Effect of Politics on Indian Real Estate Industry

Effect of Politics on Indian Real Estate Industry

Indian real estate industry , is very sensitive to the politics of our country. The main reason for the industry to be so much connected to the politics is, lack of government interference in regulating the real estate industry at large.

Unlike so many countries in the world, in India the Government does not have a central policy for property industry. The government in India , does not control the prices of the property, specially sold by the private builders. In my opinion, about 80% of the real estate sector is controlled by the private players and the government as no role in it.

 Some of the developed countries,like Canada , where the prices of each and every property being sold in the market is controlled by a system, which protects the interest of both sellers and buyers. Buying a builders property directly from the builders in Canada is easy and secure. The government regulation does not allow the builders to take the buyers for a ride. The amount of money that can be collected by the builder, from each buyer is fixed at 30%, rest of the amount the builder has to fund on its own, to complete the project. The builder also gets help from the government to complete the project, at very low interest rates. This money has to be used only for the particular project for which it was  This way the builder gets timely and enough funds to complete the project in time and deliver the quality it promises.

In the Indian real estate industry, because of the absence of any strict regulatory body, the builders collect money from the public, solely baed on their reputation. After collecting the first instalment, they float the project and buy the land from the same money which they have collects from the public. since this land is also bought o instalments from the market, builder collects more money from the public and pays off the land owners. By now builder has collected about 30% of the total cost of the project and then starts the excavation process, which is almost free, as the mud from digging is sold for land filling sites, thus offsetting the price of digging.

Now the builder demands the another instalment from the public and starts the construction process, since the construction depends on the money to be collected the construction process is generally slow and if the buyers are lucky, they will get their dream home in about 6 years time, which has now become the norm of the day.

The point is, if we had a regulatory body controlling the Real Estate market with certain rules and regulations for the builders, then we would certainly have better complexes and delivered in time.So, the question arises , why do not we have a regulatory bill , the answer is simple - this is the effect of politics on Indian real estate industry. All the politicians are deeply involved in the property market and have large stakes with the builder firms, so they let the builders make more money than they can make.

The government has to come clean and make a regulatory bill for the real estate industry, only then the buyers will be able to get their moneys worth. The soaring property prices will also be controlled and each and every resident of India will be able to buy a Home for the family.