It is no rocket science to know that black money has been the oil and fuel of the Indian real estate sector. Neither would it be an exaggeration to suggest that the lion’s share of the country’s black money has traditionally been concealed in this sector. More precisely, some 60 per cent of all high-value residential and commercial properties are funded through hard cash that does not reflect in the banking system.
With black money finding such a safe haven in realty, a new Union government proposal is coming in as a party pooper – a mandatory Aadhaar linkage with property transactions.
The government’s move to bring Aadhaar to realty’s deal tables, may be to ensure some amount of sanity, accountability, credibility and transparency to the sector, which is traditionally infamous for its tainted outlook. Much before demonetisation and the Real Estate Regulatory Act (Rera), Union minister Arun Jaitley had mooted the idea of Aadhaar linkage in real estate.
A few weeks ago, Union minister of state for housing and urban affairs, Hardeep Puri, also hinted at mandatory Aadhaar linkage with property transactions. The government reiterated recently that linking Aadhaar numbers would be mandatory for property transactions going forward.
BUILD reached out to sector
players and realty consultants to understand the implications of the Aadhaar linkage, if implemented, on Indian realty.
Says Samantak Das, chief economist & national director- research, Knight Frank India: “Linking of Aadhaar with property transactions comes at an opportune time as it will ensure increased transparency and provide more clarity in terms of land titles. Additionally, linking land titles to Aadhaar also mitigates the issue of identity theft. This move will pave the way for products like land insurance since insurers who were thus far hesitant considering the risk involved, will now be assured of complete transparency. Thus linking of Aadhaar will help clear out the multiple ownership of land and going forward will pave a way towards clear title deeds.”
Ashok Mohanani, chairman, Ekta World and vice president NAREDCO West says that the real estate sector is flush with black money on a large scale in both residential and commercial properties. Demonetisation has helped to clear out the black money to an extent. Now, with the move to link Aadhaar with property transactions, the government is going ahead to bring in absolute transparency.
According to him, with the implementation of Rera, it is mandatory for every developer to be registered on the website in order to conduct their transactions. It is only right to add the Unique Identification Number since it will help further clean up the system.
By linking Aadhaar to properties, the government can monitor property transactions between two parties and curb benami deals.
Divya Seth Maggu, associate director, valuation & advisory services, Colliers International India, believes linking of Aadhaar to property deals is a positive step towards increasing transparency in the realty sector.
“To avoid paying higher taxes, a number of properties are registered at lower prices than the actual transaction value. However, now with Aadhaar already being linked to bank accounts, mobile connections, PAN cards and subsidy accounts, the proposed linkage with property deals, will help in curbing black money transactions in real estate. With the recent policy changes that have impacted the sector considerably, most investors have already disappeared and the end user dominates the market today,” Maggu points out.
Global property consultant firm JLL too is of the opinion that Aadhaar linkage will bring in more sanity. Says Ramesh Nair, CEO & country head, JLL India: “By linking buyers' Aadhaar numbers into property transactions, the last avenue of funneling black money into real estate will be closed down. While it is true that such a move will prolong recovery of the real estate sector, there is no doubt that it will improve transparency while also resulting in a comprehensive database of real estate assets to the government.”
Anuj Puri, chairman at ANAROCK Property Consultants believes that linking transactions with Aadhaar numbers will make detecting and discouraging benami transactions much easier. “Since the government is planning to bring all types of property transactions under the purview of Aadhaar, secondary market transactions will now come firmly under the regulatory lens. Tho-ugh the primary market was brought under the regulatory framework post-Rera, secondary market transactions were not included in Rera’s purview and with transactions in this segment getting linked to Aadhaar numbers, we will probably see a further deal deceleration in this segment. More than ever before, real estate will now become a decidedly end-user driven market,” he explains.
Surendra Hiranandani, CMD at House of Hiranandani, says the move has huge implications for the sector. This step, if taken, will minimise the scope of fraudulent and benami transactions and ensure foolproof property titles for the buyers. However, insiders also say that a slew of new moves – demonetisation, Rera and GST – have already slowed down the sector. Mandatory linkage of Aadhaar will further add up to this slow pace, at least for some time. While it has hampered the economy in the short term, the sector is hopeful that these measures would become profitable in the long run.
“There is a slowdown in the sector in the last few quarters and with this move, the overall time for revival, both in terms of sales and price appreciation would lengthen,” states Maagu of Colliers.
Hiranandani suggests that it is also important to digitise data pertaining to land and property simultaneously so that it becomes easy to monitor and ide-ntify the authenticity of the individual.
The other advantage of linking real estate transactions with Aadhaar is to encourage digital transactions of land records under the Digital India Land Records Modernisation Programme (DILRMP), adds Mohanani.
Raising the issue of privacy and data protection issues is Manju Yagnik, vice-chairperson of Nahar group. Linking Aadhaar with property transactions is a positive step and is going to be undoubtedly beneficial for all stakeholders in the industry, she says.
However, her backing comes with a caveat. “There seems to be a rush to link Aadhaar with everything today. But the question is have we taken enough safety measures to protect our personal data against the threat of identity theft? Will the government, banks or mobile service providers, tax department, etc give us any guarantee that the Aadhaar details shared will be safe and confidential?’’ she queries.
Experts believe that India has to go a long way in improving data privacy issues and related safety parameters. Multiple government entities, banks and telecom service providers in the country are currently busy working round the clock to link millions of Aadhaar data. Sadly, safety issues do not top their priorities.