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9/11/2017

Government to make Aadhaar mandatory in real estate

The year 2017 has seen many reforms in the real estate sector, then in the last ten years. We have seen GST being implemented in the real estate sector as well as other initiatives such as the RERA Act and the Benami property Act. All these have led to phenomenal and concrete guidelines ultimately making the buying & selling experience more transparent

The Modi led government is set to make Aadhaar mandatory in the real estate sector after making it compulsory for PAN Card and filing income tax returns. This means that buyers need to show their Aadhaar cards whenever buying a property.  The step has been taken because of the numerous illegal or Benami properties that came into the government’s notice in the past few months. To what is popularly known as the crackdown of the Benami properties, the central government is all set to make Aadhaar based authentication mandatory in real estate deals at the time of registration of documents which include the agreement for sale between the buyer and seller and the power of attorney. It is believed that this move will help curb the black money transactions currently taking place in the country.


Kaizad Hateria, who is the brand custodian and chief customer delight officer of the Rustomjee Group, highlighted that this move to make Aadhaar mandatory in the real estate will equally be appreciated by the builders and buyers and will be a great move to curb Benami property transactions in the country.

Hateria also said that “About one-third of the country’s population of 1.25 billion, lives in cities, with more people migrating to cities". The government’s ‘Housing for All by 2022’ plan, aims to create 20 million new urban homes and 30 million rural homes. Going after benami properties can help accelerate this plan.”

In another major move, the government may also enable electronic registration of properties for which the Aadhaar based authentication will be a must to be followed by all. The observable changes in the country as a result of this decision by the government will be minimizing the risk of fraud in real estate and ensure foolproof legalized ownership of property by the buyer.

Reaction from the builders

The builders are receiving the guideline for mandatory Aadhaar in the real estate with zest.  Many of them are of the belief that Aadhaar can help the government in keeping a check on the Benami properties and flow of black money in the country. Parth Mehta, who is the managing director of Paradigm Realty says, “If the laws against Benami transactions are implemented properly, the registration of property will be flawless and in the name of the actual owner. There can be a control on the maximum number of property registrations under one name and land inventory can also be managed.” 

Aadhaar once made compulsory for the real estate sector can help in exercising control on the maximum number of property registrations under one name along with assisting in the management of the land inventory. These corrective measures are aimed at making the real estate sector more transparent, thus establishing clarity also in the mind of new investors and first-time buyers.  The whole idea has helped in strengthening the institutional framework of the real estate, and implementing Aadhaar is a move to make laws more stringent that was a must requirement for this sector.

However, keeping an eye on the Benami transactions will still be a challenge for the government since there are a considerable number of predicted Benami transactions in the unorganized property markets and hence, these tend to remain concealed from the law even now. And until the land records and transactions are not fully digitized, implementing the new guidelines is going to be a tough task for the government on the road of the betterment of the real estate sector. In order to address these shortcomings and make things concrete, the government is all set to amend the Property Registration Act, 1908, which can provide legal backing to Aadhaar-enabled authentication of documents. In other words, the compulsion of Aadhaar law also allows the Central Identities Data Repository to offer authentication services.


The Benami Transactions (Prohibition) Amended Act, 2016, was enacted last year and came into force on November 1, 2016, with the aim to curb any black money transactions in the real estate, better known as the Benami properties. With the implementation of mandatory Aadhaar guideline, the government has got full powers to confiscate any Benami Property. Since every citizen of the country is entitled to only one Aadhaar number, it will become an easy task for the government to track down and find guilty Benami property holders. If found guilty of the Benami property, there is a provision of rigorous imprisonment for at least one year, which can be extended up to seven years seeing the severity of the violation of the guidelines. The person shall also be liable to pay a fine, which may extend to 25 percent of the fair market value of the property.

The Finance Ministry who is all set to mandate the Aadhar in the real sector targeted the need for such laws in the country to promote a healthy transaction in one of the major sectors of the economy. The Finance Minister, Arun Jaitley said that “Unless we can set some examples, we set down right deterrent against such kind of practices" can this practice of benami properties end.”

Thus, it is quite clear that the government has taken sides and full pledge to prevent any errand buyers from hiding their money by investing it in the real estate sector. But the road ahead might not be easy and only after all transactions and property registrations are digitized, the true effect of implementation of mandatory Aadhar will be observed in a full swing.

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