investors have already disappeared and the end user dominates the market today. There is a slowdown in the sector in the last few quarters and with this move, the overall time for revival, both in terms of sales and price appreciation would lengthen,” he added.

Land record digitisation

Developers also want land records be digitised for optimal efficiencies.

Ashish R Puravankara, MD, Puravankara Ltd, said, “We see this move is in the right direction for the industry as it will further bring transparency. The key here is completion of digitisation of all land records, which may be easier in metros but could be a daunting task in non-metros. Post-digitisation and Aadhar linkage, developers securing land for development should see efficiencies in securing land titles, as there should be lesser ambiguity on ownership of land. ”

As per data, almost 90 per cent of Indians have Aadhaar numbers.

Surendra Hiranandani, CMD, House of Hiranandani, said, “Aadhaar linkage will minimise the scope for fraudulent and benami transactions and ensure foolproof property titles for the buyers. Aadhaar has already been mandatory by the government for various schemes and data provided by it will give crucial information on demand and supply in any particular region as well the pricing trends in the market. It is also important to digitise the data pertaining to land and property simultaneously so that it becomes easy to monitor and identify the authenticity of the deals.”

Long-term gains

Hiranandani noted that post-demonetisation, the government has adopted a series of measures to curb the use of black money.

“While it has hampered the economy in the short term, we are hopeful that these measures will be profitable in the long run. There has been a robust rise in investment inflow from both foreign and domestic institutional investors owing to the policies introduced by the government,” he added.

Published on November 27, 2017
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