A New Foundation: How Recent Government Policies are Reshaping Indian Real Estate

The Indian real estate sector, a key part of India’s economy, has undergone an evolution for the last many years. Many new governmental policies have been introduced in the hopes of ensuring transparency, affordability, and organization – especially in being investor-friendly. Highlights of this transformative evolution include, but are not limited to: the Real Estate (Regulation and Development) Act (RERA), and the government of India’s vision for, “Housing for All,” under its Pradhan Mantri Awas Yojana (PMAY).

The above outlines just a few transformation factors, but this blog post will expand upon the development and impact that came from government interventions; to show how they affect developers, homebuyers, and the effects on the market.

RERA: Ushering in an Era of Transparency and Accountability

RERA (Real Estate (Regulatory and Development) Act,) 2016 may be the most significant legislation to have impacted the sector in recent memory. It has proven to be a game-changer for the real estate sector. Prior to RERA, the real estate market was highly unregulated, with homebuyers susceptible to, for example, project delays, misleading advertising, and overall lack of accountability from developers.

Some of the key impacts of RERA:

– Transparency: Including sub-developer responsibilities amongst developers registering projects with the respective state RERA authority, developers must disclose the layout plan(s) and timeframe, and overall status of approvals. This process promotes transparency and guides buyers toward informed decisions.

– Financial discipline: One of features of RERA relates to ensuring the financial discipline of developers by requiring them to deposit 70% of the funds collected from buyers into an escrow account. This requirement is intended to prevent misappropriation of funds and ensures that funds are deposited solely for the purpose of the designated project.

– Timely project delivery: Whereas delayed project delivery was a common complaint of homebuyers prior to RERA, developers must now face serious penalties for failing to deliver their projects on time.

– Carpet area: RERA establishes a standard definition of ‘carpet area’ for developed units, ensuring that developers cannot exaggerate around saleable area or facts for buyers to only pay for actual usable space.

Grievance Redressal Mechanism: The establishment of Real Estate Appellate Tribunals provides a dedicated and time-bound method of dispute resolution between buyers and developers.

The introduction of RERA has definitely brought a renewed sense of confidence to homebuyers and has helped introduce professionalism and accountability to the real estate sector.

Why Government Policies Play a Critical Role in Real Estate

It’s not just about location…it’s not just about price; real estate is part of a very large ecosystem driven by government policy, because government policy can affect affordability, infrastructure, transparency, and how easy it is to do business.

The market has changed significantly with flagship initiatives like the Pradhan Mantri Awas Yojana (PMAY) and RERA to safeguard consumers and promote ethical development. If you know how to navigate these ecosystems, you can avoid trouble and position yourself to take advantage of timely opportunities.

Key Government Policies Driving the Indian Real Estate Sector

1. Pradhan Mantri Awas Yojana (PMAY): Making Housing Affordable

• Launched in 2015, PMAY aims to support “Housing for All” by providing subsidies and finance:
• Credit-Linked Subsidy Scheme (CLSS) allows anyone who qualifies to avail of a home loan at a lower interest rate.
• Rural and Urban: The scheme is available to households in both cities and villages.
• Market Influence: PMAY has spurred builders into producing affordable housing.
• Tip: First-time buyers should always confirm PMAY qualification; it may be able to save them lakhs in home loan interest.

2. Real Estate Regulatory Authority (RERA): Raising Transparency

Launched in 2016, RERA established organization in an area that was previously unstructured, disorganized and marred by misinformation and time delays.

• The mandatory Registration of projects gives a level of accountability to the developer, or other real estate entity.
• The Dispute Resolution mechanism provides legal relief to the buyer.
• Buyer Confidence: RERA has made entering the real estate world more reliable and safer than it was before RERA.The most useful tip of all – make sure to check if your project is RERA registered before you invest.

3. Goods and Services Tax (GST): A Unified Tax System

Previously, there were multiple taxes to consider when exploring real estate transactions and this made these transactions very complicated. After the introduction of GST, things are simple:

1. Input Tax Credit: Developers can now claim tax credits on input received which will circumvent or reduce the taxes that they will pay during the construction process.

2. Single Tax Rates: Instead of multiple taxes like VAT, Service Tax, etc., there is now a single system in place which makes pricing more clear.

3. Results: Ultimately, buyers will have better transparency on costs and developers have less unnecessary compliance costs.

My advice: Be sure to speak with a CA or a tax consultant to fully understand the GST implications on any purchases of under-construction properties!

4. Smart Cities Mission: Building Future-Ready Urban Spaces

The mission is to establish 100 cities with unified infrastructure and modern services.

• Infrastructure Improvement: Investments in transportation, sanitation, water and energy.
• Technological Integration: smart meters, intelligent traffic systems, digital governance.
• Real Estate Growth: Rising interest in purchasing properties in these cities and long-term appreciation.

Summary advice: if you invest early in smart city zones, you will likely make good gains over the long term.

5. Foreign Direct Investment (FDI) Reforms: Opening Up the Sector

India’s liberalized foreign direct investment (FDI) regulations have created a significant lure for global investors in residential and commercial real estate.

• Simplified Rules: 100% FDI is permitted in completed or completed-rental housing developments in certain conditions.
• Increased Capital Inflow: Office spaces made for “built-to-suit” commitments, retail, and logistics parks are all attracting substantial investments.
• Catalysts for Innovation: FDI is driving quality construction and modern design ideals.

Note: FDI activity trends within cities like Bengaluru, Pune and Hyderabad are good predictors of hot investment corridors.

How These Policies Are Changing the Real Estate Landscape

Affordability & Accessibility Are Improving

Subsidies, tax credits, and low-cost housing schemes are bringing homeownership within reach for more Indians.

Trust & Transparency Are at an All-Time High

With RERA and GST in place, buyers now enjoy greater clarity on timelines, pricing, and legal safeguards.

Smaller Cities Are the New Hotspots

With infrastructure projects expanding to Tier 2 and Tier 3 cities, new real estate markets are emerging rapidly.

Technology is Taking Over (PropTech Boom)

From virtual tours to online legal documentation, the government’s push for digitization is redefining how people buy and sell property.

Challenges That Still Need Attention

Implementation Delays: Programs such as PMAY and RERA seem like a great benefit on paper, but implementation can vary state to state.

• Regulatory Complexities: There may still be buyers overwhelmed by the documentation and various local regulations.
• Market Uncertainties: According to the FM, inflation, interest rates and patterns of global and domestic consumption may slow performance down.
• Tip: Take some time to understand policy evolutions and always be sure to consult with a trusted advisor before making a costly mistake.

How AroundTown Realty Can Support You

At AroundTown Realty, we support you to facilitate every part of your transaction from planning and buying a property

• In terms of real estate services, AroundTown Realty will offer:
• A realistic property search aligned with your needs, and budget.
• Advice on applying for benefits from PMAY or potential GST liabilities
• Getting all your legal and documentation done and confirmed once you’ve selected your RERA Home.

Advice on your new property and what areas to consider investing in near identified upcoming smart city and/or FDI hot spots

We want to transform your home buying or investment journey into a an informed, safe and fulfilling overall experience.

Final Thoughts

The real estate industry in India is transforming with various initiatives from the government. The advancement is undeniable, improved affordability, transparency, and better urban planning are among some of the shifts.

If you are considering purchasing a house or investing in real estate, this is your opportunity to act smart and invest with confidence! Let AroundTown Realty be your trusted resource in this journey forward.

FAQs: What You Should Know

Q: How does PMAY help buyers?
A: It offers home loan interest subsidies to eligible buyers, making homes more affordable.

Q: What does RERA protect me from?
A: RERA protects you from project delays, false claims, and lack of transparency.

Q: Has GST made buying a home cheaper?
A: Yes, especially in under-construction properties, due to simplified tax and input credits.

Q: Are smart cities good for property investment?
A: Absolutely. Their planned infrastructure and tech focus often lead to long-term value appreciation.

Q: Can foreigners invest in Indian real estate?
A: Yes, under relaxed FDI norms—particularly in commercial projects and REITs.

Ready to explore your real estate options?
Contact INVEST N ASSETS today and let us help you make smarter property decisions.