Cities such as Bengaluru, Chennai and Hyderabad recorded on average 72 percent primary transactions, while Mumbai, Pune and Kolkata showed almost an equal distribution, according to a FICCI-Grant Thornton-Escrowffrr Report.
In India, secondary real estate purchase is preferred over the primary market, as there is more room for negotiations for homebuyers without delays in possession, unlike in the primary market. In 2017-18, as many as 72 percent transactions in Delhi-NCR were concluded in the secondary segment, while just 28 percent were concluded in the primary segment, a new study suggests.
On the other hand, cities such as Bengaluru, Chennai and Hyderabad recorded on average 72 percent primary transactions, while Mumbai, Pune and Kolkata showed almost an equal distribution, says a FICCI-Grant Thornton-Escrowffrr Report titled Improving Transparency in secondary real estate market.
But experts say that real estate transactions come with their own set of challenges and in the secondary market, the major challenges are on the payment side where a lump sum amount is blocked in the transaction process and the entire amount is at high risk. Cash transactions are another challenge, with sellers demanding payment in cash to avoid capital gains tax.
Documentation or the legal vetting of property papers is another big challenge, with incomplete or unclear property chains, real estate experts said.
They recommend mandatory digitising of property records across the nation, rationalisation of GST for the secondary real estate segment, single licence fees across nation for real estate agents and a mandatory escrow mechanism to bring in transparency and reduce litigations.
Chairman of the Haryana Real Estate Regulatory Authority, Dr K K Khandelwal said that in order to bring transparency in the secondary real estate market, government must focus on digitisation of property records.
Addressing a FICCI conference in the capital on Improving Transparency in Secondary Real Estate Market, he said that digitisation will help in reducing the legal cost and process time thereby, building confidence among buyers.
He also suggested that an online database of all real estate agents across India must be introduced for better functioning of the real estate market and make it organised, regulated and transparent.
Digitisation of property records (titles/chain), will gradually decrease legal challenges and reduce the overall process time. The government should look at bringing in a single licence fee for real estate agents across the country to match global standards, experts added.
An effective escrow mechanism will protect all related parties. While the money belonging to buyers and sellers will be safe, broking fee of agents will also be guaranteed, they pointed out.
Regulations for digitisation of land records are the need of the hour and standardisation for government grants is a must, said Atul Sharma, managing partner, Link Legal India Law Services.
