Ambiguity and complexity pertaining to the new rules under RERA and incidence of GST on under-construction projects has pushed majority of homebuyers towards homes with occupancy certificate. 99acres.com delves into greater detail regarding this emerging trend.
The implementation of Real Estate (Regulation and Development) Act (RERA) and Goods and Services Tax (GST) is invariably swaying buyer’s preference towards Occupancy Certificate (OC)-ready homes. In the wake of ambiguity over the two most important policy reforms, buyers started withdrawing from the real estate market in the second half of 2016. Those willing to return to the market are now inclined majorly to this niche segment in order to avoid falling under the ambit of still-uncertain regulations under RERA.
As per the rules outlined by the central government, all residential projects that do not have an Occupancy Certificate (OC) as on May 1, 2017, would have to be registered under their state’s RERA. As a result, several developers across the country were seen rushing to issue OCs. Today, even buyers are invariably attracted to OC-secured homes. Not only are they able to avoid the RERA-related complexities, but are also exempted of GST, which is charged at 12 percent for under-construction properties.
Highlighting GST as one of the major factors leading to the popularity of OC-ready homes, Ashwinder Raj Singh, CEO, Anarock Property Consultants says, “GST implementation has resulted in reduced tax burden on buyers purchasing ready-to-move-in apartments. The tax on the entire cost of the project, including the land, will be levied at 12 percent - this should be enough for the builder to claim input credit, thus, making OC-ready projects more economical for buyers.”
The growing inclination towards ready projects is invariably visible across the metro cities. According to the latest Insite Report by 99acres.com, Noida, Greater Noida, Ghaziabad and Gurgaon in Delhi NCR, Thane and Navi Mumbai in Mumbai Metropolitan Region (MMR), Pune, Kolkata and Ahmedabad recorded a marginal hike in demand for ready-to-move projects between Apr-Jun 2017 and Jan-Mar 2017.
In addition to the absence of tax incidence, there are several other factors that are adding sheen to the ready-to-move market against the under-construction segment. Growing uncertainty over timely completion of residential projects due to cost overlays, delayed approvals or developer’s negligence are a few reasons that shifted buyer preference towards ready homes. Moreover, immediate possession allows buyers to avoid a situation of paying both EMI and monthly rental in case of a project delay.
With ready projects, homebuyers can ensure readily available supporting infrastructure and an assurance of making a safe investment in a finished product.