Problems in Real Estate sector and its possible solution

In this article, we will discuss about Indian Real Estate Sector. However, it's obvious that real estate sector around the world is facing more or less similar issues.

Problems in the real estate sector include:

1. Rising prices: Continuous and exponential rise in the price of real estate has made it unaffordable or hard to afford for common people and small businesses in many parts of the nation.
2. Inefficient use of Land: A large amount of land is lying empty because of its unaffordability or because of its owners wanting to earn more profits in future. This land does not add any value to the society or to the national economy and it often hampers the Industrialization of the nation.

The reasons behind these problems include:

1. Over-Financialization: Over-financialization in the real estate sector has led to its commodification of it. Land is being treated as a commodity to earn huge profits instead of a social property. An influx of huge sums of money by investors has resulted in its price being exponentially higher than its actual worth.
2. Hoarding of Land: Corrupt Politicians(of all parties), Corrupt officials, Business tycoons have hoarded a lot of land. Which further decreases the supply of land,thus driving the prices even higher. Almost 75% of black money in India is in Land.

The Solution: Land Value Tax on Empty Land

As the name suggests, Empty Land Tax refers to the tax on Empty Land.

Empty Land Tax can have miraculous effects on the economy. It'll bring down the price of land, increase employment, increase GDP, and boost the Industrialization of the Nation.

Now the question is, How an empty land tax will do all this?

So, Here is how it will work:

1. 1-2% amount of the total value of the empty land will be charged from its owner as Tax.
2. As the empty land doesn't produce any value,because of which the owner have to pay the tax from his own pocket. This will be a financial loss for the owner and gradually it'll become hard for the owner to hold that empty land.
3. In this condition, the owner will have just two options-
• To get rid off the land by putting it in the market for sale.
• To set up a manufacturing unit, grow some crop, or do any value-adding activity on that land.
4. If the owner decides to sell the land then this will increase the supply of land in the market, thus, bringing down the prices.
5. If the owner decides to set up a manufacturing unit, grow some crop, or to do any value-adding activity , then this will eventually boost the GDP, provide employment, and boost the Industrialization of the Nation.