Homebuyers will benefit as the cloud of the pandemic lifts off the real estate industry
In spite of Covid-related distress in some sectors of our economy, there are also signs of hope for many other sectors. In these difficult times, when there is an urgent need for job creation, especially for the blue-collar workers, the real estate industry can provide yeoman’s service in this regard.
Policymakers in India, both at the central and state level, realise this and there has been a benign environment for homebuyers for quite a few years. The times are ripe for homebuyers to buy properties, as the current low interest regime, reduced stamp duty and registration cost, PMAY CLSS benefits are making it really beneficial to go for one’s own home now.
However, we must remember that the economy is cyclical and the current environment will not last forever.
Real estate: Reasonably Priced Asset Class?
Even while the real economy is not completely out of the woods, the stock market is jubilant and scaling new heights on a regular basis. Most of the equity assets, or equity-linked assets such as equity mutual funds, are on a high price trajectory right now. This may not be the right time to acquire these assets at high acquisition costs as the equity markets are cyclical and a downturn will surely arrive at any time.
Debt instruments, on the other hand, offer very poor returns right now as the interest rate is very low across the board. They cannot even promise to compensate for the inflation. And if the guidelines of the Reserve Bank of India and the experts are something to go by, this situation will persist for quite some time.
Even investment in gold is questionable as its price is stabilising after a long run of appreciation. It may not consolidate in the current price range for quite some time.
However, real estate has provided a steady return over the years in our country. Investment in properties is one of the best methods of beating inflation over a long period of time. Real estate investment performed across economic cycles every decade.
We have noticed that homebuyers are aware of these facts and buying homes is a priority for them. Real estate companies, home loan providers, and registration data in different states, including West Bengal, are testimony to it.
Stamp Duty cut: a Game Changer?
In a pleasantly surprising move, the West Bengal government, in the state budget proposal, announced major incentives to the homebuyers. It announced the reduction of circle rates by 10 per cent and reduction of stamp duty by 2 percentage points. The scheme will be valid till October 31, 2021.
Primary beneficiaries of these policy measures are surely homebuyers who will benefit in multiple ways. Reduction of circle rates and the stamp duty will have a multiplier effect and the benefit to homebuyers is substantial.
Stamp duty reduction is a game changer by policymakers and it has helped the homebuyers and the real estate industry and property registrations increased.
Model Tenancy Act Approved. Will it lift the Rental Market?
The Union Cabinet, on June 2, 2021, approved the Model Tenancy Act, in a move that is likely to revive India’s rental housing market by initiating a multitude of reforms.
The government issued a statement which said, “The Model Tenancy Act aims at creating a vibrant, sustainable and inclusive rental housing market in the country. It will enable creation of adequate rental housing stock for all the income groups, thereby addressing the issue of homelessness.”
States and union territories can adopt the Model Tenancy Act by enacting fresh legislation or they can amend their existing rental laws suitably.
As the government pursues its ambitious dream to provide ‘Housing for All by 2022’, it unveiled a draft tenancy law, in order to boost supply in the rental housing segment. The Model Tenancy Act 2019 aims to make renting more lucrative for both, landlords and tenants, by plugging the many gaps that currently exist in policies regulating the rental housing segment.
It is expected that the Act, as and when implemented by the states, will give a boost to the rental housing market in the country. It can also formalise the market and potentially open up vacant houses for rental housing purposes.
The Advantage of Gated Communities in Difficult Times
Housing complexes’ facilities are generally professionally managed and they follow safety protocol quite rigorously. Whether it’s Covid or a devastating cyclone like Amphan, gated communities are generally prepared much better with detailed planning to fight the crisis. Lapses will not be tolerated leniently by the members and the facility management team or company can be disengaged. Therefore, they are cautious about following guidelines.
Housing complexes are taking excellent steps to prevent Covid infection. In addition to cleaning and sanitisation of the premises, they are controlling outside entrants, and taking proactive steps to organise vaccination camps.
Being cooped up in our apartments is taking a huge toll on our physical and mental health. Most of us are killing time watching TV or on social media. Absence of enough physical movement is not only weakening our bodies but also weakening our immunity. This is totally undesirable in the current scenario when a pandemic is raging.
This problem is accentuated in standalone buildings where lack of open facilities makes it difficult to even take a stroll. Thankfully, housing complexes have adequate open spaces to take some form of physical exercise, or even to take a walk or jog. Although gyms and swimming pools are not recommended currently, one can surely do some form of free-hand exercise in the open air. This will help anyone to keep in shape, and maintain elevated immunity to fight any infection much better.
Another advantage of housing complexes over standalone buildings is the landscaped open spaces, gardens, open-air seating arrangements, and beautified areas for social interaction. It is possible to maintain physical distance while talking to friends and neighbours, and just be at peace with nature.
Buying homes in housing complexes actually enhances the quality of life of the residents. In Calcutta, homebuyers primarily prefer housing complexes over standalone buildings. Innovative amenities are changing the idea of high quality living extremely fast.
Real estate has again become a preferred asset for acquisition right now. Homebuyers are back with a vengeance, and the industry is looking forward with increased optimism.
Biplab Kumar is the Vice President of N.K. REALTORS