Guidance for Residential and Commercial Property

Reasons for stagnation of the Indian Real estate market

Image That Representing the gradual growth of real estate property's rate.

Rigid rules

Policymakers should now be increasingly concerned about the quality of urban living as India moves towards an urban future. There are many deterrents to building an urban India. Rigid Rules is one of them. Rules, which lay down how much, can be constructed and in which places along with regulations and essential permissions for constructions have created some obstructions in the housing segment. Seeking clearances from multiple department is very cumbersome and is a tedious process for the developers. Compliance checks have to be done for a lot of regulations and rules that often get revised and have to be paid quite steep charges and fees. Delays in grant of permission and rejection of applications without any clear reason is what developers are faced with often. This causes an increase in bribery in the process which leads to escalation of cost. The rules laid out with respect to land use often end up restricting supply of land and increases the cost of land too.

Heavy litigation

Real estate and land are subject to heavy litigation. Data collected from the Maharashtra region shows that 16% of projects and 31% of built-up space are stuck in legal dispute. In Mumbai these figures go up to 50%. On average, in Mumbai, a legal dispute has to go through for cases, which are in different states of resolution in different courts. And because of this projects get stuck in the legal system for long periods and construction projects in India take ages to complete.

Delays and malpractices

To deal with these issues, the developers have found a way around the system for completing their construction projects. They manipulate cash flow by raising funds from the sales of apartments that have not even begun so that they can finance other projects that are probably stuck halfway or are underway to solve the availability of cheap finance. All these delays and malpractices in the end affect the home buyers who have no clue about why our project is being delayed. To address these issues, state governments have set up regulatory authorities for real estate. Most of the developers have to register with this authority and also required to provide complete information on the projects that are ongoing. They can be charged penalties for failing to provide complete and accurate information about their projects.

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