Legal Rights: Real Estate Laws and Issues in India

Everywhere you go in Indian cities, you will notice that there are shopping malls, retailers and properties for commercial as well as residential use on display. Clearly, the Indian real estate market is expected to register a tremendous growth in the next twenty years, given the thriving outsourcing business and the growth in organized retail sector. The big question, however, is whether the Indian real estate laws are potent enough to meet the requirements of the changing times. Will they steer the real estate business towards actualizing its potential? Sadly, the answer is an emphatic “no,” since the country is still working with its outdated laws be it on land ownership, urban land ceiling, stamp duty and registration or rental property. So, what exactly are the problems plaguing our laws and what are their solutions? Let us find out.

Legal Rights and Problem of Lack of Clear Titles of Ownership

One of the most prominent problems in the Indian real estate sector is the lack of clear land ownership or titles (more than 90%), which leaves them prone to misuse and swindling. For instance, it is common practice followed by many distant relatives of land owners to take over the latter’s unattended properties and claim right of title to it.

The absence of clear ownership also leads to land being kept away from the real estate market. This aggravates the probe, thus leading to land scarcity and increased land and project prices. The absence of clear ownership is mainly attributed to poor record keeping, lack of transparency, and complicated and outdated processes. Here are some solutions that can work:

• Governments can weed out the land ownership problem by updating records and adopting computerization.
• Special fast track courts can also be set up to clear land disputes in a quick manner.
• Introducing these steps can ensure increased transparency, decreased project costs and enhanced prospects for investments in real estate.

Legal Rights and Repeal of the Urban Land Ceiling Regulation Act

The Central Government, in 1999-2000, repealed the Urban Land Ceiling Regulation Act to affect positive changes in the real estate Industry. However, most states, except Gujarat, Haryana, Punjab, UP and Rajasthan, failed to repeal the act. This resulted in the failure to materialize positive outcome in the real estate sector such as:

• achieving 14% growth for 2011-2012
• getting more land into the real estate market
• creating 4 million jobs in the sector

To ensure that states repeal the act and ensure the growth of the real estate sector, the Central government will have to offer incentives and rewards. Other problems that require attention is that most Indian tenancy and rental control laws, as it exists now, are obsolete and does not serve its purposes. These laws need to be updated so that there is better security for landlords and eliminate the ever-increasing deposit amounts in lease contracts. By revamping renting laws, it will also make commercial property renting a viable and steady source of income for many.

Legal Rights and High Costs of Transferring Land Titles in India

The high cost of transferring land titles in India (more than 10% stamp duties) has led sellers to escape the stamp duty net. People are also using unaccounted money for most real estate transactions in India. This has paved the way for considerable revenue losses for the government, which could have been avoided had the charges been reduced to 3 to 5%, as in other developed countries. The current land registration process requires changing and becoming simpler, transparent and corruption-free. Realizing this need, some states have gone ahead and introduced lower stamp duty and registration charges.