Why Benami Property Should Be The Focus Area Of The Government This Year
The real estate market in India is in the middle of a significant reboot. With the real estate law being given shape and the central government repeatedly stating its intent to deal with Benami transactions, the time is ripe for the government to enforce some concrete steps to deal with such transactions this year.
However, with a large part of the sector being unorganised, the biggest challenge before the government is to assess the number of Benami properties in the country.
How curbing Benami transactions bill will give a fillip to the property market
Clear titles and transparent transactions will add to the confidence of lenders, thus, leading to an uptick in the property market. But, to make this a reality, a well-defined roadmap will be needed.
While addressing the financial penalties of Benami transactions and erring holders could be done easily, the mammoth task is digitisation along with structural reforms in the administrative arena. Although the government tried to address this issue by amending the original Benami Transactions Act 1988 to make the law more stringent, the law should not be a mere paper tiger.
Under the Benami Transactions (Prohibition) Amendment Act 2016, which came into force on November 1, 2016, a transaction becomes 'Benami', if the property is held by one person, but has been provided or paid for by another. The Act lays rules for recovery of the property and also, makes Benami properties liable for confiscation by the government.
Yash Gupta, a practising lawyer at the Delhi High Court, says: “The laws against Benami transactions need to be implemented properly. This would make property registration flawless and transparent. The government also has the option to put a cap on the maximum number of property registrations under one name.”
The government's efforts notwithstanding, the biggest task for the government is to create a mechanism where the financial transaction is not possible in the property market for Benami property deals.
The reality of the realty sector
The next big push of the government post-demonetisation is to curb Benami properties in the country. The unorganised property market (primarily the resale market) sees a majority of such transactions, therefore, it tends to remain concealed from the law. With land records and transactions not fully digitised, Benami transactions remain a challenge for the government.
Neha Mishra, who teaches property law at a private university in Bengaluru, says, "A crackdown on Benami properties will cleanse up the rotten property market and make the property more affordable. This will also give impetus to the Housing for All dream of the government — as by going after the Benami properties, the government can speed up the plan."