How Government Policies Shape the Future of Indian Real Estate: A...

How Government Policies Shape the Future of Indian Real Estate: A 2025 Perspective

Posted 2025-07-14 09:51:02

Explore the key ways government policies impact the Indian real estate sector in 2025. Learn how reforms like RERA, GST, and PMAY are shaping property trends and investor confidence.

The Indian real estate industry is one of the most crucial pillars of the country’s economy. With millions of people dependent on it for housing and employment, this sector is deeply influenced by government policies. Over the years, new laws and reforms have reshaped the landscape of real estate in India — making it more transparent, accountable, and organized. In this blog, we will dive into how key government policies have impacted Indian real estate and what it means for homebuyers, investors, and developers.

1. RERA – Building Trust and Transparency

The Real Estate (Regulation and Development) Act, 2016, commonly known as RERA, was a game-changer.

Impact:

Builders must now register their projects before advertising or selling.
Buyers get protection against project delays and fraud.
Developers are required to disclose project details, timelines, and finances.

Result: RERA has brought back trust into the market and improved buyer confidence across the country.

2. GST – One Nation, One Tax

The Goods and Services Tax (GST) introduced in 2017 unified the tax structure.

Impact:

Simplified multiple indirect taxes into one standard tax.
Reduced the overall tax burden on homebuyers (especially in affordable housing).
Developers now enjoy easier tax credit processes.

Result: Though initially met with confusion, GST has streamlined real estate taxation and improved efficiency.

3. Pradhan Mantri Awas Yojana (PMAY) – Housing for All

Launched in 2015, PMAY aims to provide “Housing for All” by 2022 (now extended in many parts).

Impact:

Subsidies on home loans for Economically Weaker Sections (EWS) and Low-Income Groups (LIG).
Boost in affordable housing construction across Tier II and III cities.
Encouraged developers to launch budget-friendly projects.

Result: PMAY has made homeownership possible for lakhs of first-time buyers in India.

4. Benami Transactions (Prohibition) Act

To curb black money and increase transparency in property deals, the Benami Transactions Act was enforced.

Impact:

Properties held in fake names or proxies are under strict government scrutiny.
Promotes clean transactions and discourages speculative buying.

Result: The market has become more formal and less cash-driven.

5. Digitization of Land Records

The Digital India Land Records Modernization Programme (DILRMP) is digitizing land ownership records across states.

Impact:

Reduced land disputes and fraud.
Faster verification for buyers and banks.
Easier access to property details online.

Result: Land transparency is slowly increasing, especially in rural and semi-urban areas.

6. Smart Cities Mission

This flagship mission aims to transform selected cities into modern, citizen-friendly hubs.

Impact:

Improved infrastructure and amenities in 100+ cities.
Better planning leads to higher real estate demand in those regions.
Investors show more interest in areas with smart city projects.

Result: Real estate near smart city zones is seeing higher appreciation.

7. Affordable Rental Housing Complexes (ARHC)

Introduced post-COVID, ARHC was aimed at solving the housing crisis for migrant workers.

Impact:

Public-private partnerships (PPP) for building rental homes.
Encouraged investments in build-to-rent models.
Helped stabilize urban housing demand.

Result: Emerging rental markets are now being recognized as profitable investment avenues.

8. FDI Reforms in Real Estate

India has allowed up to 100% Foreign Direct Investment (FDI) in townships, housing, and built-up infrastructure.

Impact:

Boosts funding for large-scale real estate projects.
Enhances global investor confidence.
Encourages modern construction technology and practices.

Result: Greater international participation in Indian real estate development.

9. State-level Reforms and Stamp Duty Reductions

Some states like Maharashtra have reduced stamp duty rates temporarily to boost sales.

Impact:

Lower transaction costs for buyers.
Spike in home sales during the discount periods.
Developers also offer additional benefits to attract buyers.

Result: Localized policies help revive sluggish property markets.

10. Model Tenancy Act

The Model Tenancy Act (2021) was introduced to regulate rental housing.

Impact:

Protects rights of both landlords and tenants.
Makes rent agreements more enforceable.
Encourages institutional participation in rental housing.

Result: Brings structure and trust to India’s often-unorganized rental segment.

Conclusion

Government policies play a pivotal role in shaping the Indian real estate sector. From tax reforms to housing subsidies and digital initiatives, these policies bring transparency, growth, and stability to the market. For homebuyers, this means safer investments. For developers, it means accountability and streamlined operations. And for investors, a more reliable and expanding ecosystem.