The real estate sector is never stable. From economic policies to inflation, every factor affects the demand and supply in the industry. And, govt policies play a foremost role in shaping the real estate market. With changes in regulations, property value may change.
For instance, if there is a change in the home loan interest rate by RBI, it indirectly affects property deals. As a real estate professional, you must know how govt policies can affect your business and, of course, your clients.
Plus, it has a direct & indirect impact on how you deal with your clients.
Government policies can influence property sales and prices. Govt subsidies and policies affect the dynamics of the real estate industry. Govt policies fundamentally impact real estate, so let’s see how.
Monetary Policies
Monetary and fiscal policies impact economic decisions. However, it can have an impact on the real estate sector. As mentioned above, interest rates and inflation can affect property value. Following this, there can be an increase or decrease in property rates.
When there is a decrease in interest rates, it directly stimulates the housing market by making mortgages more affordable. Likewise, if the tax rules change, it can dampen the investor interest in the properties.
In addition, various govt initiatives can help shape the real estate landscape, creating challenges and opportunities in the sector. In short, any change in monetary policy can impact real estate.
Zoning Regulations
Zoning regulations differ from region to region. However, zoning regulations play a significant role in the location and type of real estate development. In addition, these regulations can affect property value by controlling density and height.
Not only this, but some zoning regulations also affect commercial property prices. As a broker, it’s essential to know about the complexities of zoning regulations so that you stay in the loop.
Most builders are aware of these regulations and consider them in project development. To capitalize on emerging market trends, you must know about zoning regulations.
RERA – Real Estate Regulatory Authority Act
2017 saw a significant shift in real estate dynamics with the RERA Act. The introduction of RERA brought transparency to the sector. Plus, it got a positive change and ushered in a new shift in property investment.
After the RERA Act, potential buyers approach purchases with confidence. Compared to earlier times, when real estate investments were risky, today, buyers purchase properties with assurance.
RERA has set guidelines for real estate developers that ensure construction norms and quality standards. The best part is to provide the timely completion of the housing project. As a broker, you can register with RERA to sell, buy, and advertise the property.
Goods and Service Tax Act
You must be wondering how GST affects the real estate market. The introduction of GST has brought a significant change in the real estate sector. There has been a change in construction material rates since the tax system was introduced. With the increase in construction material prices, the prices of properties also increase.
However, this move was welcomed by the real estate sector as it ushered in transparency and flexibility. Notably, the real estate market saw a demand after the GST Act. Most residential properties were exempt from GST, while 18% flat GST was levied on the maintenance charge. The GST Act has transformed the real estate sector – with pricing transparency.
Housing Policies
Many housing policies help to address different affordability issues. Also, these policies address the accessibility and quality of housing. Also, some affordable housing schemes are a part of govt initiatives.
For instance, the MHADA flats in Mumbai are available at a low cost for the middle class. It is a govt scheme where flats are allocated on the lottery-based system, of course with registration.
In addition, Government policies include rent control regulations that affect the value of rental property. These housing policies can influence real estate property values by affecting the demand and supply.
Envoirmental Regulations
Another important policy that can affect project development is environmental regulation. How? Govt has introduced many policies related to the ecosystem and public health. In some areas, land use is prohibited, which affects the construction process.
Some policies can also affect environmental impact assessment. Most environment-related regulations can affect the assessment value of the project.
Further, the limitations and restrictions can affect the property’s resale value. Environmental policies can drive many changes. Brokers need to know about all the changes in policies. Staying updated about these policies can keep you in the loop with changes.
Ways to Stay Informed:
Staying informed about government regulations and policies is of utmost importance so you can:
- Join Industry Associations – If you participate in advocacy groups and industry associations, you can stay informed about the new policies and changes. These associations play a role in advocating favorable policies or shaping different policy debates. Ideally, the associations can support real estate development and projects.
- Community Engagement – As a broker, you can get involved in community engagement. Also, you can stay informed about land revitalization and housing affordability. Besides engaging with local stakeholders and community members, you can shape policies for sustainable real estate property deals. The idea is to stay informed about the changes in the real estate market. In addition, you can follow industry publications and govt websites to keep a tab on changes that happen – on the federal level.
Know About All the Govt Initiatives,
Govt policies can impact the real estate market, and any change in the policy or introduction of a new policy can affect the demand and supply. Plus, it can also influence different investment opportunities in the sector.
By staying informed and engaged, you can know the changes that may affect real estate. Also, understanding the nuances of policies is essential. For that, you can get help from real estate experts.