Four reforms to make secondary real estate market transparent

Like the primary real estate market in India, the secondary market too has witnessed a slump. While new regulations such as RERA address the primary market, the secondary market lacks any sort of formalisation or transparency. The secondary market isn't small by any means - secondary transactions added upto a mammoth 72 per cent of overall transactions in Delhi NCR in 2017/18 while in Mumbai MMR, such sales formed 57 per cent. Many prefer buying a re-sale property since it is ready-to-move and thereby eliminates the risk of delay that has bled the primary market over the last four years.

Industry body FICCI, along with Grant Thornton and escrow platform Escrowffrr, has now come up with a report with ideas on how to go about improving transparency in the secondary market. During the survey, it found that over 54 per cent of the respondents felt that while buying a resale property, determining authenticity of the deal, trust on the broker, and ways to mitigate the financial risk played heavy on their minds.

Here are the report's four recommendations:

1. The government should focus on mandatory digitisation of property records  to reduce legal challenges.

2. GST for secondary real estate needs rationalisation - the effective tax rate has increased from the pre-GST 11 per cent (VAT, service tax and stamp duty) to 18 per cent (GST and stamp duty) now. The stamp duty should be subsumed in the GST.

3. The report suggests mandatory escrow mechanism to protect all the parties involved in a sale. This could usher in transparency while reducing litigations.

4. The government, the report suggests, should look at bringing in a single licence fee for real estate agents across the country to match global standards.