Impact of linking Aadhaar with Real Estate

In the last 24 months, the murmur is getting stronger that the government may soon take the step of making it mandatory to link the Aadhar with the real estate transactions. I firmly believe that if it happens, then this is going to be one of the boldest reforms that has been done in the last several decades. The impact could be a mix of negative and positive outcomes in the short-term as well as in the long-term. It can entirely revamp the face of the Indian economy and the realty sector. Before we dive into its probable impact, let’s understand why linking the Aadhar with realty is essential at all?

 

Why linking Aadhar with realty is essential?

Story of ‘Ghost Cities’ in China busted the sole purpose of constructing so many homes when existing homeless people failed to occupy it. The same thing is now happening in India, as reportedly there is a large number of vacant homes in the country, and that number is growing gradually every year. While the government is looking forward to building a home for every citizen, the unaccounted properties have artificially pushed the price of the property for the homeless people. Such unaccounted realty not only sucks the resources, but also chokes the liquidity in the system for several years.

Linking properties with Aadhar can help in the inclusive growth of the realty sector, bring down the property prices to a realistic level in the long-term, and ensure an effective identification of Benami properties.

Now, let’s check out the possible impacts of the linking of Aadhar with the realty.

 

Possibility of a short-term surge in the resale property

Aadhar linking is expected to make it difficult to use undisclosed money in the realty projects and land assets. If there are people who possess the Benaami properties or properties in a false name, they may be compelled to sell such properties to avoid getting caught by the authorities. It may result in a surge in the supply of resale property in the short-term.

The property price may also become unstable temporarily. There are chances that some builders and property sellers may go for an increase in the property price to maintain their profit margin.

Boost to widespread inclusive growth

Some people possess properties and don’t disclose it in their tax return. Such realty owners usually keep the property vacant at prime locations. Such assets may now return to market circulation, and prospective homebuyers can get it at an attractive price. Genuine homeless buyer will get a better chance to buy a property. There are chances that the government will be able to release more locations for realty projects, therefore allowing greater land bank to the developers and hence ensure a sustainable growth in the long-term.

 

Some builders may face liquidity crunch in short-term

With more resale property coming into the market, developers that depends on cash transaction may face liquidity issues. The developers which follows a transparent system will continue to do business as usual.

 

Better housing policy with the availability of highly accurate data

With realty getting linked to Aadhar, it will help in creating a nationwide database that can help in the future for proper development of infrastructure, get access to exact figure of housing availability, and the government would be able to frame highly effective housing policy based on analysis such data.

 

Can help in effective land reform

Land reform is long-due in the country. It is a highly sensitive issue, as well. There is a large number of court cases pending due to land ownership disputes. I believe the Aadhar linking will significantly reduce the number of new cases. Land acquisition is a big problem for the government when it comes to infrastructure development and the development of the industrial belt. Often, it becomes difficult for authorities to identify and segregate the agricultural from non-agricultural land; ownership issue also creates big trouble. After Aadhar linking with the realty, it will help in clearly distinguishing the type and ownership of the realty, thus boosting the growth, bring land reform and reduce the disputes.

 

Finally

Aadhar linking can be a big game-changer for the realty sector and the entire Indian economy. It would require detailed research and planning, a collective effort of all the government departments, and proper execution else it can turn out to be a big economic mashup.

Before implementation, there should be policy to address issues like ownership of existing property disputes, undivided ancestral properties, data security post Aadhar linking, etc. Also, the problems of property developers should be addressed beforehand to avoid demonetisation and GST like mashup. Tax incentives for home buyers, liquidity support to developers, and pre-implementation education programs are few steps along with other initiatives that the government should focus on before linking the Aadhar with realty.