Chennai: Real estate industry, which has been the priority investment mode in the state of Tamil Nadu for over a decade, lost its fascination during the year 2017, thanks to the new GST regime, hike in registration duty and sudden sand scarcity.
The waning 2017 also saw the new Acts passed by the Central and state governments to regulate the industry.
The industry that woke up in the year 2017 after receiving a heavy beating from the demonetisation announcement, suffered more blows as the Madras high court staying registration of unapproved plots and layouts affecting business in the state. When final injunction on registration of the layout and plots came out, most of the construction projects have been halted.
Although the court has allowed providing approval for the plots sold before October 21, 2016, state housing department's apathy played spoilsport, as only a handful of plots have been approved in the state against a whopping 14 lakh unapproved plots awaiting approval.
Goods and services tax thrown up by the Central government has also taken its toll on the real estate industry. Eighteen per cent GST on the flats made the investors ‘repulsive’ to real estate business. Investors who were going to the second and third property have become hesitant to buy new properties as they are forced to pay 20 per cent tax including GST.
Although the 33 per cent slash in guideline value that came into effect from June 9 had brought initial hope, the hike in registration duty annulled the benefit of new guideline values.
While GST and higher registration duty, among other factors pulled the industry to further downhill, unprecedented shortage of river sand during the last quarter of the year almost paralysed the business. State government's announcement of the opening of 70 new sand quarries and subsequent high court's ban on new quarries left the realtors baffled; ore than 60 per cent of business has been lost.
The Madras high court, by going a step ahead, also had advised the state to stop sand mining within six months. With newly embraced m-sand yet to gain momentum, the real estate industry that needs 40,000 loads of sand has been catered with a meagre 16,000 loads a day.
Amid all the deterrents, the real estate industry had a fruitful 2017, in a perception of the customers. The Real Estate (Regulation and Development) Act, 2016 (Rera), which came into effect from May 1, has bridled the industry, which enjoyed utmost ‘freedom’ previously.
Tamil Nadu had lagged behind other states in realising the Act, as the state took weeks to ratify the Central Act. However, the government has instituted the Tamil Nadu Real Estate Regulatory Authority in the state, the appellate body under the act yet to be institutionalised.
